©2018 by Jean-Louis Moreau

Procurement Consultant - Interim Executive - Speaker
RFI stands for Request For Innovation

Continual Procurement strategy planning and subsequent transformation initiatives are instrumental in delivering Year-over-year cost savings while maximizing operational efficiency and improving competitive advantage.

 

Innovation is one of the basic ways to establish and maintain a competitive position in the marketplace. Companies create the appropriate internal environments conducive to innovation. However, they are failing to identify, cultivate and take advantage of theespecially large innovation potential that lies among suppliers.

Operating under a continuous planning cycle, it is therefore important to incorporate Supplier Enabled innovation (SEI) as a key element for consideration in strategy development. 

 

The best way to efficiently capture SEI is to have a systematic and controlled approach in five steps:

 

1 - Ensure to be recognized as a Customer of Choice for the targeted supply base — Customer/supplier activities that are collaborative tend to build trust and subsequently foster supplier innovation transfer.Suppliers know exactly what their customers do and need in terms of innovation, but before capturing SEI it is essential to be recognised as a Customer of Choice and a key account to work with. It takes a professional SRM and a respectful behaviour such as paying on time, being open to early engagement and demonstrating enough transparency to communicate promptly good and bad news.

2 - Enforce Early Buyer Involvement into processes — The earlier Procurement is involved in projects, the greater the value that will be generated. Procurement must enable all stakeholders by providing clear, structured guidance with defined KPI’s and outputs. Such a formalized approach ensures that key stakeholders have the framework and incentive needed to drive supplier innovation. Including Procurement in the early phases of project management, starting with idea generation, is key to capturing SEI.

3 - Build internal stakeholder alignment — This is simply making sure that information can flow freely between individuals and teams within the organization. Eliminate the silo approach to procurement and foster the alignment needed for an efficient strategic sourcing process conducted by multifunctional teams. Supplier innovation is preceded by supplier collaboration and this requires internal alignment of all functions involved in Source-to-Pay.

4 - Foster Supplier connectivity —  Once internal stakeholders are aligned, the most important aspect for SEI is supplier connectivity. Procurement should be equipped and positioned to link the correct suppliers and their capabilities with the most appropriate internal stakeholders. Procurement should use its unique interface position to increase connectivity, alignment and collaboration with chosen suppliers.All mechanisms for knowledge transfer from supplier to customer should be in place, starting with the necessary contracting material to protect each other's interests.

5 - Implement the appropriate technology—To work seamlessly with suppliers and unlock previously unrecognised innovation, a new structured approach is required, supported by state-of-the-art, easy-to-use technology. Businesses using Procurement technology to enhance their processes and deliver a high return are leagues ahead of those who do not. Beyond basic ERP, specific Procurement applications combined with continuous business Intelligence will enable the whole ecosystem to expand.