Assessment of Supply Management’s Value to the Enterprise

The ROSMASM Performance Check helps sourcing professionals demonstrate their contributions to shareholder value

ChicagoFeb. 13, 2014A.T. Kearney, the Institute for Supply Management (ISM) and the Chartered Institute of Purchasing and Supply (CIPS) —three institutions supporting the supply management profession—formed an alliance to increase recognition of the discipline as a key driver of strategic business value. The alliance launched the first of several initiatives to support this goal: the ROSMASM Performance Check.

Return on Supply Management Assets (ROSMA) is a performance measurement standard that helps procurement organizations quantify their financial contributions to companies using an easily identifiable metric. Derived from classic financial frameworks (such as DuPont’s investment performance measures) and shareholder value methods (such as economic value added), it helps supply management executives demonstrate the function’s financial impact on the bottom line.

ROSMA captures hard savings benefits and the tangible value created from advanced practices, supplier innovation, and the financial reengineering of the supply chain by indicating the overall financial productivity of supply management assets.

“Procurement’s responsibilities have radically changed during the past 20 years, from a tactical service function to a proactive, strategic partner to the rest of the business,” said Thomas W. Derry, ISM chief executive officer. “To meet the intricate mandates now required, the profession needs a mechanism for communication with the C-suite to increase its recognition, connect to shareholder value, and consistently and universally track and measure its contribution and performance.”

ROSMA Results Available to Procurement Professionals and CPOs

Supply management organizations can participate in the ROSMA Performance Check online via the CIPS and ISM websites.

Universal adoption of ROSMA provides numerous benefits:

  • Procurement functions can benchmark their performance against their respective markets and industries.
  • As a standard structure on metrics that the financial community understands and endorses, ROSMA reflects the mindset of chief financial officers, encouraging their buy-in to support the function.
  • As a powerful scorecard component, its results can be used to explore gaps, set priorities, and steer supply management toward a results-driven leadership mindset or model.
  • The chief procurement officer (CPO) can use it to establish priorities around financial results improvement, talent capability building and organizational development.

The ROSMA Performance Check differs from a typical point-in-time survey. Participants can use it annually to compare how procurement’s performance changed.

Supply management organizations can take the assessment at the enterprise level, or within business units and divisions. Completion takes approximately 30 to 45 minutes. Information provided is kept strictly confidential.

Immediately upon completion, participants receive their organization’s complimentary ROSMA score, and a customized report that assesses their procurement performance, compares it to leaders and followers, and identifies improvement opportunities.