Embed Size (px)
Citation preview
DE
NV
ER F
ALL
SU MMIT
2014
Driving Innovation Through
Procurement
The Life Tie ProjectRaj NathExecutive Director - Strategy
The Smart CubeMark BjedovManaging Director
www.sig.org/eval
DE
NV
ER F
ALL
SU MMIT
2014
Evaluation How-to:
Your feedback drives
SIG Event content
By signing and
submitting your
evaluation, you are
automatically entered
into a prize drawing
Why?
Option 1: App
1. Select Schedule
2. Select Schedule by Day
3. Select Day
4. Select Session
5. Scroll to Description
6. Click on the Evaluation link
Option 2: Browser
1. Go to www.sig.org/eval
2. Select Session (#28)
How?
Innovation
How Procurement Can Help Accelerate the Innovation
Agenda
October, 2014
Here to take your business forward.
The Smart Cube
—High Value Category Intelligence
and Analytics
—Global Delivery Model
—Focus on Insight
—Compelling Economics
The LifeTie Project
Thelifetie.com
@lifetie
415-269-2246
@rajnath
COMPANIES THAT PERFORM WELL IN INNOVATION INITIATIVES GROW SIGNIFICANTLY FASTER
Innovation done right means tangible gains
13%
84%
5%
28%
Top InnovatingCompanies*
Other Companies5-year CAGR
Average Annual Growth
Revenue Growth
Source: Bain Innovation Assessment Survey, Georgia Tech Survey
7.50%
14.50%
Low Cost
Innovation
Average Profit Margin For Self Reported Company
Strategies
Procurement: Can it play a role?
Source: Hackett Group
PROCUREMENT:
WHAT ROLE CAN IT
PLAY?
A global QSR major wants to develop a
specific type of “flavor dispenser” for
their beverage products; existing
suppliers had limited knowledge of the
technology…A beverage company wants to make a tailored-fit home dispensing system for its customers—branding, size fit, the works…
A confectionery manufacturer wants to “go green” with its packaging, ultimately using non-GMO biopolymers…
A global FMCG giant wants to develop integrated electronic-based oral care products by developing “never before” products in the domain
Six Key Factors
1Flex your
mindset 2Deploy the
right talent
3
Get involved…
at the right time
4
Organize flexibly…
one size never fits all
5
Bring insight to
the table
6
Measurefor success
Flex your mindset…
Be an agent of change
Procurement must change it’s fundamental role
15%
7%
63%
54%
15%
46%
Peer Group World Class
Valued BusinessPartner
Negotiations/Sourcing Expert
Gatekeeper
Administrator
Old Role New Role
Steward to purchased cost savings
Steward to a balanced supply scorecard
Procurement process executor
Business process enabler
Stock picker and trader Money manager (i.e. risk manager, not risk owner)
Supply gate keeper Supply gate opener to supply market innovation
Siloed function owner Coordinator of cross-functional supplier
interactions
Sourcing methodology zealot
Solutions assembler (agnostic to the toolset)
Source: Hackett Group
the right talentDeploy
If procurement’s role is changing, so will the skills and knowledge
Extreme difficulty attracting/retaining
Difficulty attracting/retaining
Minor Difficulty attracting/retaining
Strategic thinking and analysis
Change management and
process improvement
Project/program management
Vendor/Outsourcing management
Data analysis and modelling
Relationship management
Problem solving
Business acumen
Low demand(Replace turnover)
Significant demand(Growing need)
Very strong demand(Critical skill)
CORE COMPETENCE NICHE COMPETENCE SKILLS DEFICIENCY RED ZONE
Finding this talent is going to get even harder
Mapping procurement business skills demand and supply trends
RED
ZONE
Source: Hackett Group
Get Involved…
At the right time
— Engage Early
— Identify alternative suppliers
— Understand alternative markets and geographies
— Assess supplier risk carefully
— Conduct financial analysis (Make/Buy)
— Evaluate alternative tools and technologies
— Involve supplier in New Product Development…
— …At the design stage
— Listen and Leverage
Get Involved…
At the right time
Organize flexibly…one size never fits all
Dedicated Teams
Virtual Teams
Cross Functional Teams
…Put in place procurement innovation managers or specialists that
work closely with the Innovation R&D team and Marketing team...
…Translate business strategy into something that is meaningful to
suppliers. Take for example, the strategy to develop next generation chocolate
tablets. You could certainly argue that this is mainly a media marketing
strategy but what does it mean for packaging suppliers, for ingredient
suppliers, for equipment suppliers etc.? It doesn’t make sense to them. This is
where procurement innovation managers come in to translate the
needs…
Jean-Baptiste Rubens, Head of Procurement Innovation, Mondelēz
International
Bring Insight to the Table
— Identify possibilities
— Identify the right vendors
— Align vendor strategies and innovation plans
— Evaluate and manage economics
Measure for success
Reduced Time-to-Market…
…Improved Profitability
3.5%
7.4%
Average Top Quartile
INCREMENTAL REVENUE FROM SUPPLIER
INNOVATION FACILITATED BY PROCUREMENT
(% OF TOTAL REVENUE)
Source: A.T. Kearney
Six Key Factors
1Flex your mindset
2Deploy theright talent
3Get involved…
at the right time
4Organize flexibly…
one size never fits all
5Bring insight to
the table
6Measure
for success
Procurement’s Path
Assess your options
Review supplier capabilities
Map supplier capabilities to requirements
Study feasibility and co-develop
Assess your options
Review Supplier Capability
Map Supplier Capability to Requirements
Study Feasibility and Co-develop
Innovation Philosophy is Broad…
…Many elements to consider
Innovation isn’t about owning everything, it is about owning the right things
Innovation isn’t only about new products, but also
new processes, technologies, etc.
Process skills alone yield little differentiating value
Good project management is a hygiene factor
Are you a customer the supplier will trust?
Do you have a bias for partnering?
A key strategy for the largest innovators
…In the last three years, about 70 per cent of our innovations have been contributions from our suppliers……Significant amount of costs have been taken out of our end-to-end value chain... …And about €1.3 billion ($1.6 billion) worth of capacity investment by suppliers for us...
“”If you look at our company’s organic net revenue growth in Europe, at least
50% of the growth is coming from supplier contribution……To measure this we have defined criteria that determine whether a project or product qualifies as significant supplier contribution or not……Intellectual property (e.g. Do we receive the IP or does the IP stay with the supplier?), exclusivity on that type of material, resource commitment of supplier…
“”
(2013)
(2014)
Contact Information:
Mark BjedovThe Smart Cube, Inc.Managing Director
Tel. 248-522-7917
Raj NathThe Life Tie ProjectExecutive Director - Strategy
thelifetie.com
@lifetie.com
415-269-2246 (M)
Thank You
DE
NV
ER F
ALL
SU MMIT
2014
Session #28
Driving Innovation Through Procurement
Raj NathThe Life Tie Project
415-269-2246
Mark BjedovThe Smart Cube
248.522.7919
Speakers:
