New study says procurement performance is improving

The 2015 Return on Supply Management Assets report has just revealed that top-performing procurement teams have been producing 7.5 times the investment costs in financial benefits.

The ROSMA Performance Check study, which surveyed 226 senior level financial executives throughout Australia, Germany, the United Kingdom, France and the United States, is a collective effort between A.T. Kearney, the Charted Institute of Procurement and Supply and the Institute for Supply Management and is intended to improve procurement practices and encourage better partnerships.

Procurement employees delivering favorable results
In the announcement, CIPS CEO David Noble said, "We can strengthen the position of procurement as a critical source of strategic enterprise value, establish the CPO as a core executive team member integral to the leadership narrative and position procurement as a preferred career platform for tomorrow's best talent."

According to the study, the top-tier procurement organizations accumulate approximately $1.2 million in financial rewards per team member every year. These results can likely be attributed to companies reducing complexities along supply chains and gaining enhanced productivity assets.

On the other end of the spectrum, 50 percent of financial executives reported that, due to insufficient resources, the bottom-tier procurement performers are delivering less than 1.5 times value costs. These findings indicate the importance of having efficient, organized and highly-optimized procedures implemented throughout each procurement division.

Adjustments needed for consistency
Supply Management journalist Marino Donati also pointed out that because millennials appreciate transparency and being recognized for performance, organizations may benefit from adjusting procurement procedures to improve tracking and accountability metrics.

In the ROSMA statement, ISM CEO Thomas Derry added that increased interest in procurement value is facilitating progress.

"This is not a disruptive force, but a welcomed constructive change agent that challenges us all to 'raise our game,' both in terms of productivity and overall results," he said.

The survey report also acknowledged that procurement production varies on a number of factors, such as value incentives, which ultimately leads to inconsistent results.

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