We all know the epic scene in the classic “Wizard of Oz” when Dorothy first realizes that there is a man behind the curtain pulling all the strings and pushing all the buttons to make Oz come to life. I wonder where we have curtains in our life, where there is a hidden capability, ideas, knowledge that we are not gaining because we are not seeking to look beyond what is in sight.
The same holds true for our supply chains. Typically, our suppliers are the “men behind the curtain”, where they operate day to day providing the goods and services we requested. But how often are we Dorothy, seeking to learn more about what is behind the curtain, what incremental value the suppliers can provide and what ideas they can share?
To become Dorothy, here are four questions you should ask yourself in order to break through to new levels of supplier innovation and insights.
How do I build better partnerships with my suppliers to drive innovation and become more competitive?
Believe it or not, there are some simple actions and changes in thought processes that will get your organization a jump-start on gaining these innovative insights from suppliers.
1. Ask your suppliers how you can help them be successful and follow through. This is not a question about the relationship with you but rather taking a vested interest in what hurdles your suppliers are facing- providing your expertise to help them build trust, allow for collaboration to occur, and open the door for your suppliers to help you.
2. Ask your suppliers to solve a business problem with you. From working with over 4000 suppliers in this area, we have found is if a buy-side organization entrusts a supplier to help them solve a problem, it leads to many more opportunities for innovation. This approach creates trust, a platform to build upon and helps your company deliver value through solving a business problem.
How can I create KPI for innovation with my suppliers?
KPIs related to innovation can come in many different areas and should be aligned with the buy-side organization strategies. At the same time, suppliers should have a voice in KPIs they believe are relevant to the relationship with the buy-side organization. If both parties think about how to solve problems together vs just thinking of innovation, the KPIs become much more robust.
From installing KPIs with many supplier organizations, we have learned that a KPI without context does not create the impact that buy-side organizations are intending. The suppliers need to understand the bigger picture from the buy-side organization, for example how the KPIs align with the buy-side’s strategies and how these KPIs benefit them. The traditional approach has been very one-sided and has led to minimal results.
How can I encourage innovation between procurement, stakeholders, and suppliers?
Encouraging innovation is sometimes unapproachable because there is a belief that this process needs to be complicated. It is, in fact, the opposite. Start with business problems that need to be solved vs thinking of a supplier coming up with the next big product and it removes the barriers to success.
When suppliers are thought of as part of your extended team, where they have capabilities that sometimes far surpass your own, they are leveraged differently. They are now asked to co-create solutions, to have a voice in increasing efficiencies and help buy-side organizations understand their customers more effectively.
Sometimes we do not start because we believe that the road is too complicated and too unknown. We say just take the first step with a small business problem that your stakeholder is trying to solve and viola, you have illuminated a whole new path forward while adding value like never before.
How do supplier partnerships need to change?
Traditionally, strategic partnerships have been quarantined to those suppliers who are big, who have large annual spend, who have been around the longest. And, while some of those relationships might fit the bill, there would be additional benefits to thinking more broadly. In fact, we recommend that the traditional segmentation model should be updated.
Why? Because some of the most innovative, agile suppliers on the market today are NOT the “big” suppliers. They are the small, mid-sized companies who are hungry to co-innovate and collaborate with you.
We recommend thinking of your suppliers as you would your employees – high performing, high potential, developing, stay in role, at risk, and low performing. The high performing and high potential suppliers are those buy-side organizations who should be approaching to solve business problems with them.
If you want to learn more about how to deliver supplier innovation to your organization, join us at #PLAPC. This topic and many more will be discussed and debated. Register today! https://bit.ly/2PyQkxZ