How Can Procurement Enable Innovation?
As you’ll know, innovation is essential for any business to – not only thrive – but survive in the long term.
In fact, it’s usually a lack of innovation that’s to blame when a business can no longer meet the needs of its consumers, struggles to catch up following legislative changes or throws money at a problem that it doesn’t fully understand.
Procurement is no different. While it’s often (mistakenly) viewed separately from core business operations, the two are very much interlinked, and a lack of investment in procurement results in a multitude of problems.
What’s the problem with a lack of innovation?
Let’s take a look at some of the evidence from research conducted by market research organisation, Vanson Bourne:
- Only 45% of businesses have digitised their procurement processes.
- 64% of procurement professionals said a lack of digitisation is holding them back from doing their jobs.
- Procurement professionals spend 31% of their time on inefficient manual procurement processes. This is costing UK businesses an average of £1.94m annually.
- 67% of procurement professionals claim a lack of digitisation is limiting their ability to gain insights into spend and supplier management.
So, if you are looking to improve the health and value of your business, investing in your procurement department to boost efficiency, reduce costs and maximise profits could be the answer.
But where can you start? This article breaks down what your business can do to place procurement at the heart of its innovation.
Why is the right technology so important?
The most obvious route to innovation is arguably technology – but this is also where problems can arise.
In one survey, Topline Strategy Group found that U.S. businesses lose over $1.5 billion annually, and waste over 32 million work hours due to ineffective procurement tools.
To avoid simply throwing money at the problem, you need to step back and assess what kind of eTool your business will actually benefit from. This includes asking yourself the following three questions:
- What challenge does your team need to address?
- What process do you follow?
- Do you need to organise your data?
Then, it’s a case of choosing a tool that will easily integrate with your existing systems – there’s little point in investing in a tool that’s difficult to use and requires lengthy and costly integration.
How can supplier innovation help?
The global supply chain crisis means, more than ever, it’s crucial that you’re able to gain a clear view of your suppliers so that you can act with agility where needed.
This isn’t just about data and technology, it’s about nurturing positive relationships with your suppliers where communication is at the forefront. The benefits of this include fresh ideas, shorter time-to-market, and higher margins.
While organic communication can have positive effects, businesses usually require structured supplier relationship management (SRM) to ensure the best results – given this, it’s no wonder that 90% of leading companies already have structured processes in place to enhance supplier collaboration.
Is training the missing piece of your innovation puzzle?
Training might not jump to mind when you’re thinking about innovation, but it’s often a missing piece of the puzzle.
When procurement professionals and procurement teams don’t have the right training and development, they lack the knowledge and skills to reach their potential and deliver the best possible results for your business.
If you want your team to be able to spot opportunities and make the most of them, they need to be equipped with the right skills.
This is where training and development come in. By upskilling your procurement team, you’ll give them the ability to identify risks, understand laws and regulations, develop negotiation strategies and, crucially, enhance innovation.
Bromley Wood Academy offers a range of bespoke training and development programmes specifically for procurement professionals. Our team of experts will work with you to understand the needs of your business and design a programme that meets your objectives.
Topics covered include:
- Understanding supplier financials
- Problem solving
- Communication & influencing skills
- Sustainability & CSR in procurement
- Supplier relationship management
To find out more about how we can help you boost innovation in your procurement department, get in touch.