Procurement delivers seven times return on investment, says CIPS

Gurjit Degun
16 September 2014

The study by AT Kearney, the Institute for Supply Management (ISM) and CIPS found leading teams generate almost £1 million in financial benefits per procurement employee each year.

Building the Brand of Procurement and Supply said that middle-tier performers generate around five times the investment and cost of their supply management assets. However they have not improved their productivity since 2011.

The report said: “Most organisations do not have the reporting and tracking capabilities to provide ongoing, accurate visibility of procurement’s value-creating activities. They simply do not have a grasp of – and therefore cannot manage – their resources to optimise them with the same level of precision as is typically done in other functions.”

It also said that almost 15 per cent of buying teams are “out of mind or inconsequential players” to the CFO community and 75 per cent have “mixed and yet-to-be developed brands”.

The research is taken from the results of the ROSMA (Return on Supply Management Assets) Performance Check Report, which was developed to “establish a uniform measurement of procurement’s value delivery to the organisation”.

Joe Raudabaugh, AT Kearney partner and co-author of the ROSMA report, said: “There are many opportunities to change the brand of procurement across the profession, within our enterprises, and to attract, develop, and sustain best athlete-calibre talent. Adopting value management practices is necessary for the future.”

David Noble, group CEO, CIPS, said: “There is no doubt that the profession has to be seen as supporting the strategic aims of the enterprise and to have relevance to its goals and success. We must be able to demonstrate value in a quantitative way.”

ISM CEO Tom Derry added: “With the ROSMA Performance Check, we now know what world-class performance looks like. Our challenge as a profession is to make sure we are not a drag on performance, but rather a driver.”

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