Previous CIO of General Motors (GM), Tony Scott, was once quoted saying,
“GM is a highly collaborative organization; we rely on a whole tier of suppliers for everything that we do.”
Our organization’s products, customers, and profit, are ultimately a byproduct of the global supply chain networks that operate on a daily basis to add value through collaboration. The complexity of global supply chains – especially in organizations like GM – require hands-on relationship management of suppliers to ensure that supplier collaboration will lead to added value, and innovation. It’s nice to see that their previous Chief Information Officer had enough perspective to recognize their suppliers’ importance.
Traditional notions of innovation are often that innovation is to be driven forward by the internal structure of an organization (Olsson 2017). Resources spent/gains made on the road to innovation are, therefore, sustained exclusively by the internal entity. But, with the current globalized climate of the business world, companies are becoming increasingly reliant upon external actors to create opportunities for innovation, collaboratively.
Supplier bases are a great source of potential innovation. But, unlocking collaborative supplier innovation requires clearly defined strategies and operations by a sourcing, procurement and/or purchasing team to ensure that suppliers’ competencies are being leveraged to their fullest potential.
This article should serve as a starting point for creating and/or enhancing collaborative supplier innovation. But, first let’s put a meaning to the name!
What is Collaborative Innovation?
My favorite definition I could find of Collaborative Innovation is as follows:
“Knowledge or products are created cooperatively by members of a virtual team, bringing together various individuals and enterprises with complementary ideas, knowledge and skills” (Encyclopedia of E-Commerce Development, Implementation, and Management 2016).
According to this definition of collaborative innovation, it requires a team aspect and a knowledge sharing aspect.
In relation to collaborative supplier innovation, it is important that procurement and sourcing teams remember that the supplier is an equal party/partner in the collaboration. Without a supplier entity being treated so, true collaborative innovation won’t occur.
I would like to offer four things a procurement team must know when generating collaborative innovation with suppliers.
So… Are you ready to innovate?