Essential to the success of any organization are all-encompassing insights into the activities that define its mission. Our Return on Supply Management Assets (ROSMA℠) framework is a revolutionary performance measurement standard that empowers procurement by quantifying its financial contributions. Working with CPOs and CFOs from leading multinational companies, A.T. Kearney identified seven drivers required for procurement leaders to measure procurement performance continuously and, using accepted financial frameworks, created the ROSMA framework. ROSMA translates procurement's created value and required investments into a metric that captures the CFO's attention, demonstrates the function's financial impact on the bottom line, and allows it to continuously compare and improve performance.
ROSMASM Performance Check is a complimentary 30- to 45-minute online assessment for supply management organizations. It is the first of several initiatives to increase recognition of the supply management profession as part of a newly formed alliance of A.T. Kearney, the Institute for Supply Management (ISM), and the Chartered Institute of Purchasing and Supply (CIPS).
Unlike other assessments, participants can use it each year to check how procurement’s performance has changed. Immediately upon completion, participants receive a complimentary ROSMA score and a customized report that compares their performance with leaders and followers, and identifies opportunities for improvement.
Supply management affects a significant portion of the business value chain, and leaders continue to seek the right way to evaluate their procurement process, measure their team’s contributions, and identify the key factors for sustainable success. The ability to do this on a continuous basis is a prerequisite to boosting procurement’s status. More importantly, the right tool can demonstrate the value of procurement to all CXOs, including the chief financial officer.
ROSMA is measured by dividing financial results delivered by the required investments in supply management assets (see figure).
Procurement has evolved over the years from traditional fiduciary steward to forward-thinking business partner with a seat at the executive table. ROSMA gives procurement teams a common performance metric in the financial component of their balanced scorecard.
Early adopters of the ROSMA approach have documented gains and earned the support and endorsement of their CFOs. The benefits are numerous:
- Procurement can benchmark its performance against corresponding markets and industries
- Built on metrics that the financial community already understands and endorses, ROSMA reflects the CFO mindset, encouraging their buy-in to support the function1
- As a powerful scorecard component, the results can be used to explore gaps, set priorities, and steer supply management toward a results-driven leadership model
- ROSMA can help CPOs establish priorities for improving financial results, building talent, and developing the organization
Although it does not address all aspects of a balanced scorecard, ROSMA is the first step to helping your supply management team get the recognition it deserves as a results-focused, strategic business partner.
1 ROSMA was created using accepted financial frameworks such as DuPont’s investment performance measures and shareholder value methods such as economic value added.
“We determined that the answer lay not in establishing an all-encompassing scorecard or aligning on transactional level benefit calculations, but in applying proven and well-established financial management frameworks to position procurement’s value in the language of the CFO.” — CPO of multinational beverage and brewing company
“ROSMA has a transformative effect. We have found a new level of performance as a team, and more important, it has indeed enhanced our credibility with our business partners.” — General manager of group procurement of leading multinational dairy company