Operations Advantage: The New Language of Procurement
Forward-thinking players are setting their sights on advancing the future of procurement with active value management. But there’s a long way to go to become an essential part of the enterprise performance conversation.
The language of procurement speaks to an agenda driven by delivering value. Leading procurement organizations are well-versed in areas that resonate with financial officers and the performance narrative. They lead with hard value contributions of procurement, can discuss their performance across an array of value drivers, and advance intangible value to their organizations as well. Knowledgeable about how their teams are performing, leading CPOs know what they need to do to improve their organization’s performance and are laying out career paths to attract and retain the best talent.
Chief procurement officers who are literate in this new language are building the brand of procurement by making themselves valued partners to chief financial officers and the rest of the C-suite. In 2011, A.T. Kearney began homing in on benchmarking value delivery with Return on Supply Management Assets (ROSMA), a performance measurement framework built to help companies understand and measure how procurement contributes financially to the business.
In the inaugural ROSMA Performance Check report, we have gathered the feedback of hundreds of companies. The insights are powerful.
• Top-quartile performers are reporting hard financial results in excess of seven times their costs and investment base in procurement, providing a strong basis for reinvestment and recognition. These leaders generate about $1.6 million in financial benefits per procurement employee each year, with 35 percent of the financial benefits coming from using advanced methods that create hard value beyond unit cost reduction.
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The language of procurement speaks to an agenda driven by delivering value. Leading procurement organizations are well-versed in areas that resonate with financial officers and the performance narrative. They lead with hard value contributions of procurement, can discuss their performance across an array of value drivers, and advance intangible value to their organizations as well. Knowledgeable about how their teams are performing, leading CPOs know what they need to do to improve their organization’s performance and are laying out career paths to attract and retain the best talent.
Chief procurement officers who are literate in this new language are building the brand of procurement by making themselves valued partners to chief financial officers and the rest of the C-suite. In 2011, A.T. Kearney began homing in on benchmarking value delivery with Return on Supply Management Assets (ROSMA), a performance measurement framework built to help companies understand and measure how procurement contributes financially to the business.
In the inaugural ROSMA Performance Check report, we have gathered the feedback of hundreds of companies. The insights are powerful.
• Top-quartile performers are reporting hard financial results in excess of seven times their costs and investment base in procurement, providing a strong basis for reinvestment and recognition. These leaders generate about $1.6 million in financial benefits per procurement employee each year, with 35 percent of the financial benefits coming from using advanced methods that create hard value beyond unit cost reduction.
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