I like Sundays they provide time for zany posts like “I hate buzz words and a lot of companies don’t understand them”.

August 3rd, 2009

The word SPEND is one simple example. It is a shortcut word. Why can’t we just say what we mean? Like; what is your budget for this purchase?

The word SPEND is one simple example. It is a shortcut word. Why can’t we just say what we mean? Like; what is your budget for this purchase?

It may seem silly, but I can’t tell you how often when meeting with prospects to discuss e-procurement or e-negotiation solutions that the following question comes up. What do you mean by the term spend? Quite frankly, I always define the term in the first three slides of any presentation I conduct because if not, the question just keeps coming up. Other related questions also come up as you begin to build on the term with follow on or as I like to call them tag your it buzz words such as.

1. Spend Management
2. Spend Analysis
3. Aggregate Spend
4. Spend Visibility

If one were to look up the word spend in Wikipedia, you would quickly find out that they do not have a definition for the word spend. They do how ever have a definition for Spend management is the way in which companies control and optimize the money they spend. It involves cutting operating and other costs associated with doing business. These costs typically show up as “operating costs” or SG&A (Selling, General and Administrative) costs, but can also be found in other areas and in other members of the
Supply chain.

Similarly in Wikipedia, one can find Spend Analysis is the process of collecting, cleansing, classifying and analyzing expenditure data with the purpose of reducing procurement costs, improving efficiency and monitoring compliance. It can also be leveraged in other areas of business such as inventory management, budgeting and planning, and product development. Spend analysis can provide answers to such questions as:

We can also use Wikipedia to find Aggregate Spend which is the process to aggregate and monitor total amount spent by healthcare manufacturers on individual Healthcare Professionals and Organizations (HCP/O) through payments, gifts, honoraria, travel and other means.

We have still not been able to find a good defination for the word spend. For that we have to visit dictionary.com to find that the term spend means to pay out, disburse, or expend; dispose of (money, wealth, resources, etc.)

I won’t event get into trying to combine the term spend with the word visibility to come up with spend visibility. However if you are interested Wikipedia defines visibility as in meteorology, visibility is a measure of the distance at which an object or light can be clearly discerned.

Are you beginning to catch my drift? Maybe it might just be easier to ask a buyer what we want to know such as the following.

1. What category are you responsible for
2. What items are in the category
3. Do you have current pricing for each product
4. What is your total category budget?
5. Do you have a list of incumbent suppliers?
6. Do you have a written specification?
7. Are all products under contract
8. Do you have contract expiration dates?

This author bets you will get a better answer then you might if asking. What is your spend visibility for the category you are responsible for.

We look forward to and appreciate your comments.

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