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Diamonds Are An Innovator's Best Friend


09-Oct-15 15:14

Travelling several-hundred miles to hear about how diamonds have replaced butterflies at a European life-sciences company may sound like a random way to spend an average Wednesday in September, but it provided another step on the road to understanding how leading organisations are tackling Supplier-Enabled Innovation (SEI).

 

In the last piece I wrote, I referred briefly to Dutch chemical and sciences company DSM and how it had implemented an SEI programme called Innovolve, built from the ground up by director of procurement excellence, Harm Veerkamp.

 

Having travelled to Sittard in the southern-most part of The Netherlands to meet Harm and his CPO Tim Tolhurst, I was keen to hear more about a programme that started life as long ago as November 2011.

 

Following a benchmarking exercise, which Harm used to compare the innovation performance of DSM against a number of global organisations, his first step was to establish a community of stakeholders who were interested in the concept. This numbered around 60 from all over the business, with the main criteria for involvement (other than the requisite level of intellect) being that they were enthusiastic (if a member didn’t attend a meeting twice in row, they would be kicked out of the community).

 

Fast forward nearly four years and the Innovolve programme is alive and well, with three full-time staff, formal collateral and tangible results having been achieved across the three areas DSM focuses on: assurance, success and momentum. (For the record, ‘assurance’ SEI projects are focused on reducing supply-related project risks; ‘momentum’ SEI focuses on speeding up time to market; and ‘success’ projects focus on improving margins across the value chain.)

 

But back to butterflies. One of the pieces of collateral that I was sent by Harm acts as an introduction to Innovolve and explains how procurement’s model has changed to help facilitate innovation, from a butterfly model to a diamond model. In the latter scenario, relationship managers facilitate collaboration between many different stakeholders within DSM and the supplier; while in the butterfly model, there are still many potential collaborations between supplier and DSM, but they all must be coordinated through a single account manager, so creating a bottleneck. (When illustrated graphically, the approaches resemble a diamond and a butterfly!)

 

Insects and jewels aside, DSM obviously understands the benefits of SEI. It has invested in the approach, has structured its team to encourage efficient collaboration with key suppliers and is training its team in the skills required to succeed. And the language used within its collateral makes this clear.

 

“Purchasing and Innovation, R&D and Business Managers work shoulder to shoulder through the different stages of our innovation projects to connect DSM’s innovative strength to the innovation potential of the supply market. We are looking for proactive supply partners who want to move beyond a transactional relationship: suppliers that strive to create sustainable, shared value with DSM…”

 

One interesting exercise the company uses to help with the adoption of SEI internally is called the Innovolve Quickscan – a simple benchmarking tool that it asks each business unit to undertake. There is no rocket science here, but a simple Excel-based survey split into the four areas of Strategy; Processes; People and Outcomes.

 

Within these four areas, simple statements are made and the BUs are asked to agree or disagree. For example:

  • Dedicated time can be spent on supplier innovation because resource time has been allocated to support supplier innovation.
  • Regular supplier innovation meetings are held with cross-functional participation.
  • A fair share of R&D expenses, customer of choice positions are known for those innovative suppliers that are selected to cooperate with.

From spending time with DSM and seeing the commitment that has been made, I was again struck by how SEI should never be seen as a quick win. CPOs must invest in this area and continue to support it, evangelise it, even, over several years if it is to become embedded in the DNA of a business.

 

And for this to happen, you need key staff to be consultative and challenging; but most importantly to possess a steely determination to succeed and change the status quo.



Find more blogs on Supplier-Enabled Innovation (SEI) at our Ovation site. To register your interest or to find out more about our Supplier-Enabled Innovation Compass, contact us here.

This article is a piece of independent writing by a member of Procurement Leaders’ content team.


David Rae David Rae is Content and Community Director at Procurement Leaders. He is responsible for content strategy and community-driven initiatives and draws on 18 years covering procurement, finance and technology, for senior business leaders. Follow David on Twitter: @david_rae

 
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