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Innovation cycle in procurement and supply

What is the innovation cycle?

The innovation cycle can be used for new product development, technology innovation, supplier co-ordination and market opportunities and evolution. All of which will lead to a competitive advantage and overall improvement for your organisation. The cycle supports procurement and supply professionals to develop and improve processes.

The CIPS Innovation Cycle

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Innovation cycle stages

The innovation cycle is made up of twelve stages. From innovation triggers, to activation, evaluation and monitoring, the cycle guides you through all the stages of innovation. You’ll also find extra information for you to consider regarding your external environment, such as the legal system, economic factors and competitors; all of which play a huge part in innovation.

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1. Concept Testing

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.

New product Development (NPD)
Product iteration
Logistics/SC innovation
Technology innovation
Supplier co-ordination

Performance innovation
Outcome led innovation
Market opportunities and evolution
Regulation innovation

Extra information to consider

Innovation and Technology
Benefits Realisation

2. Concept Testing

Activation

Activate open discussion about potential opportunities for innovation within your organisation. Are there opportunities to raise productivity or increase your organisations growth potential through enablement of new innovation?

It may be that activation of an innovation project could be triggered by an internal stakeholder or department such as engineering or production.

Early engagement with the procurement team helps to support discussion to review potential challenges or opportunities faced by the organisation, along with opportunities for development and progression.

Procurement can then further develop the potential project whilst factoring in external environmental impacts and identification of stakeholders.

Extra information to consider for this step

Extra information to consider

Collaborative Working
Stakeholders
Influencing Skills

3. Concept Testing

Identify

Identify areas of impact and significant areas of engagement opportunity:

Who would the introduction of the new innovation affect?
Where are the current bottlenecks occurring in the current 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 early awareness of an innovation project is introduced within your organisation.

Extra information to consider

Stakeholder Mapping
Risk and Resilience Assessment

Business Continuity Planning
Market Analysis

4. Concept Testing

Analyse

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

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

Extra information to consider

Collaborative Working
Stakeholders

Project Management
Specification Development

5. Concept Testing

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.

Extra information to consider

Value Generation
Supplier Evaluation
Sourcing and Tendering

6. Concept Testing

Evaluate

Having scoped the market now is the time to build the full specification and evaluate weighting factors that will be applied to the request for quotation (RFQ).

If weighting is not a factor then you may be presented with the best solution possible from a supplier, however this needs to be balanced with costs, should a proposal far outweigh the budget then this will not be feasible.

Identifying a criteria of need 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.

Extra information to consider

Specification Development
Market Analysis
Sourcing and Tendering

7. Concept Initiation

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.

Extra information to consider

Stakeholders
Supplier Evaluation

8. Concept Initiation

Develop Business Case

Construct a formal business case that will be presented to the board for sponsoring.

Identify project milestones and cost benefit analysis to stakeholders.

An exit strategy should also be established at this stage, so any intellectual property (IP) is passed over or product ownership transfer is outlined, or contract period set with key performance indicators (KPI’s) being targeted.

Once sign off of the business case has been made, contract award can take place.

Extra information to consider

Business case development
Exit Strategy
Contract Management

9. Develop & Launch

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.

The 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.

Extra information to consider

Selection and Award
Project Management

Terms and conditions and the developing of contracts

10. Develop & Launch

Build Phase

Working alongside marketing collateral, 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 ran parallel so not to disrupt current operating processes.

Extra information to consider

Soft Skills
Project and Programme Management

11. Develop & Launch

Launch Readiness

Identification of the company culture will support the willingness for change, identify 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 key performance indicators (KPI’s) and further communication and training at this stage will support smoother transition.

Extra information to consider

Setting KPI's
Soft Skills

12. Continuous Improvement

Monitor and Refine

Establish a launch date and transition period for implementation of the new product or service, 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 any significant processes.

Launch and establish a go live date for implementation.

Following launch, offer an opportunity to capture feedback and document 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.

Extra information to consider

Performance Analysis & Management
Business Process re-engineering (BPR)

The Innovation Cycle

Key considerations for each step

Risk Assessment/Mitigation
Sustainability
Procurement and Supply Cycle

Category Management
eSystems and Processes
Strategy and Policy

Digitalisation

Digitalisation is emerging front and centre in today’s hypercompetitive global network. Take a look to find out why.

Find out more about Digitalisation

Procurement key themes

descriptionProcurement process
descriptionProcurement policies
descriptionDirect - Indirect
descriptionSocially responsible procurement
descriptionHow to write a contract
descriptionE-Procurement
descriptionBig data in procurement
descriptionProcurement cycle
descriptionPublic sector
descriptionTypes of procurement
descriptionWhat is procurement

descriptionProcurement process
descriptionProcurement policies
descriptionDirect - Indirect
descriptionSocially responsible procurement
descriptionHow to write a contract
descriptionE-Procurement
descriptionBig data in procurement
descriptionProcurement cycle
descriptionPublic sector
descriptionTypes of procurement
descriptionWhat is procurement

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