Like many functions, procurement teams are feeling the pressure to deliver innovation for their internal business partners. Not only are buyers expected to generate savings, but they are also asked to produce new products, ideas or technologies for the business.
Yet, the main source of innovation for business – that is, the startup community – is largely unknown to purchasing executives. Where procurement engages with small and medium-sized enterprises (SMEs), it is beset with disappointments from both parties as working cultures clash.
How do we overcome these challenges? And how should CPOs change their thinking to better-engage startups? These are some of the challenges Procurement Leaders will look to help delegates solve at its upcoming Asia Pacific Procurement Congress.
As chair of the event, I am excited to see so many senior procurement leaders from throughout the region already confirmed to attend, making this the biggest Congress yet.
We will be focusing on procurement’s ongoing journey as a trusted business partner, as well as zeroing in on the question of delivering innovation for the business through the startup community.
One of the main challenges the function faces is transforming potential startup projects into successful outputs – such engagements frequently go wrong.
Startups struggle to manage the workloads created from the risk and compliance documentation required to work for a multinational corporation (MNC). MNCs work in long time-horizons, with the onboarding process itself stretching over many months. Some startups fold while waiting to be paid.
On the other side, MNCs somewhat bemoan the lack of commercial astuteness of startups, whose own cultural constraints preclude scaling or industrialisation.
To workshop this, we are inviting some of the region’s most innovative startups to discuss the problem directly with CPOs and create a roadmap to overcome the challenges of sourcing innovation from startups.
I also asked some of our startups to reflect on where MNCs can find opportunities in working with SMEs.
“They need to focus on thinking big, but starting small,” notes Feng Yuan Liu, cofounder at Basis AI. “Design for the minimum viable product that, if successful, can sufficiently make the case for subsequent stages, but is small enough so it isn’t a disaster if it fails."
This requires a change in mindset from corporate procurement professionals. Startups are not normal suppliers. Buyers need to correctly size their contracts or tenders (if necessary) to account for the capabilities of SMEs and plan accordingly.
Similarly, there needs to be an expectation – from both sides – that this engagement won’t be the same as their usual interaction.
“For MNCs and startups to work well together, there needs to be mutual understanding and managed expectations between both parties,” says Ken Ooi, founder at Tenderboard.
Buyers will need to demonstrate skills beyond supplier relationship management and collaboration: they must adapt to work with an organisation that has an entirely different culture and set of expectations. If procurement teams want to extract this innovation, they need to thoroughly understand these unique features of working with startups.
We’ll be highlighting the thoughts of several of our startups over the coming weeks, so watch this space for more updates from our local community of technologists.
Visit the Congress website to see the latest agenda, attendee breakdown and more.
Procurement Leaders’ Asia Pacific Congress 2019 takes place at the Pan Pacific Singapore on 27 and 28 November 2019. Contact firstname.lastname@example.org for further information.
This article is a piece of independent writing by a member of Procurement Leaders’ content team.