The Supply Chain Profession is in a great moment in time. In just a few years the perspective has shifted from procurement to a much broader and strategic picture of how supply makes a vital contribution to a company’s competitive advantage.
Some things to Remember
- You Cannot Cost-Cut your way to Prosperity
- In a Fast Moving World, Innovation is the most sustainable source of competitive advantage
- Innovation from Suppliers is typically the least costly, least risky, and often the fastest to market
- Strategic Suppliers are an Untapped Wellspring of Innovation, but require a new form of Strategic Relationship to access it
We are in dynamic times. As we look into the very near future, the strategic value of key suppliers becomes increasingly more prominent.
Most importantly, in your supplier portfolio, the 90/10 rule prevails. Typically, less than 10% of your suppliers actually contribute to 90% of the value in the supply base. When we look at the value paradigm, for these 20%, one of the most important contributions to your corporation’s value is INNOVATION.
In our work, in conjunction with the University of San Diego’s Supply Chain Management program, we’ve found that only a small percentage of suppliers are given the opportunity to provide innovation streams to their customers. This is primarily because buyers don’t expect or demand innovation from their suppliers.
However, that small percentage of buyers that want supplier innovation have a clear command over their competitors in terms of sales and profits. They have learned they cannot cost-cut their way to prosperity.
For all of you that are seeing the future of supply chain management as an ever-increasingly strategic job of managing competitive advantage, you will find the Engines of Innovation approach extremely rewarding.
If you are truly dedicated to World Class Supply Management, you will be no doubt be interested in grasping the major implications of innovation in the supply chain, which will trigger major tremors in the structure of business.
See the World Class Supply Management Step Chart to determine how competitive your company is. You may be quite surprised.