Companies Are Missing Out On Supplier Innovation

Competitive advantage lost as organisations struggle to secure value from their supply base

Only one in 12 organisations benefit from supplier innovation despite it being among the top priorities for business leaders.

In a global survey of 401 companies and organisations, leading supply chain and procurement consultancy State of Flux has found that only 12% report innovation as being one of the benefits they get from managing their suppliers.

However, support for supplier innovation amongst executives stands at 60% and 28% of organisations seek greater supplier innovation through supplier relationship management (SRM).

Clearly organisations are falling short when attempting to extract greater value from their suppliers, says Alan Day, State of Flux chairman and founder.

“No company can make it on their own. Leading firms know that they can get a competitive advantage over market rivals by working more closely with suppliers to create new products and build new processes. With disruption caused by mass internet adoption and economic globalisation never far away, businesses should not ignore such a rich seam of value. Yet, on the whole, they do,” said Day.

As well as research data, The State of Flux report Harnessing and growing supplier innovation also features case studies from global companies including Lloyds Banking Group and the US postal service, as well as insight into supplier innovation from Toyota, from Oxford University vice-chancellor Sir John Hood, Carolina State University supply chain management professor Robert Handfield and Olympics cycling coach Olympic sprint cycling coach Justin Grace.

The report also highlights difficulties harnessing technology to understand and manage supplier relationships. Half of organisations say their current technology solutions do not adequately support the supplier management lifecycle while only 6% are fully satisfied with their technology support for SRM. The result is unsurprising, since for 86% of organisations the main software for SRM is Excel. The Microsoft spreadsheet software is a great desktop tool, but not an application designed for managing thousands of suppliers across a large enterprise.

But the right tools do exist. Enterprise SRM software SupplierBase is used by global companies in financial services, media, pharmaceutical and public sector organisations to manage supplier performance, risk, innovation and intelligence. It also supports reporting, contract management and CSR by drawing data from corporate supply chain and enterprise systems and external web sources.

To download the full report click here.