# Institute For Supply Management (ISM): What It Is, How It Works

## What Is the Institute for Supply Management (ISM)?

The term Institute for Supply Management (ISM) refers to a [nonprofit](https://www.investopedia.com/terms/n/non-profitorganization.asp) supply management association. Established in 1915, it is the largest organization of its kind. It provides certification, development, education, and research for individuals and [corporations](https://www.investopedia.com/terms/c/corporation.asp) in the supply management and purchasing professions. The goal of the ISM is to help advance supply management "to drive value and competitive advantage." The organization publishes the ISM Manufacturing Report on Business.

### Key Takeaways

*   The Institute for Supply Management is a nonprofit supply management association.
*   The organization was established in 1915 as the National Association of Purchasing Agents before changing its name in 2002.
*   It provides certification, development, education, and research for the supply management and purchasing industries.
*   ISM members can earn the Certified Professional in Supply Management or the Certified Professional in Supplier Diversity.
*   The ISM publishes three Purchase Managers' Indexes as part of its ISM Manufacturing Report on Business, which is considered a leading economic indicator.

## Understanding the Institute for Supply Management (ISM)

The Institute for Supply Management was founded in 1915 as the National Association of Purchasing Agents. The organization operated as such until 2002 when it officially changed its name to the ISM. As noted above, it is the largest organization that serves members of the supply management and the purchasing industries.

As of 2021, the organization had more than 50,000 members across 100 countries. The association offers services to [industry](https://www.investopedia.com/terms/i/industry.asp) professionals and corporations. The ISM's leadership is comprised of individuals who work in supply management.

The ISM provides professionals with certifications, career help, training, and peer [networking](https://www.investopedia.com/terms/n/networking.asp). Members can earn two, highly sought-after designations from the institute and become a Certified Professional in Supply Management (CPSM) and a Certified Professional in Supplier Diversity (CPSD):

*   The CPSM represents the highest degree of professional competencies and is built on an in-depth analysis of supply management functions across industries.
*   The CPSD is designed to create experts that can help guide their companies through supplier diversity issues, harness underutilized, innovative suppliers, and tap into new [markets](https://www.investopedia.com/terms/m/market.asp).

Individuals must recertify through continuing education, work experience, volunteering, or exams.

The organization releases its Report on Business, which includes the Manufacturing [Purchasing Managers' Index](https://www.investopedia.com/terms/p/pmi.asp) (PMI) and the Services (or non-manufacturing) PMI. These two indexes are published monthly by the ISM Manufacturing and Services business survey committees. They and are considered to be among the most reliable [economic indicators](https://www.investopedia.com/terms/e/economic_indicator.asp). The committees also release a monthly Hospital PMI.

> **Important**
>
> Professionals with a CPSM designation can earn as much as 10% more than their industry peers.

## Special Considerations

[Supply management](https://www.investopedia.com/terms/s/supplymanagement.asp) is often considered to be the way in which businesses purchase and use the [raw materials](https://www.investopedia.com/terms/r/rawmaterials.asp) they need to produce their finished goods. While this is just one part of the definition, there's actually more to it than that.

Supply management is a complex process that requires personnel to tackle the following:

*   Identifying, sourcing, [negotiating](https://www.investopedia.com/terms/n/negotiation.asp), and procuring a service or good that is essential to the ongoing operations of their companies according to the wishes of the organization's leaders and supervisors.
*   Formulating a strategy for developing and maintaining relationships with suppliers (and then executing on it), as well as holding suppliers accountable.
*   Utilizing technology and procedures that facilitate the procurement process.
*   Considering the theories of [supply and demand](https://www.investopedia.com/terms/l/law-of-supply-demand.asp) and what influence they have on supply.

Personnel who work in supply management and purchasing must also be adept at coordinating the [logistics](https://www.investopedia.com/terms/l/logistics.asp) involved with preproduction, inventory management, [budgeting](https://www.investopedia.com/articles/07/budgetingforcompanies.asp), workforce management, and ensuring that the business runs smoothly.

> **Article Sources**
>
> 1.  Institute for Supply Management. "[100 Years of Excellence in Supply Management](https://www.ismworld.org/about-ism/overview/)." Accessed June 21, 2021.
>     
> 2.  Institute for Supply Management. "[Inside Supply Management Magazine](https://www.ismworld.org/globalassets/pub/magazine/ismmagazine20150102-dl.pdf)," Page 20. Accessed June 21, 2021.
>     
> 3.  Institute for Supply Management. "[Inside Supply Management Magazine](https://www.ismworld.org/globalassets/pub/magazine/ismmagazine20150102-dl.pdf)," Page 25. Accessed June 21, 2021.
>     
> 4.  Institute for Supply Management. "[ISM Corporate Program](https://www.ismworld.org/for-business/corporate-program/)." Accessed June 21, 2021.
>     
> 5.  Institute for Supply Management. "[ISM Leadership & Governance](https://www.ismworld.org/about-ism/governance/)." Accessed June 21, 2021.
>     
> 6.  Institute for Supply Management. "[The Most Recognized Supply Management Certification](https://www.ismworld.org/certification-and-training/certification/cpsm/)." Accessed June 21, 2021.
>     
> 7.  Institute for Supply Management. "[The Leading Supplier Diversity Certification](https://www.ismworld.org/certification-and-training/certification/cpsd/)." Accessed June 21, 2021.
>     
> 8.  Institute for Supply Management. "[Maintain Your Supply Management Certification](https://www.ismworld.org/certification-and-training/certification/recertification/)." Accessed June 21, 2021.
>     
> 9.  Institute for Supply Management. "[ISM Report On Business](https://www.ismworld.org/supply-management-news-and-reports/reports/ism-report-on-business/)." Accessed June 21, 2021.