Supply Chain Digest recently abstracted a story from CPO Agenda that does a good job summarizing how in an ideal state, procurement teams can act as "innovation scouts" by working more closely with suppliers. The article references the case of Rehau, a European company, which has assigned 16 team members (out of a 140-person strong procurement group) to serve as "innovation scouts". According to the story, "the scouts have two main functions: (1) to have a 'helicopter view' of the market and look at how good ideas, especially from suppliers, could be applied inside the company; and (2) to be a coordinator between the engineering staff and the procurement managers to help guide innovation projects through to completion ... It's not a full-time position, but one that typically accounts for 20-30 percent of a person's time over the course of a working year, according to the company." In one case, these efforts result in 50% cost savings for an automotive component.
What can we learn from Rehau's example? For one, procurement leaders must mandate that part of the job description of their sourcing professionals should be to drive collaborative innovation with their suppliers. But I question whether or not taking 10-12% of a team and telling them to focus less than a third of their time on these efforts is enough. Those who are serious about driving innovation with suppliers should, most likely, have small teams dedicated to working alongside strategic supply partners on regular basis. Over the long-term, innovation can't be a hobby, and while it may pay to have the troops "scout it out" on a part-time basis, the largest paybacks will emerge when procurement organizations dedicate team members -- and sign them up to achieve savings numbers -- through joint cost take out initiatives (not to mention innovation initiatives) with their suppliers.
- Jason Busch