Collaborative Innovation through sourcing

Pharmtech published a nice article on "Forward" Sourcing function that is required to improve the innovativeness of a company. In line with the business model thinking you can find on our blog, it requires Procurement to fundamentally change it's model for certain commodities in order to break through the persistent silo's and make a true contribution to innovation.

Global Supply Chain Summit

The Innovation Driven Procurement workshop drew much attention of industry leaders during the Global Supply Chain Summit on October 4th 2010 in Venlo, The Netherlands. During the summit two break-out sessions were held in which the concept of IDP was presented and discussed.


The main focus for the discussions was the role of Procurement in innovation processes, the timing of Procurement involvement and the way to successfully embed Procurement into business functions. It became obvious once again that most companies have some major steps to take for Procurement’s role to crystallize and become an effective contributor to innovation. Main take-away for the participants was the change in focus of Procurement from working for the internal customer to working for external customers – together with their internal partners.

Innovation with suppliers starts inside your organization

Although at first glance this may seem trivial, the answer isn’t that simple. But it’s crucial for the way you organize your innovation process with procurement. Will your R&D department develop on its own, protecting IP from outsiders? Or will it work with suppliers and customers to co-create? Or why not outsource the innovation by asking your partners to deliver certain end-results? And to complicate this decision further; how will this mode of innovation evolve along the stages of the innovation process? Will you start idea generation with your entire supply base? Or with a few partners? This is just the tip of the iceberg of questions that you’ll be asked when you want to decide on how to innovate. There is no ‘one size fits all’, so what you need is a set of structures and processes.

Steps towards organizing innovation with suppliers:

• Define the types of innovation your company wants to apply, and for each;
• Define the procurement business model, and;
• Define process and required competences

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Procurement Involvement in Innovation Processes

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Procurement Involvement in Innovation Processes

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