Search
Close this search box.

Table of Contents

Institute for Supply Management (ISM)



Definition

The Institute for Supply Management (ISM) is a professional association for supply management and purchasing professionals. Established in the United States, ISM aims to improve business practices through research and education in supply management. It also produces the ISM Manufacturing Index, a key economic indicator often used to assess the economy’s health.

Phonetic

Institute for Supply Management (ISM): Institute: /ˈɪns.tɪ.tjuːt/For: /fɔːr/Supply: /səˈplaɪ/Management: /ˈmæn.ɪdʒ.mənt/ISM: /ˈaɪ.ɛs.ɛm/

Key Takeaways

Key Takeaways about Institute for Supply Management (ISM)

  1. Professional Development: The Institute for Supply Management (ISM) is renowned for fostering professional development in the field of procurement and supply management. It provides a balanced mix of education, research, and certification opportunities, thereby playing a crucial role in helping procurement and supply management professionals enhance their skills and efficiency.
  2. Certification and Training: ISM is known for its certification programs, the most prominent being the Certified Professional in Supply Management (CPSM) and Certified Professional in Supplier Diversity (CPSD). These globally recognized certifications serve to establish the competence of supply management professionals and offer a benchmark for industry standards.
  3. Leadership in the industry: ISM focuses on providing leadership and valuable insights in the supply management industry. It plays a leading role in promoting best practices, industry standards, and pioneering concepts through its comprehensive research and publishing initiatives, along with hosting networking events and conferences.

Importance

The Institute for Supply Management (ISM) is a highly influential body in the world of business and finance due to its role in providing critical economic data, offering professional development opportunities, and fostering advanced supply chain management practices. Its importance stems from the monthly release of the ISM Manufacturing Index and the ISM Non-Manufacturing Index, which offer valuable insight into the economic health of the manufacturing and non-manufacturing sectors, respectively, acting as significant indicators of overall economic trends. Furthermore, the resources and education provided by the ISM help to create a standard of excellence within the supply chain profession, contributing to efficiency and productivity across industries. Thus, the ISM significantly impacts businesses, financial markets, and economic policy globally.

Explanation

The Institute for Supply Management (ISM) serves a vital purpose in the business and financial world as a non-profit professional association for supply management and purchasing professionals. Established in 1915, its core goal is to enhance the value and performance of procurement and supply chain management practitioners and their organizations globally. This means it is a key resource for those in the supply management field, as it provides valuable opportunities for professional development, research, and standards of excellence.The ISM is used to provide a benchmark for economic indicators, which can potentially influence business and investment decisions on a global scale. The organization publishes a monthly report, the ISM Manufacturing Report, which is a significant indicator of the economic health of the U.S. manufacturing sector. It includes the Purchasing Managers’ Index (PMI), a weighted average of new orders, production, employment, supplier deliveries, and inventories. This index and the report as a whole are regarded as reliable near-term economic barometers, as they provide timely information that’s highly valued by economists, investors, and analysts for economic forecasting.

Examples

1. Manufacturing Sector: One of the main real-world examples of the Institute for Supply Management (ISM) is its role in providing up-to-date and critical data for the manufacturing sector. ISM releases a monthly report called the Manufacturing Purchasing Managers’ Index (PMI), which includes data collected from manufacturing supply executives about production, new orders, supplier deliveries, inventories, and employment. For example, in 2020, many economists eagerly awaited the ISM’s report to understand the economic impact of the COVID-19 pandemic on the manufacturing sector.2. Service Sector: Another important ISM report, the Non-Manufacturing Purchasing Managers’ Index (NMI), reflects data from the service sector. Real-world businesses providing healthcare, education, finance, agriculture, construction, and other non-manufacturing services rely upon this report for critical insights about business activity, new orders, supplier deliveries, inventories, and employment. 3. Strategic Decision Making: ISM plays a crucial role in real-world application for Supply Chain Managers or Operations Managers. For example, a national retail corporation will closely monitor ISM reports to analyze supplier deliveries and inventories, which would accordingly define their procurement strategies and decisions on how much inventory to hold or when to place orders, maximizing their efficiency and reducing costs.

Frequently Asked Questions(FAQ)

What is the Institute for Supply Management (ISM)?

The Institute for Supply Management (ISM) is a not-for-profit professional association for supply management and purchasing professionals. It was first established in 1915 and is one of the most recognized organizations in its field, providing its members with education, research, and certifications.

What does the ISM do?

ISM offers resources like educational programs, research reports, and certification opportunities in the field of supply management. It also conducts surveys and publishes indexes including the Purchasing Managers’ Index (PMI) which is considered a critical economic indicator.

Can anyone join the ISM?

While ISM serves professionals in the field of supply management and procurement predominantly, anyone interested in the field can join. It can be beneficial for students, academics, or business professionals who are involved in supply chain operations.

What is the Purchasing Manager’s Index (PMI)?

PMI is a monthly survey conducted by the ISM which provides information about manufacturing activities in the economy. PMI above 50 typically indicates an expansion of the manufacturing sector while a PMI below 50 indicates a contraction.

Why is the ISM PMI considered an important economic indicator?

The ISM PMI is considered a leading economic indicator as it provides insights into the health of the manufacturing sector, which plays a crucial role in the overall economy. PMI is watched closely by investors and policymakers to understand economic trends and make forecasts.

What is the Certified Professional in Supply Management (CPSM) certification?

CPSM is a professional certification offered by the ISM for professionals in the supply management field. It validates the knowledge, skills, and abilities of individuals in procurement and supply management and is globally recognized.

How can the ISM benefit my business?

ISM can provide up-to-date industry data, insights, and trends which can help improve your business decisions. Furthermore, utilizing their professional development and certification programs can enhance the skills of your supply management team.

Does ISM provide networking opportunities?

Yes, ISM provides numerous networking opportunities through its conferences, seminars, and member communities. These platforms build connections with professionals across the globe, enabling the sharing of knowledge and best practices in supply management.

Related Finance Terms

Sources for More Information


About Our Editorial Process

At Due, we are dedicated to providing simple money and retirement advice that can make a big impact in your life. Our team closely follows market shifts and deeply understands how to build REAL wealth. All of our articles undergo thorough editing and review by financial experts, ensuring you get reliable and credible money advice.

We partner with leading publications, such as Nasdaq, The Globe and Mail, Entrepreneur, and more, to provide insights on retirement, current markets, and more.

We also host a financial glossary of over 7000 money/investing terms to help you learn more about how to take control of your finances.

View our editorial process

About Our Journalists

Our journalists are not just trusted, certified financial advisers. They are experienced and leading influencers in the financial realm, trusted by millions to provide advice about money. We handpick the best of the best, so you get advice from real experts. Our goal is to educate and inform, NOT to be a ‘stock-picker’ or ‘market-caller.’ 

Why listen to what we have to say?

While Due does not know how to predict the market in the short-term, our team of experts DOES know how you can make smart financial decisions to plan for retirement in the long-term.

View our expert review board

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More