Procurement & Suppliers' Innovation

After writing a book on Procurement & Innovation (still available on Amazon), it isn't easy to condense your thinking into 2 pages. The purpose of those articles is to help structure my thoughts and to give you short insights. So, I will try to follow this same principle here on a subject close to my heart.

There are two potential aspects to explore and here, I will be focusing on suppliers' innovation and what is the role of procurement.

What is?suppliers' innovation?

Suppliers' innovation for procurement refers to the innovative ideas, solutions, and contributions that suppliers bring to the company. It involves suppliers collaborating with the company to introduce new products, technologies, processes, and strategies that generate new revenue streams, accelerate growth, and lower costs,....

Innovation involves the practical application and transformation of ideas, leading to improved products, processes, or solutions and generating value for the companies. It is not an invention and needs to have a corporate purpose.

“Anything that won't sell, I don't want to invent. Its sale is proof of utility, and utility is success"

Thomas A. Edison

Why is it important?

In recent history, notable firms like Nokia, Kodak, and Polaroid failed to recognize crucial industry innovations, leading to their decline. Innovation is vital, exemplified by successful companies like 3M and Apple, who reinvented themselves. The average lifespan of a successful S&P 500 company is now 15 years, emphasizing the need for innovation.

Leveraging suppliers' innovation is crucial for companies for:

• Enhanced Productivity: Supplier innovation can lead to more efficient processes and technologies, improving production speed and reducing costs.
• Access to Expertise: Suppliers often specialize in specific areas, providing access to expertise and cutting-edge knowledge that a company may not possess internally.
• Faster Time-to-Market: Collaborating with innovative suppliers can accelerate the development and launch of new products, gaining a competitive edge.
• Diversified Solutions: Suppliers' fresh ideas offer diverse solutions, enriching a company's product or service offerings and addressing a wider range of customer needs.
• Strategic Partnerships: Building strong relationships with innovative suppliers fosters long-term partnerships, driving mutual growth and fostering a culture of continuous improvement.

"No Matter who you are, most of the smartest people work for someone else"

Sun Microsystems co-founder Bill Joy observed more than 25 years ago

How do you generate innovation?from Suppliers?

Generating innovation from suppliers involves fostering a collaborative and open relationship that encourages the sharing of ideas and expertise. Few steps you can be taking to best leverage them:

• Set up an agile procurement organization with the?right expertise: Dedicated teams with specific objectives and equipped with the right knowledge and internal connection is critical.
• Clear Communication: Establish transparent communication channels to exchange ideas, insights, and challenges. Regular meetings and open forums can facilitate this, both internally and externally.
• Shared Goals: Align your company's goals with those of your suppliers. Mutual objectives create a sense of partnership and motivate suppliers to contribute innovative solutions.
• Incentives: Offer incentives such as financial rewards, long-term contracts, or preferential treatment for suppliers who bring valuable innovations to the table.
• Co-Creation Workshops: Organize workshops or brainstorming sessions where your company and suppliers collaborate to generate new ideas and jointly develop solutions.
• Technology and Knowledge Sharing: Encourage the sharing of cutting-edge technologies, market trends, and industry insights to spark innovative thinking.
• Supplier Diversity: Work with a diverse range of suppliers, as different perspectives and expertise can lead to unique and innovative solutions.
• Feedback Loop: Create a feedback loop where suppliers' suggestions are reviewed and acted upon promptly, fostering a culture of responsiveness and innovation.
• Prototyping and Testing: Collaboratively develop prototypes or conduct pilot projects with suppliers to test and refine innovative concepts.
• Long-Term Relationships: Nurture long-term partnerships with suppliers, as a stable and trust-based relationship provides a conducive environment for innovation.
• Continuous Improvement: Regularly assess and evaluate the effectiveness of your collaboration efforts to identify areas for improvement and optimize the innovation process.

By actively engaging suppliers and involving them in your company's innovation journey, you can tap into their expertise and creativity to drive meaningful advancements in your products, services, and processes.?