Why does supplier innovation seem so difficult?

There are a number of challenges that arise when we want to explore guided innovation as a source of value in a (hopefully strategic, but not always) supplier relationship. The challenges range from stimulating good ideas through to handling the ideas and keeping suppliers engaged. In this blog we’ll look at just one of the challenges we uncovered through performing our annual global research into SRM best practices – what do people actually mean when they use the term innovation?

We’ve seen the ‘innovation’ used to describe anything from a radical idea that generated surprising new value through something as simple as a continuous improvement initiative.

So, in this context, the issue is one of ‘communication risk’ where the intent gets distorted or mis-interpreted between the customer and the supplier. To illustrate the sorts of distortion that can occur between the writers’ intent and the readers’ interpretation, here are some examples we’ve collected from recent supplier meetings, reviews and SRM governance documents:

• Found in a contract: “The supplier must propose a minimum of four innovations a year.”
• From an email describing a suppliers’ recent performance: “What the supplier did for us was a great example of innovation.”
• In the first draft of a supplier governance framework: “Our aim is to attract innovation from our strategic suppliers.”

To explore this issue of communication risk we ran a little experiment during one of our recent Stimulating and Managing Supplier Innovation workshops. We asked people to imagine that they had been hypnotises, and could not speak or write the work innovation. Then we gave them the three examples shown above and asked them to asked them to rewrite the statements, without the ‘i-word’ being used. Would everyone substitute the same words in place of “innovation”? The answer was “No”! In fact, we were given a broad range of alternatives, as follows:

• “The supplier must propose a minimum of four innovations a year.” Produced a range of substitutes like: Improvements, enhancements, new ideas.
• “What the supplier did for us was a great example of innovation.” This time the ‘i-word’ was replaced with metaphors like ‘ground breaking’, ‘leading edge’, ‘strategic’ and ‘going above and beyond’.
• “Our aim is to attract innovation from our strategic suppliers.” In this case the replacement terms were less widespread: ‘New ideas’ and ‘breakthrough thinking’ were typical.

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So what are the implications? If the goal is to stimulate continuous improvement ideas, we should ask for them, and in doing so we will typically get solutions that address issues in an incremental fashion. However, if we really do want to stimulate those unexpected, break-through, game-changing ideas from our suppliers then we should explicitly ask for that type of thing!

Finally, we should recognise that innovation isn’t something that we should just ask for. If we are serious about supplier relationships then we should embrace supplier led innovation as a collaboration opportunity to broaden thinking, create engagement and explore opportunities together with our suppliers and facilitate the creation of innovative solutions.

So, should we start saying what we really mean when talking about innovation with our suppliers?

For further information on how we can help your organisation with supplier innovation, please contact us here  or download our white paper on SRM: Stimulating and Managing Supplier Innovation 

You can register for our Supplier Management at Speed event here