Firms should get innovation from suppliers

7 May 2007
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08 May 2007 | Steve Bagshaw, in Las Vegas

"Everybody will be talking about this in five years," said Steve Rogers, a consultant from the Cincinnati Consulting Consortium. The "this" in question is capturing innovation from suppliers.

While for many this subject is not actually that new, Rogers, speaking at the ninety-second International Supply Management Conference in Las Vegas with his co-presenter Robert Porter Lynch, had some good views on why firms should do it and how.

They spelled out five reasons why: 1. You cannot cost-cut your way to prosperity. 2. Innovation is the most sustainable source of competitive advantage and suppliers are typically the least costly, least risky, and fastest-to-market way to get ideas. 3. Suppliers can be a "wellspring" of ideas but need collaboration to access them. 4. Innovation requires analysis of what value means to you (will the customer buy it and will it give me a competitive advantage?) 5. Vision without execution is hallucination.

As for the how, the first thing is culture. If you are serious about supplier innovation, do you have the internal mindset to see it through? Are you prepared to share to achieve it?

Second, is your understanding of innovation the same as that of your suppliers? "You must tell them what they want," said Rogers.

And you must work together; share the successes and the failures and allow the suppliers to benefit too.

There are some issues that need to be solved, not least of all that of intellectual property, but according to Lynch this requires a move away from the current "protective" approach between buyer and supplier towards a "regenerative" stance of "co-creation" and collaboration.

SMmay2007

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