Source : Procurement Leaders
Autor : Steve Hall
If procurement doesn’t act as a pipeline for innovation coming from the supply base, a business can die. Or how about another way – if procurement doesn’t listen to suppliers warnings, it can be painfully slow to jump when cracks start to form in the market. When you look at companies that failed, you have to ask: did they listen to suppliers?
In recent months, I (and I’m sure I’m not alone) have been reading plenty about companies that simply couldn’t keep up. There’s plenty of interesting warnings to take away from their various downfalls, but I kept wondering whether there couldn’t have been people telling them the way they needed to be going.
Take Kodak. Here’s a company that made the first handheld cameras, that decades after it sat atop the photography world is now actually stopping making cameras. Much of Kodak’s decline is attributed to its inability to match Japanese companies in the digital market. But Kodak actually had the idea, it’s alleged, for the digital camera quite early on – it even built one and then reportedly shelved it for fears that it would cannibalise their film products.
What would suppliers have been saying, were they – unimaginable, I’m sure - given audience with the CEO? Well film-side suppliers may well have been saying ‘great job – we’re happy to be working with an established name. Can you pay us more?’
But on the digital-side, possibly there were messages out there early? ‘Oh yeah, we’re supplying 50 of these to a Japanese company’... ‘actually, there’s a lot more we could do with this technology we’re selling you’. It’s fantasy, but I don’t think you can suppose that there weren’t signals there from the supply market that Kodak missed.
There’re few ways around a CEO once they’ve got their mind set – but you can imagine it was easier for procurement to listen to the messages from comfortable suppliers, than those challenging them to do something different, to go into the unknown.
How about RIM? Blackberry was another example of a huge success that was left flatfooted, both by innovation elsewhere in the market and by its own inability to deal with security issues, real or perceived.
Which isn’t to say that Blackberries or Research In Motion are done – just that, again, the warning signs were probably there and procurement should have been in a position to see them. Whereas one of Apple’s strengths has been its ability to segment its suppliers into those it can leverage massive cost savings from and those it can work more closely with to gain an edge in R&D, other businesses, well, haven’t – and look at the share prices.
Again – a simplistic picture, but whether procurement needs to be acting differently in order to connect up information and ideas from the supply base with internal business partners has come up rather a lot here at Procurement Towers in recent weeks.
Companies like Unilever and P&G might argue that they’ve spent a lot of time and resources making sure that they do it very well. ‘Innovation is the lifeblood of the organisation’ as the argument goes, and procurement has a crucial role to play there. But the lessons of how the function is structured, how buyers are engaging with suppliers, where conversations with the supply base are opened and how the findings are communicated - all are important and relevant across industries.
No business is immune to risk and none are able to squarely ignore innovation. Without procurement playing its part as the nerve centre of the organisation, they’re already two steps behind. And maybe you can sometimes trace these failings back to an inability to listen and make the right information available to the right people in the organisation.