Study Finds That Top Procurement Organizations Continue to Deliver Financial Benefits

The 2015 Return on Supply Management Assets (ROSMA) Performance Check Study, “Building a Bolder Legacy: The Procurement Mission is Under Way,” found that top performing procurement organizations improved their performance versus the 2014 report results with most delivering 10 to 15 times returns.

Top performers were also found to deliver 7.5 times the costs and investment base in procurement and are expanding their advantage. These leaders generate about $1.25 million in financial benefits per procurement employee per year.

The second annual ROSMA Performance Check Study is once again a collaboration between A.T. Kearney, the Institute for Supply Management (ISM), and the Charted Institute of Procurement & Supply (CIPS). The joint initiative's objective is to build the brand of procurement and encourage the profession to embrace advanced value-management practices and stronger CPO-CFO partnerships.

Joe Raudabaugh, A.T. Kearney partner stated, “Procurement faces a transformational period, similar to other corporate disciplines over the past 30 years. Beginning with manufacturing in the 1980s, and moving on to supply chains, research, engineering, and more recently sales and marketing, the mission for procurement organizations is underway – whether procurement is ready or not.”

Although top-performing procurement organizations are already delivering substantial financial benefits to their companies, the second part of this ROSMA research, which surveyed 226 senior financial executives from Australia, France, Germany, the UK and the United States, found that 50 percent of financial executives believe that bottom quartile procurement organizations return less than 1.5 times their cost in value. CPOs from these bottom-quartile teams validated this perspective, reporting dilutive performance results with financial benefits insufficient to cover their activities.

SC
MR