September 23, 2014

Are procurement the right people to handle supplier innovation?

 

The phase “Elephant in the room” is an idiom for an obvious truth that is either being ignored or going unaddressed. The expression also applies to an obvious problem or risk no one wants to discuss. The concept of supplier innovation is not necessarily new to business but as it becomes adopted wisdom among the procurement community there is an elephant in the room.

Are procurement are the right people to handle supplier innovation?

There is something almost Jekyll and Hyde about the modern procurement function. On one hand they are the gatekeepers to fortunes if you are seen as strategic or business critical, they are therefore the team you want to share your next best thing with. On the other hand, they are the team you least want to encounter as they will inevitably find a way to improve the terms of engagement in their favour.

Procurements historical big stick approach is difficult to reconcile with the modern carrot of wanting to become a preferred buyer so they can secure new products and services that provide their organisation with competitive advantage.

The tricky part is new ideas, new concepts, new practices are like the tender shoots of a plant and easily destroyed if handled incorrectly. Where poor procurement experiences have accumulated over time, organisational memory serves protectionist behaviours with buyers and makes the offer of openness from the self-same people somewhat unappealing.

A collaborative innovation economy is dependent on trust. The shift in paradigm from experiencing Mr. Hyde’s leveraged savings, forced rebates, and de-constructed margin erosion, to embracing Dr. Jekyll’s open book collaboration, joint innovation and collective value chain optimisation has left suppliers in a state of wariness wondering at what point they will be back to dealing with Hyde.

The 2000’s were the era of spend analysis, reverse auctions and buying networks. The 2010’s is a decade of big data, relationship management and disruptive innovation. We access more information and have greater transparency than ever before but we seem to know less. That is a topic for another time but hold that thought.

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Grant Watling is a Principal Consultant and Global Consulting service line leader at HICX Solutions. HICX Solutions delivers the leading Supplier Information Management platform that helps customers significantly reduce costs and risk associated with managing suppliers. HICX Global Consulting has the mission to help clients make the most of their SRM investments in the shortest possible time and specialise in providing advice on all aspects of supplier management.

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