Innovation is a major issue for companies in terms of competitiveness, and one to which buyers may legitimately make their own contribution. Indeed, a new approach to their supplier relationship by buyers is likely to produce significant and lasting results.
This co-innovation approach is, for example, the path followed by Laboratoires Urgo, according to an article published by Procurement News. This mid-sized company chose to give its buyers a proactive role in value creation, based on the application of four good practices that were revealed by the company's Director of Purchasing during a conference:
- Include strategy in the agenda of any exchanges between buyers and their partners
- Approach the supplier relationship on an exclusively reciprocal basis
- Give recognition to suppliers' efforts in proportion to the extent of their investment
- Be inventive and structured in your handling of the ecosystem
The basis for expanding your role as a value-creating buyer is that the objective of a rapid fulfilment of corporate strategy is achievable for you thanks to the support and expertise of your top partners.
To achieve this objective, the first two good practices are:
- Knowing what your priorities are
- Building a spirit of co-innovation with your partners
Laboratoires Urgo recommends sharing with suppliers considered of strategic value, elements such as:
- The development prospects for the laboratory's products and services over the next three years
- Its priorities for action to boost its growth
- The points on which partners can make a positive contribution
Seen through this filter, buyers are encouraged to take a fresh look at their key suppliers, who are clearly seen as stakeholders in the long-term success of the company's strategy.
A supplier is a supplier, irrespective of any involvement in the strategic success of the company. Value-creating buyers are not supposed to abandon the fundamentals of their role so they are still expected to evaluate their partners!
However, the value-creating buyer approaches this valuation with a different attitude: reciprocity. The assessment goes full circle:
- I evaluate you
- You evaluate me
It is this shared vision of effective collaboration that structures trust; the challenge is no longer to punish contractual deficiencies, but to confidently establish the prospect of continuing progress. Co-innovation is based on a demanding but lasting relationship!
Recognition is a well-known lever of motivation in the field of management. But it's not only that!
Just as a Purchasing Director motivates his team by expressing his satisfaction, a buyer favours innovation transfers by welcoming the results of the efforts made by his best partners.
At Laboratoires Urgo, the recognition of suppliers is the subject of a marked process. Thus, each year, the pharmaceutical company distinguishes three suppliers, from both the direct and indirect purchasing sectors.
The reward for each winner is threefold:
- A "Supplier of the year" award
- A quantity of Urgo laboratory products
- A personal message from the Director General of Urgo Industries
No partner of interest will engage in a co-innovation approach without confidence in the strength of the customer-supplier relationship. This is why the fourth good practice is only to be addressed when the first three are in place.
Value-creating buyers must themselves be creative in the tools they put in place to generate the emergence of new ideas and practices.
Cited by Laboratoires Urgo, initiatives of this type contribute to a positive dynamic:
- An ideas box dedicated to suppliers, with 50/50 sharing of the benefits of the innovations implemented. The laboratory estimates that one thousand suggestions are put forward each year.
- A speed dating event is held every two years, reserved for indirect purchasing suppliers, with a focus on specific issues (e.g. digitalisation of the relationship and its benefits for the fluidity of the supply chain).
- Direct purchasing suppliers, for their part, meet up each year for two days of innovation -focused workshops, mixing participants from the Urgo side with Tier 1, and even Tier 2 and 3 suppliers.
In conclusion, while this approach may not be applicable to all your suppliers, it fosters ongoing dialogue with your key partners, in a spirit not of discussing problems but rather of considering mutually beneficial solutions.
Value creation is the new role assigned to the purchasing function. To understand why buyers have everything to gain from engaging in this process, watch the video of Natacha Tréhan, Senior Lecturer in Purchasing Management at the University of Grenoble Alpes and Researcher at CERAG, Tomorrow's challenge is value creation.