Everybody talks about capturing supplier innovation, but rarely is it a reality in many companies. An article in CEO magazine inspired this blog, and a post by Dave Henshall just this morning spurred this last minute mention before posting; both are worth your time for further reading. Just as CEOs have to create the conditions for innovation in a company, purchasing and supply chain leaders must create the conditions to drive and capture innovation from suppliers. Our companies’ futures depend on it.
In my career, I have been able to capture innovation multiple times. One occasion, driven by a problem, had a profound impact on my thinking. Vlasic Foods had just purchased a BBQ sauce product from General Foods. When tamper-evidence became a requirement, it was a challenge for food and consumer products, and for us the efficiency of the equipment applying shrink bands was no greater than 68%. We purchased the closures for this product from Brown-Forman, a leading manufacturer of spirits. When discussing the problem with the closure supplier, they offered to help by inviting our team to visit their plant in Louisville, where their engineers analyzed our shrink band and advised us that it was size too small to fit on the jar. They further showed us equipment that they had innovated for their own product to score and glue the band on the jar. By early the next week, we ordered the right size band, received new equipment from the supplier and our efficiency became greater than 92%. This would have taken our company several months and many dollars to resolve without supplier innovation.
The story is only important if we understand what drives supplier innovation. In this case there was total trust between the companies, a supplier relationship that was strong and growing. The personal styles of the management were similar and there was an open discussion about the issues. In addition to these factors, the Vlasic operations and engineering teams were open and accepting to the ideas.
This is only one example of many, but I think it is important to understand the motivation and conditions for innovation will be required for survival in the future. Innovation is a process that needs to be deliberate, managed and focused with the right mindset and attitude.
Is your company ready to make innovation a reality?