EIPM has launched a major research project to measure the progress of the Purchasing profession towards value creation: the Value Creation Observatory.
This research project sheds light on the impact of Purchasing on company value creation. It highlights some of the best practices leveraged by the best performing companies.
The results of a first survey and of a series of interviews are now available. They show that companies that have outstanding financial and commercial performance excel in the following 3 imperatives:
They involve the purchasing organisation in gathering unmet needs. Step by step a purchasing organisation can win its seat at the table where decisions are taken. It gets closer to clients and gains opportunities to anticipate market changes and contributes to building competitive advantages. Only 25% of the companies surveyed reached what we describe as the third stage, a stage in which buyers are involved in understanding customer needs, where they map user needs and perform scenario analysis to act ahead of time and anticipate future innovations.
They look for innovation opportunities within their supplier ecosystem. 65% of the companies we have surveyed believe buyers will increasingly engage with Tier 2, Tier 3 suppliers, new players and start-ups. Furthermore a new set of practices are currently being developed and refined in order to access innovation opportunities within the ecosystem.
They involve suppliers in innovation projects. Best performing companies display high levels of collaboration with key suppliers especially on innovation projects that aim at increasing efficiency and at minimising risks. Other innovation projects tend to call for a wider mix of existing and new players. This goes well beyond product or technology innovation. Companies with outstanding financial performance involve more than others suppliers in projects that aim at accessing new markets or at creating different business models.
Ultimately, our research shows that these three imperatives help to make a difference between an average and an outstanding performance.
Best performing companies have progressed holistically along the three dimensions without losing track of the business focus.
A strong financial focus might call for special attention to involving suppliers in innovation projects that deliver productivity gains.
A business focus on growth and market share might call for specific attention to internal partnering practices and enable access to unmet needs.
Nevertheless, excellence can only be achieved when these three imperatives are jointly mastered.
This project has been very positively welcomed by practitioners and a detailed report on the above mentioned Imperatives of Edgeless Innovation has been produced and presented during the EIPM Annual Purchasing Conference, in December 2014.
We are now happy to share those detailed findings with you in a series of upcoming articles. Stay tuned!