Why Procurement Leaders Should Focus On Innovation and Creativity
In the coming times, procurement will be more about sourcing ideas than sourcing raw materials, products and services. A company or business will no longer be just about delivery of products or services but about engagement of clients and stakeholders in new and innovative ways. That will be an inflection point for businesses and the change has already begun!
There is no second thought that innovation will enable procurement to be conducted in an effective way. The transformation in the role of procurement as a service intermediary will enable business operations to be conducted more effectively depending on the business requirements, supply market, volatility and geography.
Creativity is desired in a business but can never be a replacement for effective leadership at the top. However, we often underestimate the power of creativity and leadership. In fact, creativity and leadership are intertwined. They depend on each other to translate the procurement process into something more than buying of goods and services. The whole connection between the two can be further explored in several ways. For instance, for advanced procurement businesses, supplier costs can be reduced through continuous improvement efforts that can become the benchmark of evaluating a business’ standing.
What we miss out is that only a handful of procurement leaders are genuinely looking to engage with contract manufacturers and tier-one suppliers who are responsible for providing the much needed resources to the business in the times of need. The underlying theme of make versus buy regulates technology procurement, capital investment and even general IP investment. However, this will probably be a thing of the past as a benevolent leadership will enable business experts to measure creative procurement sooner than later. This can lead to co-creation of new intellectual properties or regular sharing of research and development explorations in the different aspects, say from product innovation to radical-shop floor productivity.
The make versus buy debate will be the talking point that will be the ultimate test of the influence of capabilities of procurement function in a business as it will form the core on which most of the business decisions will revolve around. Also, it involves asking the simple as well as difficult questions that shape the way for procurement to be regarded as a significant activity. This will include questions like how does ‘buy’ impact the ultimate customer? Does it actually increase business or just transfers the risk? How is it beneficial for any of the stakeholders involved in the process? These sets of questions would enable businesses to take procurement seriously and not just look at procurement from the angle of unit costs. When a business arrives at the right sets of questions at the front-end, it is able to come up with creative solutions at the back-end, enabling the business to strive and be successful.
Businesses can edge out competition in the procurement side if they thwart other organisations from considering potentially vertically-integrated acquisition strategy owing to the pre-existing supply contracts that speak of guaranteed supply contracts, early insight in to a potential transaction etc. If creativity is applied to supply chain and not just the supplier engagement and negotiation, it can help procurement be the decision maker rather than a routine part of the business operations.