Procurement 101The Missing Piece in the Procurement Puzzle
Uncommon partnerships can be a source of brilliance. They’re found in unexpected places and are often the combined result of chance, experimentation, and open-mindedness. When these factors unite in a corporate setting, businesses experience multi-sided value that can lead to the discovery of emerging markets, resource sharing, and a higher level of overall performance.
Unique cooperative relationships are developing across all industries. Purchasing departments are beginning to seek out non-traditional suppliers that promote innovation-driven procurement (IDP), or outside-the-box strategies.
CONFOUND YOUR COMPETITION
Any company that involves their suppliers early in the production process practices “open innovation” (also known as co-creation, part of IDP). Firms that include their suppliers in the initial stages of a project have been shown to outperform their competitors. Global procurement demands end-to-end and enterprise-to-enterprise connections.
The challenge of open innovation is to resist a fixed, conventional view of sourcing. For example: a medical technology company or geographical information systems business may have solutions for the dashboard on a car. Are these obvious sources? No. But they may contribute to a large payoff for companies that know you can’t explore a new world through old world assumptions.
INNOVATIVE PARTNERSHIPS AT WORK
Here are three examples of innovative businesses that optimized their suppliers’ position:
- Procter & Gamble connects with external parties for product development – suppliers’ research teams work in P&G labs, and P&G researchers work in supplier labs.
- A retail chain in India, Reliance Fresh, partners with a prison in Delhi – the inmates make their bakery products.
- The Big White ski resort in British Columbia, Canada, hosts ‘Big Reds at Big White’ with the area’s top wineries – guests can participate in a wine tasting program that promotes both the resort and the surrounding wineries.
Although the partnerships behind IDP can seem like a lucky accident, in reality they need to be organized. Procurement teams must be willing to engage with new sectors. They must have both technical and market insight. They must have boundary breaking communication and collaboration skills. A progressive view on internal standards might be the most important factor: after all, an apple had to fall pretty far from its tree to land on Steve Jobs’ computer.
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