Spend Matters welcomes another guest post from Tony Fross of LogicSource.
Introducing the Collaborative Value Creation Challenge
Last month, Shweta Shanker of GEP wrote a dead-on post on Procurement and Marketing Collaboration. One of the many important points she made is the need for procurement to provide visibility into any individual supplier’s spend relationship, which then ensures that all possible leverage is maintained.
Conversely, one might argue that marketing needs to provide upstream visibility into their activities so that procurement has adequate time to source and procure. All too frequently, marketing’s creative process eats the time theoretically allotted to sourcing and procurement. As a result, procurement is forced to provide expedient support (using the same suppliers every time) as opposed to optimal support, delivering the best possible pricing and quality for the marketing piece or program.
A little more than a year ago, one of our customers asked us to help them address this challenge. In response, we evolved our OneMarket platform from its original functionality as a P2P solution for complex goods to a “Concept-to-Customer” solution that connects marketing’s creative asset development and approvals processes directly into sourcing and procurement.
This endeavor created mutual value for clients and for us. They have increased collaboration, visibility and efficiency internally between those who develop creative assets and those who ultimately have to source and purchase products and goods that utilize those assets.
In turn, they guided us to develop a broader technology solution that brings value to a greater number of stakeholders within the client enterprise. In essence, they drove innovation out of our asset base, which we could then market to other clients.
This is collaborative value creation, and it’s at the heart of creating a true virtuous circle between suppliers and clients.
The story above illustrates a targeted effort. Recognizing a problem (“How might we better connect marketing and procurement?”) led to a solution that addressed the particular challenge. What’s harder to execute, however, is proactive and continuous value creation, where mechanisms are in place to sense opportunities to drive innovation out of the supplier network continuously.
In a past post, I noted the challenges we see in the market as companies have moved upstream, exiting the capex heavy part of their value chain. That post was focused on the challenges of integrating those players in order to have transparency and control. A related challenge, not addressed in that conversation, is how enterprises execute effective Supplier Relationship Management (SRM) in order to get innovation from their suppliers. (In response to Shweta’s post, Pierre Mitchell posted a link to an excellent presentation, based on research he did at Hackett that addresses this topic.)
I have been having this conversation with clients a lot lately. The conversation tends to vacillate between agreement that deeper supplier engagement generates opportunities for collaborative value creation processes, e.g., value engineering programs, and the thought that staffing is too lean to do it.
So here are my questions to the Spend Matters community:
Who do you think has best addressed this issue?
What companies have truly found a way to engage suppliers in continuous collaborative value creation and drive innovation out of their supplier network, despite having lean internal staffing to manage that kind of process?
What methods and tools have they used?