Study shows procurement’s struggle to prioritise innovation

Only 1 in 20 procurement professionals prioritises innovation when selecting a supplier

The study, which included interviews with 20 senior procurement professionals, reviewed some of the considerations at play when choosing a potential partner –  and how procurement teams can overcome the challenges posed when trying to balance cost savings alongside innovation.

The full findings are included in APS Group’s whitepaper: Putting a price on innovation: The procurement puzzle.

This study highlights how multinational electronics company Philips is driving innovation through procurement. It also advises how other procurement professionals can achieve the same success.

The results revealed that procurement teams still lean towards a more conservative approach, with 56% of respondents claiming they preferred a partner that had a strong track record as opposed to one that could offer innovation. Secondary to this was a supplier’s ability to deliver a consultative approach (25%), followed by cultural fit (10%). Innovation appeared to be considered a ‘nice to have’, with just 5% saying it was of primary importance.

‘‘Conversations with procurement professionals revealed that the desire to introduce innovation is there, but that most departments are finding it difficult to prioritise this above all other considerations.’’ said George Smart, business development director at APS Group.

‘‘Part of this comes down to a culture of ‘short term-ism’ which sees departments focus on the immediate gains, such as cost savings. Long term goals are often secondary considerations, and, rightly or wrongly, innovation can often fall into this category.”

In terms of where price ranked when selecting a partner, almost one fifth said it matters more than anything else. The vast majority (83%), however, claimed that there were other factors which were more important. 56%, for example, said that they wanted a supplier that had a reputation for delivering on time and on budget.