A.T. Kearney Study Finds Only 15% - 20% of Procurement Organizations Deliver High Value and Have Strong Recognition from Executive Stakeholders
Tuesday, December 13, 2016
Most procurement organisations do not transparently manage or report on their productivity.
The 2016 Return on Supply Management Assets (ROSMA) Performance Check Study, “What Good Looks Like,” reveals that the procurement profession has a top-tier group of standout performers, a middle-tier that is 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, A.T. Kearney partner and co-author of the report stated, “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 third annual ROSMA Performance Check Study is once again a collaboration between A.T. Kearney, the Institute for Supply Management (ISM), and the Chartered Institute of Procurement & Supply (CIPS). The joint initiative’s objective is to build the brand of procurement and encourage the profession to embrace value-management driven practices and strengthen their CPO-CFO partnerships.
The ROSMA Performance Check Benchmarking and the Voice of the Stakeholders research illustrate what good looks like for high-performing teams. The top attributes of good procurement organizations are:
1. Strong procurement teams are recognized by their stakeholders as integral business partners with a seat at the business leadership table.
2. All stakeholders, from both business and finance, say that procurement leaders are accountable for results, stakeholder satisfaction, and team productivity.
3. Procurement has well-defined and respected performance metrics that all stakeholders understand and support.
4. Finance and procurement jointly, routinely and thoroughly evaluate procurement performance.
5. Principle stakeholders (C-suite, finance, and the business?) are aware of and understand procurement value drivers and performance ranges.
6. Principal stakeholders have a rich understanding of how procurement creates and delivers hard value to the business’ financial results.
7. Good to great procurement teams deliver at least seven times their cost in hard financial value to their organizations.
Thomas W. Derry, CEO of the Institute for Supply Management, commented, “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.”
David Noble, CEO of the Chartered Institute of Procurement & Supply, 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.”
The report also provides in-depth analysis on the following topics:
- 2016 Research Insights including current and cumulative benchmarks from the Return on Supply Management Assets (ROSMA) report and insights from the companion research, Voice of the Stakeholders
- Profiles of the top procurement performers – their attributes, achievements, and leadership agendas
- Reviews how emerging technologies and strategic moves to reset capabilities will redefine procurement
- Provides a solution for procurement’s branding problem, specifically the inability to attract and retain top talent- Provides information on Disruptive Procurement with the description of a new and exciting chapter that takes procurement beyond its borders and energizes the entire industry.
About the 2016 ROSMA Performance Check Study and the Voice of the CFO and Finance CommunityThe ROSMA Performance Check Benchmarking Study collects the financial performance of procurement as reported by participating CPO organizations. A.T. Kearney began ROSMA Performance Check benchmarking in 2009. The cumulative database has more than 675 completed benchmarking surveys. For this report, insights are drawn from 150 completed, qualified, and accepted submissions received in the last year. For the Voice of the Stakeholders section of the report, third-party independent research in early November 2016 collected input on procurement organization value delivery from 217 non-financial, non-procurement senior executives from Australia, Canada, France, Germany, the United Kingdom, and the United States.
About A.T. Kearney
A.T. Kearney is a leading global management consulting firm with offices in more than 40 countries. Since 1926, we have been trusted advisors to the world’s foremost organizations. A.T. Kearney is a partner-owned firm, committed to helping clients achieve immediate impact and growing advantage on their most mission-critical issues. For more information, visit www.atkearney.com.
About Institute for Supply Management
Institute for Supply Management® (ISM®) serves supply management professionals in more than 90 countries. Its 50,000 members around the world manage about $1 trillion in corporate and government supply chain procurement annually. Founded in 1915 as the first supply management institute in the world, ISM is committed to advancing the practice of supply management to drive value and competitive advantage for its members, contributing to a prosperous and sustainable world. ISM leads the profession through the ISM Report On Business®, its highly regarded certification programs and the newly launched ISM Mastery Model™. For more information, please visit: www.instituteforsupplymanagement.org.
About The Chartered Institute of Procurement & Supply
The Chartered Institute of Procurement & Supply (CIPS) is the world’s largest procurement and supply professional organisation. It is the worldwide centre of excellence on procurement and supply management issues. CIPS has a global community of over 115,000 in 150 different countries, including senior business people, high-ranking civil servants and leading academics. The activities of procurement and supply chain professionals have a major impact on the profitability and efficiency of all types of organisation and CIPS offers corporate solutions packages to improve business profitability. www.cips.org; @CIPSNews