July 14, 2016 | Written by: Alex Zhong
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“Innovation distinguishes between a leader and a follower.” It’s one of the well-known quotes attributed to Apple’s founder and former CEO Steve Jobs.
Jobs knew that innovation creates value, and creates success.
The inverse can be true as well. With a nod to Charles Darwin, it’s not always the strongest company that survives, it’s the one that’s most adaptable to change. Technological advances and global forces are shaking up virtually every industry, in what some are calling “the age of disruption.”
Fortune 1000 CEOs are well-aware of these facts. To illustrate, according to IBM’s latest C-suite study, which interviewed more than 5,000 top executives in over 70 countries, more than half of all CXOs are seeking greater innovation for their businesses – and looking to outside sources and partners for that innovation.
However, it appears that many procurement organizations and CPOs are not in line with their CEOs. Perhaps, as Dr. Robert Handfield, director of the Supply Chain Resource Cooperative and author of The Procurement Value Proposition: The Rise of Supply Management, wrote in a recent report, “procurement’s traditional focus on cost savings has, to some extent, caused many professionals to overlook the value of procurement-led innovation.”
In contrast, the world’s top-performing procurement organizations, those with higher savings achievement and corporate profitability, see innovation as a key source of “differential value” for procurement.
According to Dr. Handfield, increased levels of outsourcing translate into businesses relying more on their suppliers – as market experts and innovators. Top-performing procurement organizations understand that their relationship with suppliers is more than just managing cost and risk. They understand that suppliers are partners – and perhaps the business’ greatest potential source of innovation.
According to the IBM IBV Chief Procurement Officer Study, top-performing procurement organizations cited bringing in innovation into the enterprise as a top priority, second only to reducing costs and increasing profitability for the business.
In the Procurement’s New Chapter: Innovation ebook, Dr. Handfield details best practices and strategies for developing procurement-led innovation – “a process that integrates the ideas of suppliers, fostered through a collaborative working environment, to create new products and service technologies.” He emphasizes that innovations “can occur in multiple forms: new and improved products, service innovation, and supply chain process innovation.”
He also provides a five-step process for harnessing the power of supplier innovation:
#1: Define the needs of the business.
#2: Target the right suppliers and ideas.
#3: Validate the supplier’s capabilities.
#4: Engage and collaborate.
#5: Proactively manage the supplier relationship.
If you’d like to learn more about harnessing supplier innovation to stay ahead of the competition in the “age of disruption,” download the Procurement’s New Chapter: Innovation ebook or join us at Empower 2016 for in-depth coverage. Hope to see you there!