Speaking to the head of supplier innovation at a major consumer brand recently provided me with a fascinating insight into the difficulties procurement faces when trying to tap into the more advanced capabilities of key suppliers.
This was a major international brand, with a widely respected and advanced sourcing function, but despite this my contact spoke at length about how significant a challenge it has been to develop a process for managing supplier innovation.
Open innovation has been dabbled with (and put on hold due to a lack of concrete outcomes), while the number of key suppliers the company is working with through an official innovation programme has been reduced to single figures, and pretty low single figures, at that.
This isn’t to say that the company doesn’t see potential here, far from it. Rather, it recognises that the potential is so significant that it is willing to invest significant time and cash on developing a programme fit for purpose. In their own words, it means taking this supplier innovation concept from one that is quite “fluffy” and intangible to one that is “systemic” and embedded within the culture of the organisation.
It’s certainly not easy to realise this, but all of the category leads from across the business (both direct and indirect) are congregating in the coming weeks for an internal event to explore how supplier innovation can be exploited and owned by the categories themselves, rather than a centralised supplier-innovation function.
I’m sure this particular company isn’t the only one wrestling with the issue right now, and adding fuel to that fire is the fact that I know of at least one global consulting firm that’s quickly trying to absorb as much intelligence as it can in this crucial area, by whatever means. (They are obviously being approached by their clients, and they obviously don’t yet have the answers!)
Neither do we, but we will soon have more answers than most following the launch of our Supplier-Enabled Innovation study last week. We will be using the study to assess the state of play in the market, understand capabilities and gaps, and investigate what the leaders are doing that works – the tools they use; how they structure their procurement organisations to support it; how many FTEs they have working on it and how they track success.
Having spoken to several of our members over the past few months about supplier-enabled innovation specifically, it’s clear that the appetite to understand this complex area is there. It’s also clear that it’s the next big opportunity for procurement.
In fact, without wanting to sound overly dramatic, it could be the next big thing in business as CEOs wake up to the immense amount of potential that exists in the upstream supply chain.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.