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The Conference objective this year was to give insights on how
purchasing is and should be contributing in the business innovation
process, this as seen from three different perspectives: academics,
practitioners and consultants. About 96 professionals representing
12 different nationalities and a wide range of industries
participated.
Some of the questions raised in the conference:
- What is needed to transform purchasing from operational efficiency
to a source of competitive advantage?
- What strategies are needed for innovation?
- What type of expertise we would need to assure contribution to
innovation?
- Is there any knowing- doing gap in between what we know we should
do and what we are doing
- How to manage suppliers for innovation?
- What type of organisational structure is needed to facilitate
purchasing involvement in innovation process?
- What is the role of the company culture and values in stimulating
or inhibiting purchasing involvement?
- How to manage relationship with internal clients?
- How to bring purchasing added value in innovation in the top
management table?
The panel of the speakers included:
Academics session
Elda Simonaska, MBA Course Director & Research Associate EIPM
“Purchasing: a driver, a passenger or a passer-by in the disruptive
innovation?”
Dr. Arjan Van Weele, UNIVERSITY OF TECHNOLOGY Eindhoven; NEVI-Chair
of Purchasing and Supply Management
“Suppliers as a source of innovation and competitive advantage”
Practitioners’ session
Bernd Kehl, Manager Procurement Operations – LEAR CORPORATION
“Purchasing involvement at R&D at Lear Corporation”
Pierre Josselin, VP Purchasing- DANONE – BISCUIT DIVISION
“Purchasing innovation at Danone”
Nando Galazzo, VP Procurement - BOREALIS
“ Back to the future in procurement”
Dr. Wolfgang Heinbach, VP Business Excellence Radio– SIEMENS ICM
NETWORKS
“ Purchasing and innovation in Mobile Networks”
Consultants’ session
Bastiaan Soeteman, Senior Principal - AT KEARNEY
“Stretching the right side of the diamond – purchasing contribution
to innovation”
Khosro Ezaz-Nikpay, Principal, European Purchasing & Supply
Management Practice Leader – McKINSEY
“Sourcing for innovation”
Robert Ohmayer, Associate Partner, Operations Strategy - ROLAND
BERGER
“Driving innovation through purchasing and engineering”
Michael Walsh, Principal - Marco Kesteloo, VP - BOOZ ALLEN HAMILTON
“Innovation through purchasing – how to make it happen”.
Bertrand Lalanne, Senior Partner - CREARGIE
“Purchasing involvement in the innovation process – myths &
realities”
Their presentations and discussions led to few common observations.
Innovation is a critical business issue especially in the actual
business context. And if purchasing wants to take a strategic role,
it has to play by the rules of that game – it should be an
integrative part of company innovation processes, by bringing a
clear expertise and value added.
Companies today have reached the limits of incremental improvement.
Squeezing another penny out of costs, getting a product to market
few weeks earlier, responding to the customer a little bit faster,
downsizing or re-engineering, will not save the business in the long
term. Companies today need growth and for that they would need
innovation – not simply sustaining innovations but disruptive
innovations. Business capacities in handling disruptive innovations
will make the difference in between winners and losers. However,
companies have a lot of difficulties today entering in those kind of
innovations since they require ways of management and principles
which are completely different from the ones companies are using
today for managing their existing operations.
Disruptive innovation in the contrary of the sustaining innovation,
which contribute to improving the performance of existing product or
service, offer a completely new value proposition. It is important
to mention that many of such innovation have nothing to do with
technology, rather with the business model idea.
When it comes to purchasing actual involvement in the innovation -
we are far away from being completely integrated today.
In fact, purchasing is getting operationally highly efficient: we
are good in reducing costs, optimising processes, satisfying
internal customers: making things better, faster, cheaper. But this
is not enough. We should bring competitive advantage and today
competitive advantage means “innovation”! Purchasing should be
organised for innovation. And as one of the functions more in
contact with external world and a reach on the whole supply chain,
it is well placed to do so. But for that it would require a radical
change in the function, in its strategies, expertise and ways of
working! And above all it would require entrepreneurs.
Supplier management should be another area of concern. Purchasing
can’t manage suppliers in the same way for price reduction and for
innovation. The priorities and the investment needed in building
relationships would be completely different.
A switch from purchasing to Value Based Sourcing is required.
Supplier’s resources should be managed in such a way that they
contribute to the Company overall product/market strategies.
Purchasing becomes so from inward to outward focused. Its main
priority becomes delivering value to the business, value having a
different meaning to each company. It integrates key, leading edge
technology suppliers in new product development, captures supplier’s
innovative ideas and thinks how suppliers core business would
contribute to create that value. The question purchasing should ask
to the supplier is ‘What can WE do to enable YOU to contribute to
our business value creation?
The relationships are constructed over time, on the recognition of
each other competencies and esteem and above all on the creation of
that intangible thing called “trust.
Problems, which exist today in supplier management, are not
technical but organisational in nature. The most common ones are:
- Unwillingness to take risks in establishing relationships, limited
experience, no clear agreements, misunderstandings about how each
organisation functions, disagreement on sharing of the gains,
selection based on price rather than innovativeness, collaboration
with too many and/or insignificant suppliers, mismatches between
expected and available capabilities, supplier involvement seen as
threat etc.
Those were some of the most important observations coming out of the
Conference. Certainly there is a big knowing-doing gap today in
purchasing involvement in innovation. But the change should start
from somewhere, and this somewhere is in the hands of purchasing
professionals. |
