Innovation – the elusive objective for procurement in 2014

A final reminder of our webinar with IBM on Thursday this week. The topic is “How to drive supplier innovation for competitive advantage”.

How do we find and develop suppliers who are innovative, and are prepared to share their innovation with us (and preferably, not with our competitors)? Now this has become probably the hot topic in procurement for 2014, driven perhaps by the recovering economic situation and the desire for firms to get back into expansion rather than retrenchment mode. But one thing is clear- this topic can’t just be tacked on to the end of a typical supplier meeting or negotiation, which unfortunately is what often happens.

So after an hour or so of beating up the supplier about prices , poor service or delivery, why you can never get through to them on the phone, the buyer suddenly says “oh, and by the way, have you get anything really innovative to offer us – you know, that no-one else gets from you and will bring us lots of extra revenue and profit”?

When you put it like that, it’s easy to see how silly it sounds. But this is what many organisations are in effect doing. Why should a supplier go out of their way to develop innovative ideas, products and services, then choose to offer them to you as opposed to anyone else? That’s the question we have to answer if we’re serious about capturing innovation from the supply base. If you are a monopoly buyer, then maybe you don’t have to try too hard, but for the rest of us, it needs a bit more effort.

And what makes it so elusive is that in order to achieve and benefit from supply-side innovation, businesses need to pursue both some specific processes, activities and approaches, yet also achieve the “softer” cultural fit and trust with those suppliers who can drive collaborative and innovative activities. It’s the combination of the hard programme management skills and the relationship elements that has proved tricky in many cases.

It will be interesting to hear from IBM’s own procurement people in that regard during the webinar, as a firm who have always been seen as strong on process, yet are now stressing the other side of the equation. Here’s a sneak preview of one of their points.

  • To be successful innovation requires:

–      attractive and sound business case for your selected partnership suppliers

–      trust and collaboration in the relationship with your suppliers

–      staff need to be trained to nurture the relationship and think win-win (profit enhancement) not traditional win-lose (cost take out)

So get your sandwich and your cup of coffee and have a working lunch break with us on Thursday at 1 pm (UK time), or a late lunch in most of western Europe (2 pm) or breakfast in the USA, dinner in Asia ... register here anyway.

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