In order to tackle the huge demands around sustainability being placed on them by consumers, investors, and regulators alike, enterprise businesses must source new solutions, and fast. Failure to do so threatens not only their bottom line, but possibly their very existence. As large businesses struggle to come up with the answers on their own, supplier-sourced innovation signals a huge new opportunity. This article looks at the role of innovation in sustainability, details the benefits of supplier-sourced innovation, and shows how Vizibl customers are leveraging the value of their suppliers to support sustainable business growth.
"Innovation distinguishes between a leader and a follower"
– Steve Jobs
In the traditional view of procurement and supply chain teams, the function’s main focus is to make savings, mitigate risk, boost efficiency and ensure the continuity of supply. For the most sophisticated procurement departments, the easy wins around cost, risk, and compliance have long been claimed and captured. As a result, delivery of significant savings year on year has become ever-more challenging, and procurement must find new ways to deliver on key business objectives.
Whilst the imperative to manage costs, mitigate risks, and find new efficiencies remains ever present, new pressing needs have emerged. As the increasing pace of disruption looms over the shoulder of businesses and enterprise organisations find their predicted lifespan cut short, their leaders must find innovative ways to generate growth and improve productivity, without compromising the health of the business in the long term.
In 2022, this means prioritising sustainability and resilience at the heart of their innovation and growth strategies; ensuring that the fight for corporate survival does not risk compromising the health of the planet, its people, or the viability of the business itself.
“You have to have a big vision and take very small steps to get there. You have to be humble as you execute but visionary and gigantic in terms of your aspiration. In the Internet industry, it's not about grand innovation, it's about a lot of little innovations: every day, every week, every month, making something a little bit better.“
– Jason Calacanis
When it comes to sustainability, however, the reality is that we don’t have an abundance of ready-baked solutions; for the majority of large organisations, the steep demands being placed on them represent a new frontier, and one they cannot embark upon alone. Whether the goal is to reduce carbon in the supply chain, find innovative hydrogen manufacturing plant solutions, remove surfactants in products, or improve supplier diversity, we now need to look outside of our own teams and organisations, and turn instead to our wider ecosystem.
Traditional procurement’s mentality is grounded in a prescriptive specification process: you know what you need to buy, you specify what you need it to do, you build evaluation criteria, and you have access to a set of market ready suppliers that can provide the relevant goods or services. Here, procurement has excelled.
Addressing sustainable growth, however, presents a new challenge: what happens when you don’t know what you need to buy, when you need solutions your internal team can’t even conceive of?
That’s where supplier innovation comes in. And luckily for procurement and supply chain, their position at the interface between the business and its extended ecosystem make them perfectly placed to facilitate and orchestrate the process.
Supplier innovation, also known as supplier-sourced innovation, is a practice that involves leveraging the ideation, existing IP, and future innovation potential of the supply base in order to increase the business’s own innovation. This process allows businesses to circumvent any limitations on their own internal R&D, bring a wave of fresh new ideas into the business, and source solutions from subject matter experts in their supply chain.
These innovations can range in scale from finding small previously-undiscovered operational efficiencies, up to launching brand new products and services that are commercialised faster than home-grown ideas.
The benefits of supplier innovation have many large organisations looking to their supply base to source solutions that boost their growth, sustainability and resilience. But over the course of these efforts, most discover that supplier innovation is notoriously difficult to capture, manage, govern, and measure in a way that can be accomplished at the scale needed to solve the challenges enterprise businesses are facing.
Like many other business strategies, supplier innovation risks falling foul of poor processes and other inefficiencies which limit the realisation of its benefits. While many organisations have begun to recognise the huge untapped potential in their supply base, their efforts to extract this value are hampered by poor access to data, siloed ways of working, and tools and technology that aren’t fit for purpose. Procurement’s traditional operational mindset and historically combative mode of engaging with suppliers can also undermine their efforts, and the rigid qualification procedures baked into the function can ward off small, innovative startup suppliers who do not have the capacity to engage with this complex and lengthy process.
For supplier innovation to flourish, organisations need the processes, tools, and mindset that support the Supplier Collaboration and Innovation mission, enabling them to become ‘Customer of Choice’ with key strategic suppliers. Characterised by a relationship built on an ethos of transparency and mutual benefit, ‘Customer of Choice’ status grants a variety of privileges to the buyer, including priority access to both existing and future innovation, and to the best minds within your supplier’s organisation.
The Vizibl Supplier Collaboration and Innovation platform has been expressly designed to give procurement and their business partners the tools and processes required to establish effective collaboration, become customer of choice with key suppliers, and reap the benefits of supplier innovation for sustainable business growth.
It does so by supporting the creation of programmes with value trackers attached. If, for example, a business is looking to reduce GHG emissions, they could establish a ‘Carbon reduction’ value tracker in the Vizibl platform. All projects both internally and with suppliers that seek to reduce carbon emissions are linked to this value tracker, allowing procurement and supply chain to robustly measure project contribution to strategic goals, and provide senior leadership with evidence of the programme’s success.
To source new sustainability innovations from the supply base, Vizibl users can take advantage of the platform’s Innovation Hub. With the Initiatives functionality, the organisation can pose ‘problem statements’ to suppliers and invite them to submit potential solutions in the form of Opportunities. The format of these is guided by the buying organisation, balancing flexibility of what ideas can be submitted with robust process around their format and submission. Because great ideas can come from anywhere, a recent release to Innovation Hub has expanded Initiatives & Opportunities to allow for external submissions, allowing procurement to source ideas from potential partners with whom they don’t yet have an established relationship.
Opportunities can be triaged in the platform, and once given the go ahead can be converted into proofs of concept with Vizibl’s project functionality. Projects, programmes, tagging and value trackers can then be moved into Vizibl’s active collaboration area: the Supplier Collaboration Workspace. This combined with powerful reporting ensures Vizibl customers track, manage and prove their collaboration, innovation and sustainability efforts.
Value trackers allow organisations to measure and report on every initiative, opportunity, and project, uncovering the conversion rate of ideas into fully-fledged projects, and enabling clear demonstration of a programme’s contribution to key strategic goals. Powerful reporting tools allow widgets and dashboards to be created from these value trackers, showing at the touch of a button the contribution of supplier innovation to corporate goals such as growth and sustainability.
“We are, after all, the greatest problem solvers to have ever existed on Earth. If working apart, we are a force powerful enough to destabilise our planet. Surely working together, we are powerful enough to save it.”
– David Attenborough
Against a backdrop of widespread disruption, dwindling corporate lifespans, and new demands being placed on businesses, innovation will confer considerable competitive advantages to the organisations who can harness it. The growing pressure from customer and investor stakeholders to operate more sustainably in particular requires new solutions for adaptation to – and mitigation of – the damage that unsustainable business practices have done to our planet and its people in the past.
Faced with this huge demand for new ideas, organisations must take Attenborough’s advice, and look to work with others to solve their challenges; new solutions can come from anywhere. By expanding our networks, working more effectively together, keeping sustainability at the heart of our growth plans, and robustly measuring our progress, businesses can tap into the value of their extended ecosystem and switch to a programme of sustainable transformation and growth.
Visit Vizibl’s Supplier Innovation Hub to find out more.