This document discusses the benefits of early procurement involvement in innovation projects. It argues that procurement can help reduce life cycle costs the most when involved from the early concept stage, not just later on. An ideal model involves procurement from the start along with supplier involvement throughout the process. However, conflicting goals between procurement and innovation teams can compromise collaboration. The document proposes an optimal collaboration model from strategy down to process to better leverage the competences of both groups for more efficient innovation and fewer issues later on.

1. Successful integration of Procurement in innovation projects
8 March 2010

2. Procurement competences in reducing Life Cycle Cost are most effective
when involved 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
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3. Early Procurement Invovlement is beneficial for both R&D/Marketing and
Procurement
Benefits for R&D / Marketing Benefits for Procurement
• Leverage capabilities and 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
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4. An optimal collaboration model between innovation partners is needed from
strategy down to the innovation process
Setting up an optimal collaboration model Strategy
 Translate the strategy into the overall innovation business model,
including:
- Overall partner framework Business
model
- Degree of centralization & reach of innovation
- Internal collaboration framework;
• Aligned target setting
• Project management Innovation
• Information flows Process
• Formalization of internal and external partnerships
 Design the innovation process, including:
- Assignment of leads and partners in each stage of the innovation process Innovation
Performance
- Mapping of required competences in each stage against the available
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
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5. The right collaboration model will ensure full use of the competences present
with R&D/Marketing and Procurement
Strategy Our four step approach
1. Assess:
 The fit between strategy and collaboration model
Business  The Procurement maturity
model
 The presence of Procurement Innovation competences in the organization
2. Develop:
 The full collaboration model
Innovation  The organizational structure and governance in Innovation teams
Process
 The innovation process requirements for Procurement competences
3. Start small: pilot the collaboration model for one project
Innovation 4. Scale fast: roll-out the collaboration model for the entire organization
Performance
Optimal innovation performance can only be achieved when all parties involved are aligned
Presentation Title
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