Only 20% of procurement teams deliver high value

Just a fifth of procurement organisations are delivering high value and have strong recognition from executive stakeholders, according to the 2016 Return on Supply Management Assets (ROSMA) Performance Check Study.

The study, the result of a collaboration between CIPS, the Institute for Supply Management (ISM) and AT Kearney, also found that “most procurement organisations do not transparently manage or report on their productivity”.

The annual report said there was a top tier group of standout performers, making up 15-20% of 150 survey respondents, a middle tier delivering value but “performing well below the top tier”, and a “large group of bottom quartile performers that add limited value to their organisations”.

Joe Raudabaugh, partner at AT Kearney and co-author of the report, said: “The top tier procurement teams will sustain great core practices and move forward with employing disruptive procurement strategies – bringing entrepreneurship and innovation to supply markets and supply chains. These organisations will be rich in top talent.”

The report said top procurement teams had the following attributes:

  1. Recognition from stakeholders as integral business partners
  2. Accountability for results, stakeholder satisfaction and team productivity
  3. Well-defined and respected performance metrics
  4. Performance routinely evaluated by procurement and finance
  5. Principle stakeholders are aware of and understand procurement value drivers
  6. Principle stakeholders have rich understanding of how procurement creates and delivers value
  7. Deliver at least seven times their cost in financial value

David Noble, group CEO, CIPS, said: “There are many challenges ahead for the procurement profession in the coming decade. Technology will have a greater impact as automation replaces many traditional transactional functions. The skill set will change in favour of innovation-driven deal-making and value creating and procurement teams and business will have to respond to these changes quickly and expertly.”

Thomas Derry, CEO at ISM, said: “Top quartile procurement organisations embrace transparency and report on their results in metrics that are widely accepted across the organisation as measuring the tangible value delivered.”

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