INNOVATION
A few years ago, I was working with a global manufacturer of tractors and agricultural machinery. When I spoke to its suppliers, they said something which underscores why supplier innovation is so tough. I found out that suppliers of fittings and accessories were quite often small and medium-sized businesses. Although they thought the large manufacturer was extremely ethical, they still did not trust it. They didn’t trust the manufacturer’s ability to communicate effectively. They knew it didn’t understand their true costs. They knew it didn’t have the ability to speak in one voice in terms of product planning. They said, “We really don’t get any feedback, we’re not able to talk to your end customers, so we don’t really know if the products we’re producing are good, or if customers like them or not, we’re running blind.” I’ve been studying topics related to supplier innovation for more than twenty years, and this example shows you have to have so many elements in line, internally and externally, to make it work. Twenty-five years of study One of my first studies was in the 1990s at Michigan State University, where I worked with a global procurement benchmarking initiative, which ran for about eight years. From that, I worked for the Global Electronic Benchmarking Network (GEBN), a consortium of 200 companies. And we were talking to them about best practices, and I wrote a number of technical reports about category strategy and ecommerce, supplier development, a lot of the concepts that were just starting to emerge in the mid-1990s. I think of supplier innovation as an extension of supplier performance management and supplier relationship management: it is the top of the pyramid. Once you get your performance in line, and can measure it, and you’re developing suppliers, it creates opportunities for suppliers to start to innovate and start getting involved in product, process and service, and design integration.
Rob Handfield Is the Bank of America University distinguished professor of supply chain management at North Carolina State University, and director of the Supply Chain Resource Cooperative (http:// scm.ncsu.edu). He also serves as an Adjunct Professor with the Supply Chain Management Research Group at the Manchester Business School.
Learning from the history of supplier innovation
Dating back to the 1990s, the ideas behind supplier innovation are nothing new. So why do so many organisations still struggle to get the concept embedded across the business? Robert Handfield, professor of supply chain management at North Carolina State University, delves into history for some clues.
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STATE OF FLUX
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