The automotive sector has long been seen as a benchmark for procurement excellence, so it’s not surprising that the winner of this year’s Procurement Leaders Award for Innovation heralds from that same industry.
Brose, the Coburg, Germany-based tier-one supplier to the OEMs was recognised for a specific procurement project where a breakthrough in car doors was made possible thanks to a relatively new Supplier-Enabled Innovation (SEI) programme. The door module produced in collaboration with one of its suppliers is 40% lighter than rivals and opened the eyes of the wider business to the opportunities that exist within the supply base.
What I found interesting about this (and I’ll go into a little more detail about the project itself later) is how CPO Sandro Scharlibbe described the environment of procurement and innovation at Brose, itself a well-established German auto supplier. While procurement is clearly crucial to Brose’s success, and enjoys good visibility and influence across the business, this seems more to do with the traditional areas of procurement – price, quality, on-time delivery…
When it comes to product development, however, that influence was clearly less significant. “It was clear that the image of procurement inside research and development, as an example, was pretty bad and so too was the perception that we had of them,” Scharlibbe told us for an article produced for our SEI Compass report.
And this, I think, is true across the board. When automotive is talked about as being more advanced than other sectors, it’s the traditional areas of procurement being referred to and not the emerging field of SEI. Rather than a single sector being ahead of others in terms of Supplier-Enabled Innovation, there are pockets of great work being done in various industries and regions, and, just as importantly, large swathes of inactivity.
That said, Scharlibbe and his team have clearly recognised the opportunity and are going about changing things. He put an innovation management organisation and innovation board in place within the procurement function and started to “listen”, to both the business and his suppliers. As a result, communication channels have been opened and cross-functional teams put in place to assess supplier ideas and business needs.
Since the programme was established, 200 innovation ideas have been identified with 22 of these being ear-marked for mass production. But it’s the car-door example that continues to stand out. Following supplier selection, the supplier and Brose attended technology workshops together and worked closely on project scoping before an exclusive development and cooperation contract was signed. Six months later, the supplier presented its idea and the product then went into production.
Central to all of this, naturally, was communication and collaboration, but we must also return to this concept of trust. The supplier in question had to buy into working with Brose before a production contract had been signed, and, one assumes, had to make significant financial and other investments in order to deliver the pre-development project.
Scharlibbe sums the situation up perfectly, when he says, “Great suppliers in our industry are limited; the best ones can pick and choose who they want to work with and invest resources in – knowing this is key to becoming a preferred customer”.
CPOs can get involved in our Supplier-Enabled Innovation think tank, by completing the contact form here.