A quick search on Google for the word ‘innovation’ led me to the Wikipedia page which cites the origin of the word. The word innovation derives from the Latin word innovatus, which is the noun form of innovare “to renew or change,” stemming from in-“into” + novus-“new”. Couldn’t agree with this more after I read a recent article in HBR – ‘Don’t Let Your Supply Chain Control Your Business’.

The article through the study that it carried out discovered that a heavy reliance on first-tier suppliers is dangerous for Original equipment manufacturers (OEMs). It weakens their control over costs, reduces their ability to stay on top of technology developments and shifts in demand, and makes it difficult to ensure that their suppliers are operating in a socially and environmentally sustainable fashion.

The practice of relying on the first tier suppliers can be related to the Pareto’s rule and there is no denying the fact that buyers accrued a number of benefits from rationalizing the supplier base. This article, through its study emphasizes the need for procurement to have a re-look at its supplier strategies and move away from tried and tested approaches in order to remain competitive in a challenging business environment.

This is where I would like to draw the attention of the readers to my opening line on innovation. As procurement evolves from a tactical role of merely interacting with suppliers to a more strategic role of forging sustainable relationship with the suppliers, it needs to renew & change its approaches / tactics as the situation demands keeping in mind the overall strategic objectives of the organization.

This demands procurement to adopt collaborative approaches to manage suppliers and at the same time incorporate market intelligence into its processes to ensure they are abreast with the latest trends in the market that empower them to take corrective measures at the appropriate time. Supplier relationship has been in talks off late keeping in mind the numerous supply disruptions faced by organizations around the globe which had a direct impact on the bottom line. The supply disruptions can be attributed to a number of reasons viz. natural calamities, political instability, supplier bankruptcy etc.

This coupled with the looming fears of slowdown in growth and demand, is once again forcing procurement to remain on its toes to manage the times of uncertainties to deliver on the final goal of organization i.e. to contribution to the bottom line.

So the question now that needs to be answered is, how can procurement teams innovate in the field of supplier management? Which are the areas of supplier management which offer scope for innovation? This and many other questions will be addressed by our expert Dr. Robert Handfield, (Bank of America University Distinguished Professor, North Carolina State University/ Director, Supply Chain Resource Consortium, NC State) at the second event in our online ‘Expert Access’ series on December 7 at 1 pm ET.

Click here to register and send in your queries to gain insights in the field of supplier management through our expert.

Learn More: Vendor Management