When our Marketing Associate George Shepherd joined us straight out of university last year, he pointed out how tricky this abbreviation fascination can be for anyone joining the procurement sphere for the first time. So on his first day in the team, his colleagues – eternally keen for a chuckle – asked him to come up with ten best guesses for some common acronyms.
Six short months ago, I joined Vizibl, and consequently, the wider and wonderful world of procurement. Three months prior to joining, I was still a university student about to graduate with a degree in English literature and art history, entirely ignorant that a function like procurement even existed, much less that it was an important facet of all enterprise businesses.
Procurement, for a recent graduate six months into a new role, is a function which truly embodies the saying ‘the more you know, the more you realise you don’t know’. In principle, as it was explained to me as if I were five years old on my first day of work – and I might as well have been – procurement can be defined as the process of a company or organisation buying… well, buying pretty much anything. When a manufacturing company needs components, the act of purchasing said components is through the procurement function of the company. When an enterprise needs global consulting services, they buy these services through procurement. Sounds simple enough, right?
In the simplest of terms, yes, turns out it is that straightforward! However, when viewing the procurement function under a microscope, it becomes clear that it is an infinitely complex world, with myriad moving parts for even the simplest of purchases. This complexity extends to every facet of procurement, including the vocabulary, which I have nicknamed ‘the procurement vernacular’.
There have been multiple times so far in my short career as a marketer that I have been in rooms (mostly virtual rooms, thanks to the pandemic) with people in procurement functions of all levels and industries. One of my very first takeaways from these meetings was that procurement certainly loves an acronym. For my first few weeks in these meetings, I would catch the odd word or two, trying to recall these acronyms and scramble to locate them in the Vizibl glossary. It seemed that entire conversations were governed by short, spit-fire bursts of single letters, reciprocated by knowing nods, oohs and aahs throughout the room.
As someone who studied English literature, I usually pride myself on having a great command of the language. So, as you can imagine, it was a strange sensation to wade into this world of procurement, a to-me-unknown yet ever-important function of enterprise companies, and have people speaking a dialect which was familiar yet entirely alien.
My onboarding took place at a café near Waterloo station, where the Vizibl marketing team had me guess what a series of acronyms stood for, as both a fun activity and an introduction to the world of procurement. Now that I am six months into my role, I decided to revisit this list of acronyms, both to see how far I have come, and to have a chuckle at my lack of procurement knowledge on my first day at Vizibl. Here were my best guesses:
My guess: ‘Beating all fiscal opposition’
My first guess, and I must admit, it sounded like a stretch. The word BAFO is a phonetically strong sounding word, so I thought that it conveyed some sense of victory or triumph. I imagined a CPO being asked how their work is faring, and responding: ‘Things are great! We are BAFO!’
Actual definition / explanation: Best and Final Offer.
This refers to a multi-stage procurement process, in which written offers from bidders are subject to clarification and/or negotiation. Bidders are invited to submit their final offer, which will not be subsequently negotiated further.
My guess: ‘Cost improvement procurement sector’
Again, this was, admittedly, a total long shot. I just thought I’d hit all the keywords – I could easily picture myself walking into a procurement meeting, where people are referring to the ‘cost improvement procurement sector’ and all nodding knowingly at that powerful, mysterious branch of each company.
Actual definition / explanation: The Chartered Institute of Purchasing and Supply.
A membership organisation for procurement professionals, as well as a professional certification scheme for procurement.
My guess: ‘Centre lane management’
Perhaps a manager's way of dealing with two radically different employees? The managing bridge between outbound and inbound marketing? I don’t quite know where I was going with this one, but I will readily admit defeat: Even at the time of guessing, I was fairly certain that centre lane management does not exist.
Actual definition / explanation: Contract Lifecycle Management.
The management of an organisation’s contracts from initiation through negotiation and execution, ongoing management, performance appraisal, and renewal or expiry. For cost savings, efficiency, and compliance reasons, many procurement organisations will use contract lifecycle management software to automate much of this process.
