Procurement needs to be involved in innovation from the inception of products, one of Lego’s top buyers has said.
By the time a new product has come to market, it is too late for procurement to make an impact on innovative processes, said Emma Freiha, senior sourcing manager at Lego.
At this point customers are ready to receive the products, marketing initiatives have been finalised and deals with suppliers signed, so it’s difficult for procurement to even do its basic function of finding savings.
“The basic role of procurement is very hard to put in place because you’ve already lost the opportunity,” she said.
Speaking at the eWorld Procurement and Supply conference, Freiha said procurement has been at the heart of the toymaker’s plans to find sustainable alternatives to its plastic bricks. The firm aims to move away from plastic completely by 2030, and recently released its first plastic-alternative product.
At Lego, procurement sits on the cross functional core team working towards its sustainability goals. “This is actually a revolution for Lego,” said Freiha, who added that procurement had not previously been a big part of innovation.
Lego took the decision to look outside the company for innovative alternatives to plastic simply because it doesn’t produce its own resin. Freiha called this “open innovation”. “You’re not only focusing on what your company can provide or what your team can provide, but you’re looking into the market,” she said.
Freiha added open innovation was different from outsourcing because outsourcing required specific requirements to be given to suppliers. With innovation “you start from scratch”, she said, with just a few boundaries to guide suppliers.
Innovation required a different skills-set than day-to-day procurement, Freiha said. “[Buyers] have to have a very good knowledge of the market, they have to have a very good knowledge of who’s supplying what and how to engage and make sure supplier relations though the innovation process are tightened.
“That’s why we say, 'Think different'. Instead of just thinking in the same way that you usually do, start to open the box a little bit and bring some ideas that have not really existed in the market.”
Freiha added that procurement’s integration into innovation and R&D was an indicator of business maturity, but told buyers to expect pushback. “You have to live the pain of the change management. The natural reaction from many of your colleagues and teams will be to reject whatever you’re doing.
“You have to live through the pain of making sure the mindset of your organisation is following in terms of, 'This is important, this is an opportunity, it’s not only a risk'.”
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