A.T. Kearney Study Finds Only 15% - 20% of Procurement Organizations Deliver High Value

Most procurement organizations do not transparently manage or report on their productivity

By SCMR Staff

December 13, 2016

The 2016 Return on Supply Management Assets (ROSMA) Performance Check Study, “What Good Looks Like,” revealed 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 organizations.

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 organizations 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 Charted 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 businesses) 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.

“Top quartile procurement organizations embrace transparency, and report on their results in metrics that are widely accepted across the organization as measuring the tangible value delivered,” notes Thomas W. Derry, CEO of the Institute for Supply Management.

This observation was echoed by David Noble, CEO of the Chartered Institute of Procurement & Supply.

“There are many changes coming to the procurement profession in the decade. Technology will have a greater impact as automation replaces many traditional transactional functions,” he says. “The skill set will change in favour of innovation driven deal making and value creating.”