Procurement Involvement in Innovation Projects


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How can procurement effectively collaborate with innovation departments/teams?

Companies need to assess whether each department is heading in the same direction. Once all departments involved are aligned and have complementary targets, embedding the collaboration whithin the process will ensure successful contribution of procurement to innovation.

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Procurement Involvement in Innovation Projects

  1. 1. Successful Integration of Procurement in Innovation Projects 14 March 2010
  2. 2. Procurement competences in reducing Life Cycle Cost are most effective when applied in innovation projects from early stages Typical involvement by innovation teams Ideal involvement by innovation teams Cost reduction Cost reduction opportunities opportunities Procurement Procurement involvement involvement Supplier involvement Supplier involvement Life Cycle cost Life Cycle cost avoidance avoidance determined determined Concept stage Project stage Prototype stage Revision stage Product stage Concept stage Project stage Prototype stage Revision stage Product stage Challenge: collaboration is compromised by conflicting goals between procurement and innovation teams Copyright © 2010 Capgemini. All rights reserved. 2
  3. 3. Early Procurement Invovlement is beneficial for both R&D/Marketing and Procurement Benefits for R&D / Marketing Benefits for Procurement • Leverage capabilities and supplier market know-how of procurement • Closer to the core of the requirements of the business (R&D/Marketing) • Easy entry and filtering of ideas from (potential) suppliers • Influence policy and decision making where it impacts the bottom line the most • No need to develop Procurement competences such as supplier management • More a business partner, less a police officer or mere negotiator • More efficient innovation projects, fewer setbacks due to conflicting procurement • Get in control of all spend and suppliers perspectives in later stages • Full scope supplier involvement strategy • Full scope supplier involvement strategy The benefits will not come from mere involvement, it requires a change in the collaboration model Copyright © 2010 Capgemini. All rights reserved. 3
  4. 4. An optimal between innovation partners is needed from strategy down to the innovation process Setting up an optimal collaboration model Innovation Strategy  Translate the strategy into the innovation collaboration model, including: - Overall partner framework Collaboration - Degree of centralization & reach of innovation Model - Internal management framework; • Aligned target setting • Project management • Information flows Innovation • Formalization of internal and external partnerships Process  Design the innovation process, including: - Assignment of leads and partners in each stage of the innovation process Innovation - Mapping of required competences in each stage against the available Performance competences in the partner network Aligned and structured involvement of the right internal and external partners enables full leverage of competences which leads to higher innovation performance Copyright © 2010 Capgemini. All rights reserved. 4
  5. 5. Collaboration will ensure full use of the competences present within R&D/Marketing and Procurement departments Innovation Our four step approach Strategy 1. Assess:  The fit between strategy and collaboration model  The Procurement maturity Collaboration Model  The levels of Procurement Innovation competences in the organization 2. Develop:  The full collaboration model  The organizational structure and governance in Innovation teams Innovation Process  The procurement competence requirements of the innovation process stages 3. Start small: pilot the collaboration model for one project 4. Scale fast: roll-out the collaboration model for the entire organization Innovation Performance Optimal innovation performance can be achieved when all parties involved are aligned and work together Copyright © 2010 Capgemini. All rights reserved. 5