Innovative Procurement is a popular topic these days in the procurement sector of all industries. One of the first questions I’m asked when the topic comes up is whether it’s Procurement Innovation i.e. how procurement staff do their work or, Procuring Innovation i.e. contracting for innovative products or services. While it could be either, Innovative Procurement is done best when both innovative procurement processes and tools are applied to contracting for all products and services.
Applying innovative procurement tools and strategies often yield unforeseen benefits even when procuring standardized products and services. Some products and services may look the same as they did ten or fifteen years ago but the manufacturing process and supply chain behind them has definitely changed. Up-to-date procurement strategies will offer opportunities for suppliers to demonstrate how their business and product innovations can benefit you as a customer.
Leading organizations focus their strategy on procuring value as defined by a desired business outcome or solution when considering the options delivered by innovative products or services. A value oriented evaluation process avoids the time consuming effort of breaking up product proposals into sub-elements, carrying out a detailed sub-element comparison but never quantifying whether the sum of the parts will deliver the “goods” – so to speak.
Understanding the marketplace for the product or service being procured is an important step in the Procurement Innovation process. Researching the marketplace and engaging with suppliers to understand their business processes and challenges creates the insight to ask suppliers innovative questions that uncover value and identify the best match between your needs and supplier offerings.
Suppliers benefit from procurement innovation when the unique benefits and value of their product or service are given weighting in the procurement decision.
If your organization is using the same procurement tools and techniques they were using ten years ago, then you are likely missing out on valuable innovation that doesn’t fit into a traditional procurement template. Flexing your organization’s innovative procurement muscle now, even for relatively standard procurements, will prepare your organization to “Innovatively Procure Innovation” and find innovative solutions that will deliver a better business outcome.
Visit Osborne-group.com for other Principals’ ideas and opinions on a range of topics. The Osborne Group provides interim executive management, consulting and project support across all sectors and over a broad scope of service areas.
