What have your suppliers done for you lately? Or, a better question might be: Have you partnered with your suppliers to drive value?
The former is aligned with an outdated view of suppliers as mere commodity vendors: squeeze them for cost reductions and hold them accountable to deliver. The latter addresses what more enlightened companies want from their suppliers today: a strategic relationship and partnership to drive value for both organizations. With busy agendas, stretched employees, and insatiable demands, we must recognize the value add of supplier partnerships and should hold suppliers to higher standards. But it’s also up to companies to create an environment where suppliers can thrive as a strategic asset.
So how can suppliers provide strategic value for your company? Let’s first consider your value proposition. You are selling your products and services, and your suppliers handle either a piece of the product/service execution or delivery of the products and services, or possibly both. How can you work together to drive more value to your end customers?
The first answer to that question is another question: have you asked your supply chain for ideas on how to innovate and drive greater value in your customer value proposition? While this may sound like an oversimplified response, recent innovation market research conducted for “Advancing Innovation: Galvanizing, Enabling, & Measuring for Innovation Value!” (published by the Institute of Management Accountants) shows that only 31% of those surveyed have asked that question of their suppliers.
Many companies approach innovation as an internal process, and some even treat it as a secretive initiative. But the research suggests that 50% of your ideas should come from outside the company. So who better to ask how to best innovate your offerings and your overall value proposition than your suppliers? Many suppliers want to be innovative and drive more value, creating a win-win scenario — not the old-school, win-lose relationship inherent to “vendor management,” where suppliers are seen as only providing a commodity at the lowest price.
Recognizing the potential value of partnering with suppliers for support and thought leadership is only the first step. The next is figuring out how to solicit their ideas, which has a range of possibilities, including:
Holding an ideation workshop
This is a straightforward tactic. You can initiate these workshops with one of your suppliers to discuss current problems and opportunities, where the supplier may be able to contribute more value to your total offering. Maybe it has new technology to bring to the table, maybe it has another customer benefiting from a different business construct like a subscription model, or maybe it simply has additional benefits it can deliver.
Utilize technology to enable crowdsourcing
Why ask one when you can ask them all? A more rigorous approach, crowdsourcing allows you to solicit thoughts and ideas from multiple suppliers simultaneously. Through the use of technology solutions like Spigit, you can digitally post a business challenge to your supplier community or ask for specific ideas to drive more value for your customers. Suppliers can submit thoughts and solutions to your request and, depending on how you configure your crowdsourcing tool, you could allow multiple other collaborative aspects to the request.
For example, all or a select group of suppliers can submit ideas, and others can “like” or vote on the idea from a standpoint of likelihood of success, value creation, differentiation, etc. This also creates the potential for suppliers to create an alliance, working together to find joint solutions for your organization’s toughest problems. This creates open communication that may have otherwise been impossible across vendors.
Until a few years ago, business was not conducted this openly, and we did not have the tools to collaborate at scale. Today, we can and already do use many technology solutions to quickly solicit, evaluate, and test innovation ideas to create value — even before beginning to execute the ideas. Ask yourself: are you part of the 50% capitalizing on your supplier relationships. And what value are you leaving on the table because you simply haven’t asked?
This article was first published by CFO Magazine and republished with permission.