Just one in 20 buyers prioritise innovation when choosing a supplier, a survey of procurement professionals has found.
Difficulty giving innovation a financial value means buyers are “more conservative” when selecting suppliers, preferring partners with a proven track record for delivering on time and to a budget, the report by marketing firm APS Group said.
More than half of buyers surveyed (55.56%) said they put the greatest value on a strong track record, a quarter said they valued a consultative approach most, and 10% prioritised a cultural fit. Innovation was considered “nice to have” and topped the list of secondary considerations, it said.
Buyers do recognise the benefits of innovation, the report said, and of those surveyed almost as many said they were most likely to research market innovations by talking to suppliers (35%) as talking to their peers (36.84%).
Pressure to show savings and a lack of a standardised way to financially measure innovation was a key problem, the report said. Although senior management might say they wanted innovation, “when push comes to shove what matters most is financial performance”.
Not taking the long view was also a barrier to innovation, said George Smart, business development director at APS Group said. “Part of this comes down to a culture of ‘short term-ism’ which sees departments focus on the immediate gains, such as cost savings. Long term goals are often secondary considerations, and, rightly or wrongly, innovation can often fall into this category,” he said.
Getting senior management buy in, setting both short and long term targets and sharing responsibility for innovation with suppliers were steps buyers should take to improve innovation, the report said.
Making sure your procurement team has the right skills through recruitment and training can also help build long term relationships. “Better relationship management will ultimately help organisations demonstrate a commitment to the supplier and encourage them to work towards your organisation’s long-term goals,” the report said.
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