What are the key factors for successful supplier innovation management?

1 Define your innovation goals and strategy

Before you engage with any supplier, you need to have a clear vision of what you want to achieve through supplier innovation. What are the specific challenges or opportunities that you want to address? What are the expected outcomes and benefits? How do you align your innovation goals with your overall business strategy and objectives? Having a well-defined innovation strategy will help you communicate your expectations, select the right suppliers, and measure the results.

2 Assess your supplier's innovation capability

Not all suppliers are equally capable or willing to innovate with you. You need to evaluate your potential or existing suppliers based on their innovation capability, which is the ability to generate, develop, and implement new or improved solutions. You can use a supplier innovation capability assessment tool, such as the one developed by the University of Cambridge, to measure and compare your suppliers' innovation performance, culture, processes, resources, and networks. This will help you identify the best fit and the most promising partners for your innovation projects.

3 Establish a collaborative relationship

Supplier innovation requires a high level of trust, commitment, and collaboration between you and your suppliers. You need to establish a mutually beneficial relationship that fosters open communication, joint problem-solving, and knowledge sharing. You also need to define the roles and responsibilities, the scope and objectives, the milestones and deliverables, and the incentives and rewards for each innovation project. You can use a formal agreement, such as a joint development agreement or a collaboration contract, to document and clarify these aspects.

4 Manage the innovation process

Supplier innovation is not a one-time event, but a continuous process that involves multiple stages and activities. You need to manage the innovation process effectively and efficiently, from idea generation to implementation and evaluation. You can use a structured framework, such as the supplier innovation process model by Tidd and Bessant, to guide and monitor the innovation process. The framework consists of four phases: scouting, selection, development, and diffusion. Each phase has specific tasks, tools, and techniques to help you manage supplier innovation.

5 Evaluate the innovation outcomes and impacts

The last but not least factor for successful supplier innovation management is to evaluate the outcomes and impacts of your innovation projects. You need to measure and analyze the results, both qualitatively and quantitatively, in terms of performance, quality, cost, time, customer satisfaction, and competitive advantage. You also need to assess the impacts, both positive and negative, on your business, your suppliers, your customers, and your stakeholders. You can use a balanced scorecard, a SWOT analysis, or a return on investment calculation to evaluate supplier innovation.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?