Procurement – The Innovation Mavens

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Alan Day, Chairman and Founder State of Flux, discusses how Procurement can become idea mavens for their organisation and how information on supplier innovation can be harnessed through SRM.

library-488677_1280In his book ‘The Tipping Point,’ Malcolm Gladwell describes ‘the law of a few’ and how the success of a social epidemic (or social change) relies on a group of individuals with a particular and rare set of social gifts. The individuals are grouped into connectors, mavens and salespeople/persuaders. The mavens are "information specialists" or "people we rely upon to connect us with new information." They accumulate knowledge, especially about the marketplace, and know how to share it with others.

Procurement is uniquely positioned to apply a little of Malcolm Gladwell’s thinking and could be an innovation maven for the organisation.

With the recent advancements in the digital age and the rapidly changing marketplace, no organisation can afford not to embrace innovation. So why are some good at it and others not? Often the main difference is cultural. Those organisations that have innovation in their DNA find a way to make innovation happen, others find a way to justify sticking with the status quo.

Through our SRM research, we hear how difficult it is to harness supplier innovation and manage ideas or opportunities brought to organisations. Typically there are a number of reasons why they struggle to manage external innovation. Common reasons include confusion on what innovation is, difficulty in navigating the organisation and lack of resources to name just a few.

Suppliers have visibility of what your competitors are doing and very often have a better view of what is happening across an organisation than the organisation itself. This makes them well placed to bring the innovations, good ideas or improvements to the table.

So how can the procurement function help foster or harness innovation and go about changing the organisational culture or DNA to better embrace innovation?

The easiest and first thing to do to make a cultural change is to look at individual and team behaviour towards innovation. Is the environment conducive to continuous improvement? Are individuals free to make mistakes (and learn from these)? Do people get recognised and rewarded for innovative ideas and approaches they bring to their role, the department and the organisation?

Next time when you are reviewing a supplier, why just evaluate the product or service? Why not look at how they run their businesses, including how they manage their people; their business strategies and approaches; their processes, policies and the technologies used to support their business. In essence, what are the little (or big) things they do that make them great?

The trick is to be ‘unreasonably curious’ about how suppliers run their businesses. Treat it as a source of learning and look for ideas and ways your organisation could improve.

Three areas that can help with innovation ideation

There are three areas procurement can focus on to unlock ideas when interacting with suppliers:

  1. Market and supplier information – be a student of your supplier’s business by understanding:
  • What’s happening in your supplier’s organisation, their marketplace and with their supplier base, and how they are managing this.
  • What data you can gather on the supplier to give you a better idea of how they run their business. What data you can find that helps you understand how they build up their costs.
  1. Innovation ideation – create an environment for innovation to thrive and communicate what it means in your organisation:
  • Continuous improvement – understand what KPIs are needed to measure success and drive continuous improvement; understand what behaviours these KPIs will drive; ensure there are 360º or perception measures on the relationship (compared with KPIs on the product or service); build a continuous improvement environment or culture.
  • Innovation ideation – be sure to communicate what innovation means for you and your organisation and create a process to help suppliers navigate your organisation, submit ideas, and respond to your needs and challenges. Create an environment (be a customer of choice) that allows the supplier to feel comfortable suggesting new ideas, trying things and jointly willing to make mistakes.

Innovation is often described as if it were a single event. Terms such as, a eureka moment, a light bulb moment or an ‘a-ha’ moment are loosely used, but in reality it is most likely the result of sustained periods of work.

  1. Lastly risks – understand areas of potential risk. Innovative ideas often arise in challenging situations:
  • Supply chain risk – what is the likelihood of disruption to the continuity of supply? What is the likelihood of events that may change the competitive nature of supply (quality or cost)? What is the likelihood that they or one of their suppliers may do something that effects your reputation?
  • Supplier vulnerability – what is the likelihood that the supplier may go out of business?

In addition to the above, there are other practical things you can do to help better foster supplier innovation. If you don’t already, start:

  • Listening to suppliers’ ideas and provide feedback
  • Running supplier innovation days
  • Connecting groups of suppliers to work on areas of the value chain together
  • Recognising (and rewarding) suppliers for their good ideas
  • Recognising (and rewarding) your procurement team for fostering or supporting good ideas from suppliers

But above all, it needs individuals to embrace innovation. It needs individuals to think about how to continually improve at all levels: role, department and the organisation. And, it needs you to become an innovation maven and bring those good ideas from suppliers back to your organisation.

Alan can be reached on +44(0)2078 420 600 or email 

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