Engineering firm Cummins sees diverse suppliers as a key source of innovation.
The company has developed its Innovation Gateway to onboard diverse suppliers through a multi-stage process.
The gateway is designed to pick up suppliers who might otherwise fall foul of procurement hurdles, such as providing three years of accounts or insurance requirements.
Denis Ford, international sourcing leader EMEA & APAC for corporate indirect purchasing at Cummins, told SM: “Innovation comes from small, agile, diverse groups rather than big corporates.”
Cummins’ sourcing strategy is built on a system of category management. Ford said IT, air, sea and road freight, warehousing, and logistics were the biggest categories.
He described how market expertise and wider analysis feed into sourcing decisions that can be global, regional, multi regional or local, depending on the commodity and a calculation of total value performance or TVP.
But traditional sourcing can create barriers to entry for small, local and diverse suppliers, said Ford, which is why the Innovation Gateway was built.
The gateway is based on several stages, beginning with a need being identified by a team of experts in the business. This is then defined and sent out to the supply base, often via government agencies, universities and NGOs with links to innovative suppliers.
“We look to excite the market,” said Ford.
Ideas are submitted through an online portal. These are evaluated before some suppliers are asked to produce firmer proposals. A Dragons’ Den-style event then takes place, in front of a panel of experts, before a trial stage at a Cummins site.
Ford said data from the process showed a disproportionate amount of innovation came from diverse groups. “It works as a tool for bringing in innovation,” he said.
Ford will be discussing Cummins’ Innovation Gateway at the CIPS Business Briefing on Strategic Sourcing this Friday at the Park Plaza, Westminster Bridge, London.