Is supplier innovation the elephant in the room for procurement?

Grant Watling is principal, global consulting services at HICX SolutionsThe phase the "elephant in the room" is an idiom for an obvious truth that is either being ignored or unaddressed. The expression also applies to an obvious problem or risk no one wants to discuss. The concept of supplier innovation is not necessarily new to business but as it becomes adopted wisdom among the procurement community there is an elephant in the room.

Are procurement the right people to handle supplier innovation?

There is something almost Jekyll and Hyde about the modern procurement function. On one hand they are the gatekeepers to fortunes if you are seen as a strategic or business critical supplier, and are therefore the team you want to share your next best thing with. But on the other hand, as a supplier they are the team you least want to encounter as they will inevitably find a way to improve the terms of engagement in their favour.

Procurement’s historical big stick approach is difficult to reconcile with the modern carrot of wanting to become a preferred buyer so they can secure new products and services that provide their organisation with competitive advantage.

The tricky part is new ideas, new concepts, new practices are like the tender shoots of a plant and can be easily destroyed if handled incorrectly. Where poor procurement experiences have accumulated over time, it makes the offer of openness from the very same people somewhat unappealing.

A collaborative innovation economy is dependent on trust. The shift in paradigm from experiencing Mr Hyde’s leveraged savings, forced rebates, and deconstructed margin erosion, to embracing Dr Jekyll’s open book collaboration, joint innovation and collective value chain optimisation has left suppliers wary, wondering at what point they will be back to dealing with Mr Hyde.

The 2000s were the era of spend analysis, reverse auctions and buying networks. The 2010s is the decade of big data, relationship management and disruptive innovation. We access more information and have greater transparency than ever before but we seem to know less. That is a topic for another time but hold that thought.

Grant Watling is principal, global consulting services at HICX Solutions

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