My guess: ‘Power to procure’
I suspect I was being a bit hopeful with this one – rather than stressing over cost, savings, and contract disputes, perhaps procurement comes together from time to time for a little motivation and inspiration, using this phrase as a Monday pick-me-up mantra.
Actual definition / explanation: P2P: Procure/Purchase to Pay
Procure-to-pay is the process of integrating and automating procurement systems and ‘accounts payable’ systems to increase efficiency. It involves four key stages: selecting goods and services; enforcing compliance and order; receiving and reconciliation; invoicing and payment. P2P systems help procurement buy from preferred suppliers at negotiated prices without the paperwork back-and-forth.
My guess: ‘Key sourcing management’
Now, of all of these, I feel the most proud of this one in hindsight. It made sense to me, as the sourcing of key materials is crucial to any company: so crucial that it requires management!
Actual definition / explanation: Key Supplier Manager
KSMs are a key job role in the procurement function of a given business. It is the job of the Key Supplier Manager to manage relationships with a supplier that the business has deemed strategic. Day to day they are likely to deal with a Key Account Manager (KAM) on the supplier (selling) side of the relationship.
My guess: ‘Order the inventory fast’
I mean… you can see where I was coming from, right? Is this not procurement’s whole deal? See also: procurement for dummies.
Actual definition / explanation: On Time, in Full
A common KPI to analyse supply chain logistics accuracy and efficiency. On time in full measures whether a supplier was able to deliver the full quantity of a specific order (or even a specific item across orders) on or before the date requested. If 150 of 200 orders from a particular supplier meet these criteria, that supplier will have an overall OTIF of 75%.
My guess: ‘Selling to procurement’
I remember feeling vaguely confident about this one – as if this is a term used by suppliers in order to express the process and sale of their materials to a buyer’s procurement function; a.k.a., selling to procurement!
Actual definition / explanation: Source to Pay
The entire end to end process involved in procurement, starting with finding a supplier, continuing through negotiation, contract, and accounts payable. S2P relies on technology, with S2P software helping to find efficiencies, and enable processes like auctions, spend analysis, category management, and billing.
My guess: ‘Supply labour authorisation’
Seems I was pretty lost with this one. I will readily admit that my guess was a bit pathetic. It is essentially three words which I had heard my colleagues say during my induction and I mashed them together, hoping for the best. Can’t blame me for trying.
Actual definition / explanation: Service Level Agreement
Usually part of the contract between a business and a supplier. The SLA sets the expectations between the service provider (supplier) and the customer (the business), describing the products or services to be provided, the single point of contact for any end-user problems, and the metrics by which the effectiveness of the product or service is monitored and approved.
My guess: ‘This continent’s operations’
As writing these explanations is making me feel increasingly moronic, I will put this one into a sentence for you: ‘TCO has been tenuous over the past year, but we are hoping to bolster TCO in the next quarter’. Get me in a sky-rise boardroom ASAP! BAFO!
Actual definition / explanation: Total Cost of Ownership
The purchase price of an asset plus the direct and indirect costs of operating it. This metric takes a ‘big picture’ look at what a product’s true cost is over time. If I buy a coffee machine, the purchase cost might be £800, but TCO will account for the costs of getting it delivered, maintaining it over its predicted life cycle, repairing it, the electricity to run it, the products to properly clean it, the cost to dispose of it at the end of its lifecycle, and many others. This will be considerably more than the initial £800 purchase cost.
My guess: Aha! Finally one that I knew from day one – I wouldn’t have been a great fit for Vizibl if I didn’t pick up quick-smart that SC&I stands for Supplier Collaboration & Innovation. And for a little procurement acronym flex of my own, I also know that SIH is Vizibl’s Supplier Innovation Hub, SCW is Vizibl’s Supplier Collaboration Workspace, and SRM is Supplier Relationship Management - the cornerstones of SC&I!
Having only arrived in this complex and mysterious world of procurement in September, I still have a long, long journey left to tread before all of your acronyms make sense, but I hope to be able to speak in that spit-fire tongue of single letters one day soon, and eventually be lucky enough to add ‘procurement vernacular’ to the language section of my CV.