Innovation in procurement
What is innovation in procurement?
Procurement innovation refers to innovative solutions, products and processes that help to develop and drive value within an organisation. Procurement and supply professionals have a key role to play in adopting innovative approaches and it can lead to several benefits. These could include support to Small to medium sized enterprises (SME’s), improved market stimulus and improved performance against wider procurement objectives. Innovation in procurement can be split into four areas which are shown below.
- Innovative operational procurement:
This area refers to using tools and systems that help you carry out your responsibilities in an innovative way. This could be 3D printers, AI technology or using cloud-based systems. - Innovation in procurement strategy:
This area involves thinking about how your work can be done differently and strategically.
- Buying innovative goods and services:
This area is the most common and it’s the buying of innovative products that will bring opportunities to your organisation. This could be new IT systems, equipment, or drones. - Encouraging innovation across suppliers:
It’s important that innovation is encourage throughout the whole supply chain. Encourage your suppliers to produce innovative ideas that help them to deliver the goods or services in a more innovative way.
What are some examples of technological innovations?
Embracing innovation can help you to increase productivity and value and drive down costs throughout the organisation. If you’re not sure where to start, take a look below at some examples of technological innovations.
- 3D printing:
3D printing layers materials to produce finished goods and is not just limited to plastic. Metal, concreate and food are all being used as part of the 3D printing process due to technological advances. This process helps to increase the speed to market of products, reduces global impact and improves supply chain efficiencies. - Artificial intelligence:
Artificial intelligence is a fast-developing area and can include rules-based automation or intelligent automation. It helps to remove repetitive tasks from the production process which release the workforce to focus on other areas within the organisation.
- Cloud and mobile:
This technological innovation can help to streamline and automate procurement operations. Cloud computing is extremely flexible and delivers superior power and performance. - Big data:
Data has a wide variety of uses from operations management of suppliers to commercial negotiations and identification of opportunities. - eSourcing:
This type of technology helps to increase efficiency and operations within the procurement process. It uses electronic and internet enabled systems to communicate with suppliers, select items and helps you through the evaluation process through an automated system.
How is technology applied in procurement management?
When thinking about implementing technology in your procurement processes, it’s important to identify the purpose and the benefits it can bring. Here are some common areas on how technology is used within procurement.
Organisation
Technology can help with the organisation and storage of important documents such as contracts. Staff can easily access documents anywhere and anytime.
Analytics
Using data can help you to track spend and inventory which will help you to make better decisions. Data is huge within procurement and can help you to reduce errors when procuring.
Inventory management
Using technology such as Radio Frequency Identification can help you to control and monitor product levels in real time. It helps you to keep track of the entire life cycle of the product and helps to reduce waste.
Innovation Cycle
The innovation cycle is designed to support the identification and development to bring about product or supplier development and supply chain or business process improvement which can lead to competitive improvement. Read more about the steps involved.
Explore the Innovation Cycle
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