Moving vendors from order takers to strategic innovation providers

When someone recently asked me what I thought about the idea that there is a need for suppliers to become more strategic and innovative, I came to the proverbial fork in the road. 

Down one road which like a pathway after a bad storm that is strewn with debris, I saw the potential obstacles originating in the way that procurement had previously worked – and sadly in far too many cases still does. Specifically, the adversarial nature of the relationship between buyer and seller where, as a notable author, Kate Vitasek, once put it during a lecture she gave there are a clear winner and loser.  Talking with Kate afterward – we have become good friends since then, she recounted how Microsoft used to provide her with incentives for squeezing as much as she could out of a supplier. As she will readily admit, this is hardly the basis for forming the kind of relationship that leads to more significant innovation. There are, of course, other obstacles, but, you get my point. 

The Second, Less Travelled Road

I love the Robert Frost poem “The Road Not Taken,” and what it symbolizes. No, this isn’t going to be an article on a classic poem from 1916. However, in the context of moving vendors from being order takers to strategic innovators, the road less taken requires a shift in procurement’s traditional mindset. Some may find it difficult to accept; moving from a transactional relationship with suppliers to one that is relational.

Let me give you an example of what I mean when I say relational.

A few years ago, I moderated a panel discussion in which the then head of Spend Matters UK Peter Smith was a member. While there were many great insights from the panelists, the one that stood out the most was Peter’s story regarding how the ubiquitous upside-down Heinz ketchup bottle came into existence.

Smith told of how the bottle idea originated with a Heinz supplier, and in partnership with the company’s procurement department was “championed” to upper management. At the time, I remember thinking to myself how many of the listeners tuning in to the broadcast would have “linked” a product innovation with procurement? I then went on to suggest that for a similar collaboration to occur with greater frequency, procurement professionals must begin seeing their roles in much different light than they did at that time. Or to put it another way, we have to as a profession collectively make a conscious and concerted effort to choose the less traveled road that involves proactive collaboration and transparency in which the term win-win is more than an unrealizable sentiment.

Building a New Relationship Bridge

Innovation can take many different forms. From ketchup bottles to the restoration of a city’s infrastructure.

Do you remember the I-35 bridge collapse in Minneapolis? Tragically, 13 people died while 145 were injured. The state was under tremendous pressure to rebuild the bridge and do so in a way that would restore a vital artery into the city and also honor those who had died. The state collaborated with its suppliers to rebuild the bridge in record time and on budget. What is even more amazing is that how they designed and built the bridge had never been done that way before. In other words, the state and their partners were innovative. 

But, to get to that point of innovative breakthrough, the state changed the way it did business, opting for an open book framework where everyone knew the other’s costs and the associated risks were shared equally. They didn’t negotiate, they collaborated. 

As an aside, when the state reverted to their old way of doing business on the next bridge project, they ran both over budget and late. When I originally heard the I-35 story, I openly wondered, “does procurement require a crisis to collaborate and innovate?

The moral of the story? Supplier innovation begins with you and requires a relational versus transactional mindset.  So, ask not what your supplier can do for you, but what you can do for your supplier. Now, where have I heard that before?

By Jon Hansen, exclusively for Procurement Foundry