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Innovation Cycle

Innovation in Procurement and Supply Management supports the identification and development required to bring about product or supplier development, supply chain or business process improvement, leading to competitive improvement or advantage.

The Innovation cycle has been designed to support develpment in the following business areas:

  • NPD
  • Product itteration
  • Logistics/SC innovation
  • Supplier Co-ordination
  • Performance innovation
  • Outcome led innovation
  • Market opportunities and evolution
  • Regulation innovation
  • Technology innovation

 

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Hover and click on the procurement cycle to review the topic summary with links to the practical knowledge and resources to support your day to day activities whether studying or operating in an organisation.

Tap the contract management cycle to review the topic summary with links to the practical knowledge and resources to support your day to day activities whether studying or operating in an organisation.

Innovation Trigger

The innovation cycle has been developed to support the approach required to cover Innovation activities, any of the development or business process improvement areas identified can act as a trigger to implementing the Innovation cycle.

Identify

The identify stage gives opportunity to scope out the initial need, what is the challenge and whom does it affect?, where are bottlenecks occurring in a process, which areas of the supply chain could benefit from development? 

It is at this early stage that all stakeholders should be identified, to ensure that all stakeholders can be consulted and are aware of the potential for innovation.

Analyse

Through collaboration and early stakeholder engagement, a need can be identified along with potential cost benefits, competitive advantage or areas of business impact.

 

Stakeholders can support the development of plausible options and an early specification outline can be structured.

Options Analysis

Scoping of market options at this stage will give an overview of potential solution providers, build awareness of products or services available to support the area of innovation, along with offering an initial outline of cost. 

Evaluate

Having scoped the market now is the time to build the full specification and evaluating weighting factors that will be applied to the RFQ. 

 

If weighting is not a factor then you may be presented with the best solution possible from a supplier, however if the cost far outweighs the budget then this will not be feasible.  Identifying a criteria of need based and applying weighting on areas such as cost, environmental impact, quality and improvement on market positioning for example will ensure that the best fit possible and the right solutions are presented to the stakeholders.

Concept Selection

Following submissions from potential solution providers analysis of the weightings will support identification of best fit solution providers, further consultation with the Stakeholders at this stage will also validate the narrowing of selection.

 

A discovery stage may be undertaken with possible suppliers so they can identify all key systems that operate within your organisation they may need to integrate with.

Develop Business Case

Construct a formal business case that will be presented to the board for sponsoring, within the project identify milestones and cost benefit analysis to stakeholders.

 

An exit strategy should be established at this stage, so any I.P is passed over or product ownership transfer is outlined, or contract period set with KPI’s.

Development and Planning

Build presentations and an introduction to the project so that all key stakeholders can sponsor and support the project.  This may require a communication plan and also training materials to be built, to support the smooth integration of the project. 

 

Supplier that has been selected may start to introduce training and development days so that areas of risk can be assessed and the testing stage can commence.

Build Phase

Working alongside marketing collateral and communication and training plans the service or product will go through test stages with stakeholders, identification of errors should be brought into discussion.  The Build phase may be conducted offsite or parallel ran so not to disrupt current operating processes.

Launch Readiness

Identification of the company culture will support the willingness for change, identifying business areas that may resist change or may not have fully bought into the project, as they may seek further clarification and support to make the most of launch readiness.  Is there benefit realisation for all stakeholders? 

Further support with alignment of operation processes and re-alignment of KPI’s and further communication and training at this stage will support smoother transition.

Monitor and Refine

Establish a launch date and transition period for implementation, all bugs should be fixed at this stage and full training should have gone through sign off. 

 

An early test programme should be undertaken and any additional training or bug fixes should be identified and resolved, re-map and significant processes.

Activation

This is launch and go live date for implementation of the new product or service, this stage also offers a opportunity to document and capture feedback and lessons learnt.  If the business benefits can be broken down into themes it will be easier to identify what has been successful and areas of improvement for future projects.

This cycle then begins again.

Procurement Environment

As an organisation, procurement structures vary depending on the culture and structure of the organisation.

 

The structure of the team whether this be centralised, decentralised or hybrid structure on a local and/or global level, should be aligned to deliver both the procurement and organisation strategy. This structure will enable the procurement process to run effectively.

External Environment

A business does not exist in isolation and can be influenced by macro factors outside of their control; this is typically referred to as their ‘external environment’.

 

The external environment consists of competitors, the economic, social, monetary system and the political/legal system and affects all parts of the procurement cycle.  Identification of possible macro influences can be assessed by utilising the following tools:

  • STEEPLE
  • SWOT
  • Porters 5 Forces (to identify your organisations current market position).

Risk Assessment/Mitigation

During various stages of the procurement cycle you should understand the risks that can impact an organisation and implement strategies to mitigate and manage those risks effectively.

Sustainability/CSR/ Ethics

In addition to traditional economic criteria such as price and quality items such as social, economic and environmental factors should be considered to ensure a sustainable solution when procuring products and services.

 

Sustainable procurement helps organisations to eliminate waste, become more energy efficient, ensure security of supply, and often results in long-term savings. Corporate Social Responsibility is a way of ensuring that the business monitors its compliance with the law and industry standards and how business processes can be managed to provide a positive impact on society.

Procurement Cycle

The Procurement cycle is the cyclical process of key steps when procuring goods or services.

 

CIPS developed this interactive tool to guide members through the procurement process with links to relevant knowledge to support you through the procurement journey.  You will need to be a member to access all Knowledge links.

Category Management

Category Management is a strategic approach which organises procurement resources to focus on specific areas of spends. This enables category managers to focus their time and conduct in depth market analysis to fully leverage their procurement decisions on behalf of the whole organisation. The results can be significantly greater than traditional transactional based purchasing methods.

eSystems and Processes

eCommerce systems including E-Sourcing and E-Procurement are widely used by organisations to buy and sell products, and can utilise technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems and automated data collection systems.

Strategy and Policy

A procurement policy refers to a statement or set of guiding rules or principles covering how procurement should be managed within an organisation.

 

A procurement strategy is an action plan from which the direction of resources will be organised and utilised to implement that policy and achieve the desired objectives.

 

There are a number of related topics, best practice guides and white papers surrounding strategy and policy that can be accessed via the link below.