Procurement-Driven Innovation from Pieter Swarts at ProcureCon

What you’re looking for at an event like last week’s ProcureCon conference is a speech, discussion or workshop that makes you sit up and really focus. Even better if there are several that hit that button. It is impossible to keep at full concentration for 3 days, so you need a very strong message, great communication skills or something very different to really grab the audience.

This week we’ll feature some of the sessions that succeeded in grabbing our attention, starting today with Pieter Swarts, Chief Procurement Officer of the leading Dutch telecoms firm, KPN. The presentation was titled Procurement Driven Innovation – that has become a bit of a cliché at procurement events this year, but in this case it included a description of some very tangible actions that the firm is taking. Swarts is a 27-year veteran of procurement, the last 15 as CPO in several different firms, and his presentation was notable for both its practicality and also his clear passion for the topic.

Swarts started by saying that procurement strategies based on the Kraljic Model are limited because they focus on improving the status quo of the company, not “driving renewal” as he put it. Such strategies will not be the catalyst for change, and he also pointed out that cost-cutting has its limitations - “you can’t shrink your way to greatness”. He talked about different sourcing models; creative, adaptive, lean and transformational. How can procurement contribute to these?

He sees procurement as the link and intermediary between the internal and external stakeholders of the business. His aim is to create a “procurement innovation community”, to simplify and extend the use of “innovation contracting”, to run proof of concepts with suppliers, to experiment and be agile. Procurement can support and promote ideas from the market that relate to goals including revenue generation, cost, technology and quality improvement, and CSR.

KPN has set up a “procurement innovation hub” as the first step towards an innovative business focus for the function. Now, as Swarts said, suppliers should expect that KPN is ready to:

  • Discuss your ideas and initiatives to drive innovation
  • Jointly explore new models relating to contracting for innovation
  • Provide an “Innovation Desk”
  • Re-direct a proportion of its spend to invest in innovative solutions and suppliers
  • Share risks and rewards of the joint programme.

We particularly liked that list of actions (or aspirations if you like). Equally, KPN will expect their key suppliers to apply the same principles to look for innovation through the whole supply chain; so at second tier and beyond. That is another powerful point; often the real innovation can come from small firms who are our suppliers’ suppliers, so encouraging that whole supply chain focus is very sensible.

As we said earlier, there is much talk about capturing supplier innovation at the moment, but considerably less real action. Delegates certainly got the impression that here was a CPO and a firm who are taking it seriously and genuinely taking actions to make a difference. And we hope to keep in touch with Pieter Swarts and perhaps get an update from him on how it’s going in a few months time.

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