Did you know that procurement can help with innovation?
Today’s blog is by Margaret Stewart, Director of HR, and Administration at SafeSourcing Inc.
Procurement has traditionally been seen as a cost-control function, but people are discovering that it may also be a strategic lever to drive innovation and unlock new business value. There are a few ways in which innovation can be seamlessly integrated into procurement practices to foster growth and sustainability.
Procurement has undergone a significant transformation over the past decade. No longer confined to negotiating prices and managing supplier relationships, procurement now plays a critical role in shaping the strategic direction of an organization. This shift is largely driven by the recognition that suppliers are not just vendors but potential partners in innovation. This collaboration with suppliers is the first step towards leveraging procurement for innovation by fostering strong, collaborative relationships with suppliers. By involving suppliers early in the product development process, companies can tap into their expertise and innovative capabilities. This collaborative approach can lead to co-creation of products and solutions that are more advanced and better suited to market needs.
Recently, the digital transformation in procurement has been a game-changer. Technologies like Artificial Intelligence, Blockchain, and Internet of Things (IoT) enhance transparency, streamline processes, and improve decision-making. AI can predict market trends, Blockchain ensures secure and transparent transactions, and IoT provides real-time data that can be used to optimize supply chains. Strategic sourcing involves analyzing the total cost of ownership and not just the initial purchase price. This approach encourages the consideration of innovative solutions that might have a higher upfront cost but result in long-term savings and value creation. By focusing on the total value delivered rather than just cost, procurement can drive significant innovation.
A great example of how procurement helps innovation is by looking at Apple. Apple’s procurement strategy is a prime example of innovation. The company’s close collaboration with suppliers has led to the development of unique components like the Retina Display and custom processors. Apple’s procurement team collaborates closely with suppliers to push the boundaries of what’s possible, ensuring their products stand out in the market. Integrating innovation into procurement is not just a trend but a necessity for modern businesses aiming for long-term success. By fostering collaboration, embracing technology, focusing on sustainability, and managing risks, procurement can become a powerhouse of innovation.
For more information on how the SafeSourcing team can help your organization with procurement and innovation, or on our Risk-Free trial program, please contact a SafeSourcing Customer Service representative. We have an entire team ready to assist you today.
