ROSMA and Supply Chain in 2020

Iasta recently hosted our user conference (Iasta reSource) in Indianapolis on September 9-11, 2014. The conference was a great opportunity for our clients to come together and network with peers, attend sessions led by fellow Iasta clients sharing their success stories, and participate in interactive sessions lead by experts such as A. T. Kearney.

One of my favorite sessions during the conference was led by Marc Hochman at A. T. Kearney titled, “Supply Team 2020”. Marc discussed the progression that procurement needs to make between now and 2020 to be at an optimal level of influence.

Marc started the discussion by examining top performers in the Procurement industry and what they are doing differently than the competition. I’ve summarized the key points below:

1-Don’t be “stuck in your office”

At Iasta, we embody this theme. We believe interacting face-to-face with the internal customers is a critical component to success. Similar to sales, visiting the customer on their “home turf” speaks to our commitment to collaboration, not control.

Marc had an interesting way of speaking to this theme: Control of spend is not necessarily the goal; but rather influence of spend. There is a difference!

2-Measure everything

As a regular practice, procurement pros in the industry measure everything. A key component of this practice is that the Procurement organization aligns itself with, and is accountable for, the same standards of performance across the rest of the business. As I’ve brought up in several previous blogs, it’s important that Procurement speak the same language as the rest of the business. Without that piece, communicating the value Procurement brings to the business becomes a tremendous challenge.

One interesting way Procurement is measuring and communicating this value is through the use of the ROSMA framework. ROSMA (Return on Supply Management Assets) was developed by A. T. Kearney as a performance management standard that gives Procurement organizations a way to quantify and communicate the financial value it is delivering to the organization.

Simply put, a ROSMA score provides a measurement of how much financial gain is realized by the organization versus the amount of investment being made. For example, a ROSMA score of 4 indicates that for every one dollar being invested in the procurement organization, four dollars is being returned. Further, the ROSMA framework provides an assessment of how a particular organization compares to the leaders and laggers in the industry.

As a software company, of course this discussion triggered us at Iasta to think about how our analytic reports can be leveraged to report on these findings! I digress on that, but the entire discussion was one that I thought was very thought provoking. Communicating value to the business is almost always a pain point for the Procurement organization, so it was interesting to hear this method to address this business issue and share a way for Procurement to continue to increase its influence.

How is your procurement team preparing for supply chain in 2020? Share your thoughts by commenting below or tweeting me at @iasta_chadhinen.

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