Enhance Supply Chain Efficiency by building a Robust Pipeline of Innovative Ideas. Support your Procurement strategy.

In Sweden, there’s a well-known adage often quoted in sales and perseverance contexts: “100 knocks, 10 talks, and 1 yes please.” This phrase harks back to the era of door-to-door vacuum cleaner salespeople. It encapsulates the journey of a salesperson who would knock on 100 doors, engage with 10 potential customers, and eventually secure one sale. This scenario mirrors the experience of continuous improvement in procurement functions, where out of 100 suggested improvements, only one might prove successful.

However, the ability to generate a plethora of ideas should not be viewed negatively. Rather, the real challenge lies in failing to transform these ideas into tangible, profit-enhancing outcomes. This blog post explores the critical importance of cultivating a rich pipeline of ideas to boost supply chain efficiency. It emphasizes three key areas: fostering the ability and inventiveness to generate ideas, effectively shaping these ideas into actionable proposals, and strategically prioritizing them to achieve the greatest impact.

How to Foster Capability and Creativity in Idea Generation

The first step in building a robust pipeline of innovative ideas is ensuring that your organization possesses the necessary capabilities and creativity to identify potential improvements in the supply chain. This involves:

• Encouraging a Culture of Innovation: Create an environment where every team member feels empowered to suggest improvements. Regular brainstorming sessions, innovation workshops, and open forums can stimulate creative thinking.
• Understanding Supplier Markets: Having Category managers and Tactical buyers with sufficient market knowledge, as well as understanding his/her own organization’s offering to customers, enables the capability to identify possibilities and inefficiencies.
• Cross-Functional Collaboration: Collaboration across different departments can lead to a more holistic view of the supply chain, enabling the identification of improvement areas that might not be apparent from a single perspective.
• Spend time understanding the possibilities of your current IT-tools. There are often more possibilities to collect.
• Leveraging Data and Analytics: Utilize data analytics to gain insights (example Spend analyses) into supply chain performance, identifying areas for improvement and innovation.

Structuring Improvement Ideas into Actionable Cases

Once ideas are generated, they need to be developed into structured cases for further discussion and decision-making:

• Detailed Case Development: Each promising idea should be transformed into a detailed case, including potential benefits, risks, required investments, and a projected timeline.
• Stakeholder Engagement: Involve key stakeholders early in the process to gain diverse insights and ensure alignment with broader organizational goals.
• Feasibility and Impact Assessment: Evaluate the practicality of implementing each idea and its potential impact on the supply chain.

Prioritizing Ideas for Maximum Impact

The final phase in this process of building a robust pipeline of innovative ideas involves meticulously selecting ideas for their potential to boost profitability and considering the resources available for implementation. This ensures that the most impactful improvements are brought to fruition. The categorization of these improvements aligns with the structure of the procurement strategy:

• Commercial (Category) Improvements: Typically spearheaded by Category teams, these improvements focus on strengthening supplier relationships, executing cost-saving measures related to suppliers, and initiating activities that add value to the customer experience.
• PMT (Process, Method, and Tools) Improvements: This area emphasizes the refinement of current processes, the adoption of innovative methods, and the integration of advanced technological tools to elevate both efficiency and effectiveness. A key aspect here is the elimination of redundant activities.
• Organizational Improvements: These involve the strategic utilization of resources, such as eliminating overlapping roles, to optimize organizational functionality. Such improvements are instrumental in enhancing overall efficiency.

How to get Traction and Collect Savings

After the ideas have been solidified and ordered by priority, the critical responsibility of the procurement management team is to ensure successful execution. This involves dedicating the necessary resources, energize and clearing any hurdles that might impede progress.

Building a robust pipeline of innovative ideas is not a one-time task but an ongoing process that requires commitment, collaboration, and strategic thinking. By fostering a culture of creativity, structuring ideas into actionable cases, and prioritizing them effectively, procurement executives can significantly enhance their supply chain’s efficiency and adaptability, positioning their organizations for long-term success in an ever-evolving market landscape.

