From SCDigest's On-Target e-Magazine
- July 21, 2015 -
Supply Chain News: Keys to Successful Supplier-Enabled Innovation
Focused Teams Deliver Better Results than Broad "Innovation Culture" Approach Report Finds
SDigest Editorial Staff
Most but not all companies would like to drive their own innovation in part through contributions coming from their supply base, but clearly some companies are doing that much more effectively than others.
That’s the obvious conclusion from a new report on the topic from the analysts at Procurement Leaders.
SCDigest Says: |
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Trying to drive SEI from diffusing the procurement culture with a supplier-innovation focus is not nearly as effective as having a smaller group specifically targeted on such strategies. |
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What Do You Say?
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The concept is a simple one. By tapping into the capabilities and innovations of the supplier community, procurement is able to dramatically increase the volume of research and development being done on behalf of their companies.
Seems obvious that companies should be tapping into that kind of resource systematically and consistently, but the report says that few companies are able to so that despite the clear benefits.
The report is based on a global survey of 58 procurement executives, and one on one interviews with about 20 members of that group.
Moving to the next level of Supplier-Enabled Innovation (SEI) is not easy, the reports warns, noting that "internal clients may not be initially supportive, ownership issues around intellectual property can arise, and you may not have yet the right skills in the function to recognize, let alone promote, supplier innovation."
One key issue, the report finds, is that there is hardly a widely accepted definition of what Supplier-Enabled Innovation really means. That said, about two-thirds of respondents said that SEI should not be viewed as something special, but rather it should be intertwined with all the other tasks that procurement managers perform as a matter of course. However, an important block instead sees SEI as a "specific program, a set of dedicated workstreams, where the business invests resources, monitors progress, and builds the innovation output into organizational priorities."
Surprising or not, the latter group - those that view SEI as a separate program - in fact drive more value from their efforts.
"The more proactive and targeted the procurement function is in enabling the innovation, the greater the impact," the report notes.
The challenge, of course, is for procurement to find a way to connect the innovation needs of internal managers in product development, supply chain, etc. with outside suppliers in a way that fosters joint innovation.
"The main value-add of procurement comes from linking the capabilities that suppliers possess with internal stakeholder needs," the report notes. And only procurement can really drive these innovation-driven relationships, through stronger connections with suppliers at multiple levels. Indeed, it is the strength of the connections with suppliers that is the top factor in innovation output.
(Sourcing and Procurement Article Continues Below)
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