The research collaboration between A.T.Kearney, the Institute for Supply Management (ISM) and the Charted Institute of Procurement & Supply (CIPS) revealed that top performing procurement teams improved their performance compared to the 2014 report results.
The 2015 Return on Supply Management Assets (ROSMA) performance check study, “Building a Bolder Legacy: The Procurement Mission is Under Way”, surveyed 226 senior financial executives – across the UK, US, France, Germany and Australia – and it was found that the top and the middle-tier performers were delivering from three to seven-and-a-half times the costs of investment.
The top tier performers teams, generated about $1.25 million a year in financial benefits per procurement employee. The outstanding performance of these companies is thought to come from the application of advanced methods to unlock value including through assets productivity gains, clean sheet redesign and complexity reduction.
However, the study found that 50 per cent of financial executives believe that bottom-quartile procurement teams return less than 1.5 times their cost in value. This perspective is validated due to the insufficient financial benefits obtained to cover their activities.
The study recognised as well that the performance of the procurement teams varies widely across all of procurement key value drivers, thus concluding that the procurement sector remains a function plagued with inconsistent performance in delivering strategic activities.
Despite the insufficient financial benefits obtained by 50 per cent of financial executives, the profits obtained by top and middle-tier performers display the huge benefits of having a strong and organised procurement department. Therefore, as David Noble, CEO of the Chartered Institute of Procurement & Supply, defends, “We can strengthen the position of procurement as a critical source of strategic enterprise value...”.
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