October 29, 2021
Written by
Alex Short

Five steps to capturing supplier innovation

Supplier Enabled Innovation (SEI), along with Open Innovation, is being dubbed by many forward thinking Procurement Leaders as the future of procurement. As we are all well aware, the greatest untapped potential for innovation lies within our supply chains. But the question remains: what’s the best way to capture Supplier Innovation?

Stepping stones

To try to answer that question I’ve set out our 5 steps to capturing Supplier Innovation:

1. Customer of Choice

Before you begin the journey of successfully capturing SEI you need to make sure your business is recognised as a Customer of Choice.  If your suppliers don’t trust you, and see you as a key account to work with, then your entire approach is set to collapse at the first hurdle.  Pay your suppliers on time, be open to engagement and communicate promptly.

2. Process

The earlier your procurement function involves itself in processes such as, idea generation and idea implementation then the greater the value that will be generated.  Procurement must enable the business by providing clear, structured approaches with defined KPI’s and outputs.  This formalised approach ensures that key stakeholders have the framework, and catalyst needed to drive innovation.

3. Internal Stakeholder Alignment

This is simply making sure that information can pass freely between individuals and teams within your business.  Where possible we should try to reduce the silo approach to procurement, and give employees the tools and authority they need to make decisions without delay.  As we’ve mentioned in the past, supplier collaboration comes before supplier innovation, and for this to happen internal stakeholders must be aligned.

4. Supplier connectivity

For both Supplier Enabled Innovation, and Open Innovation, supplier connectivity is the most important aspect. Procurement is perfectly positioned to link the correct suppliers and their capabilities with the best internal stakeholders, and thus drive huge value. So once we’ve aligned the internal stakeholders we can use our unique position to increase connectivity, alignment and collaboration with your chosen suppliers.

5. Technology

Is the key enabler for delivering supplier innovation. Businesses using technology to enhance their processes and deliver a real Return On Relationships(ROR) are leagues ahead of those who do not.  Technology is getting more powerful and dynamic all the time, and its effects are increasing on a continuous basis.

Complicated supply chains coupled with globalisation mean that the days of using excel and Sharepoint are behind us.  To work seamlessly with your suppliers, and unlock previously unrecognised innovations which create new value, a new approach is needed.  This approach will be more and more supported by state of the art technology.  Technology that is as easy to use as Facebook.  The early adopters of technology will soon be seen as the forward thinking mavericks that changed the face of Procurement for ever and, by doing so, cemented their positions in the world’s biggest businesses.

Supplier Enabled Innovation is a new concept that procurement is once again looking to own, and it will be fascinating to see how it manifests itself in the coming months.  This is yet another vehicle, along with SRM and Open Innovation to name a couple, which could take procurement to the next level. But is it yet another acronym that will be bandied around by CPOs at events without much action?  Or, will it be the catalyst which drives innovation and change.  Only time will tell.

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