The 2015 Return on Supply Management Assets (ROSMA) Performance Check Study found that top-performing procurement organizations improved their performance compared with the previous year with most of these top performers delivering 10 to 15 times their costs. These leaders generate about $1.25 million in financial benefits per procurement employee per year.
Top-performing organisations deliver significant financial returns, but the second part of the 2015 report "Building a Bolder Legacy: The Procurement Mission is Under Way” found that amongst 226 senior financial executives from Australia, France, Germany, the States and the UK, 50% believed that those organisations in the bottom quarter returned less than 1.5 times their cost in value, with many unable to cover the cost of their organisational activities.
David Noble, Global CEO of the Chartered Institute of Procurement & Supply (CIPS), commented: “Once again the results of the report show that procurement and supply management has a critical role to play in business success, and together the profession can advance in the pursuit of a stronger legacy for the years ahead. The ROSMASM Performance Check offers our professionals another component in their toolkit and provides a robust demonstration of their function’s financial contribution.”
The third annual ROSMASM Performance Check is now open and is the performance management standard developed and administered by A.T. Kearney with CIPS and the Institute for Supply Management (ISM). The ROSMASM Performance Check helps to establish a common financial performance framework component for the profession’s scorecard.
Commenting on ROSMASM, Joe Raudabaugh, A.T. Kearney partner said, “ROSMA’s real value is as a steering mechanism to help procurement leaders guide their organization and help them facilitate critical discussions with key stakeholders. It is helpful to the partnership between CFOs and CPOs since CFOs understand and like the framework and the fact that it is a derivative of proven financial concepts.”
The results of 2015 found stellar examples of procurement organizations setting a strong standard for performance excellence, but overall there is inconsistent performance in the profession across all of procurement’s key value drivers: spend coverage, sourcing programme velocity, sourcing project yields and outcomes, compliance rates and operating costs – regardless of company size, industry or spend mix. Supply management organizations can take the assessment to see how they compare on these key drivers. The assessment can be taken at the enterprise level or within business units and divisions. Completion takes approximately 30 to 45 minutes. Information provided is kept strictly confidential. Upon completion, participants receive their organization’s complimentary ROSMA score and a customized feedback report that assesses their procurement performance, compares it to leaders and followers, and helps identify improvement opportunities.
Tom Derry, CEO of ISM, says “It is no surprise that organizations are increasingly interested in the value-from-procurement topic. Procurement leaders want to find better ways to measure, manage, and track procurement performance to improve and highlight the value that procurement brings to the overall organization.” Over the last few years, CIPS, ISM and A.T. Kearney have offered the ROSMA℠ Performance Check service to help procurement groups from all over the world measure and monitor their performance annually.
To view the 2015 results and contribute to 2016’s findings: Check out the CIPS , ISM and A.T. Kearney websites.