What is supplier-enabled innovation?
Supplier-enabled innovation is a hot topic in procurement. But what does it mean, and should you be tapping into it?
Supplier-enabled innovation (SEI) refers to how businesses tap into the expertise of their supplier network to develop new products and services, or refine existing ones, and make improvements to processes.
It’s not exactly a new idea, but a growing number of Australian organisations are realising its potential. This is especially the case for procurement leaders who are looking at how they can use supplier relationships to deliver more value to their organisations.
Why you need supplier-enabled innovation
A survey by Winc (formerly Staples Australia) showed that 86% of procurement professionals want suppliers to provide innovative solutions. If you’re not yet tapping into supplier-enabled innovation, here are some reasons why you should:
- Leverage expert knowledge.
Think about the in-depth knowledge held within your supplier network. Each supplier is an expert in their field. Supplier-enabled innovation is about tapping into these skills and knowledge to make improvements that will drive your organisation forward.
- Improve cross-organisational collaboration.
Supplier-enabled innovation doesn’t only involve procurement, but also R&D, product development and other business functions. As such, it encourages stronger cross-functional collaboration across the business and ensures everyone is working towards organisational goals.
- Stay ahead of the competition.
Working with suppliers to find better ways of doing things can help you stay ahead of the competition, often in ways that couldn’t be achieved from a purely internal approach.
- Become a customer of choice.
Collaborating with your suppliers demonstrates to the vendor community that you are a desirable organisation to work with (just as social procurement does). This positive reputation means suppliers are more likely to bring their A game and work harder to win your business.
- Long-term partnerships
Ongoing collaboration with suppliers helps you nurture stronger, long-term partnerships. As a result, your suppliers are more able to align to your unique needs.
How to get started
Choose your SEI partners carefully. Your success with supplier-enabled innovation comes down to choosing the right partners. If you can’t find innovative suppliers to work with, the whole process falls apart.
Look beyond your existing suppliers. While it’s tempting to dive straight into your existing supplier base, the right suppliers are not always the ones you already know and work with.
Consider cultural compatibility. Do your organisations have strategic alignment around product and service goals? Is there a compatibility of corporate cultures? Are top management committed to the process?
Make sure your goals and visions align with the supplier partner right from the start. It’s critical to ensure there are clear definitions, responsibilities and objectives – one way to achieve this is with innovation workshops, where you can plan and select ideas, manage IP and make decisions about resource allocation.