Learn more about Procurement management

This course package aims to provide learners with a comprehensive understanding of the responsibilities typically on the agenda of a Chief Procurement Officer (CPO). Following are an introduction to Procurement management, basic level.

• The Operation Strategy Matrix, developed by Professor Nigel Slack, offers an in-depth perspective on organizational strategies. Crucially, it illustrates how these strategies can be distilled into specific procurement strategies. This alignment is pivotal to ensure the procurement department’s activities are in sync with the overarching goals of the company.
• While there’s no one-size-fits-all approach to structuring a procurement function, various factors such as the nature of the business, its history, available resources, and other variables dictate how roles and resources should be organized. Despite this variability, LHTS believes that showcasing a generic, contemporary blueprint of a procurement organization – detailing roles and responsibilities – can be instrumental. Such a structure not only helps budding procurement professionals understand their function but also highlights the potential challenges a CPO might face. An optimized procurement function is often the cornerstone of a company’s success, ensuring quality, cost-effectiveness, and reliability within the supply chain. While every company must tailor its procurement function to its unique needs, this general blueprint provides a robust foundation to comprehend the core elements and their efficient integration.
• Competence management emerges as a pivotal strategic area within the procurement function. When executed adeptly, it ensures access to pertinent skills and can also amplify a company’s appeal as an employer.
• Additionally, the package introduces learners to Sourcing Key Performance Indicators (KPIs), which are critical metrics every procurement department should monitor. Participants will gain insights into tracking and interpreting these KPIs to guarantee peak performance.
• EFFSO sheds light on the concept of category management (CM) and offers guidance on establishing an effective category management program. The follow-up course navigates learners through the initial steps of CM implementation, providing an exhaustive overview of CM and the essential components for an initial category strategy, complete with handy checklists.
• The course also delves into Value management, focusing on deriving additional value from the supplier base. It provides a deep dive into the techniques and tools employed to maximize this value.
• Why is Corporate Social Responsibility (CSR) pivotal for the procurement community? The course explores the significance of responsible business practices and how they mark the initial steps towards sculpting a sustainable supply chain.
• Discussing digitalization, the course underscores the integration of proactive digital procedures within the procurement domain. Successful digital transformation can unleash a plethora of benefits including enhanced efficiency, transparency, cost savings, revenue generation, agility, and supply chain management improvements. Various technologies are available to bolster this digital metamorphosis:
  • Spend Visibility Analysis Tools: These tools proffer insights into organizational spending, promoting informed decision-making.
  • Blockchain for Smart Contracts: With blockchain, contracts can be verified, executed, and stored securely without third-party intervention.
  • Robotic Process Automation (RPA) Technology: This tech employs “robots” or software to automate mundane tasks, freeing up human resources for value-add activities.
  • Procure to Pay System: These systems mechanize the process from ordering to payment, culminating in swift, efficient transactions.
  • In this module, Medius toolkit is exemplified to demonstrate how standard processes can undergo digitization. By grasping and leveraging these digital tools and methodologies, companies can not only streamline their procurement procedures but also remain competitive in an increasingly digital landscape.
• The procurement department’s role isn’t just about sourcing goods and services. They must ensure these meet the organization’s quality, cost, and delivery criteria. But beyond these basic requisites, procurement professionals must weigh the ethical and societal ramifications of their purchasing choices. This is where the ‘Supplier Code of Conduct’ assumes significance. This code demarcates the principles and expectations an organization sets for its suppliers, encompassing ethical work conditions, environmental stewardship, human rights, and other relevant societal facets. It’s imperative for procurement professionals to be cognizant of and understand these facets to make informed decisions that align with the organization’s broader objectives and ethos.
• Concluding the course, we offer a personalized 1-on-1 e-meeting (60 minutes) with a course instructor. This session’s objective is to translate the theoretical insights from the online lectures into practical application in real-world professional settings.

Note: Illustrations to the blogpost “Building a Robust Pipeline of Innovative Ideas” was created by Chat-GPT on November 25, 2023.

Want information about LHTS courses in Swedish, visit Utbildning Inköp.