• March 5, 2016

Succesfully utilizing the huge potential of suppliers through Supplier Enabled Innovation

Succesfully utilizing the huge potential of suppliers through Supplier Enabled Innovation

By Robrecht Maes, Manager Procurement at Philips Group Innovation

Succesfully utilizing the huge potential of suppliers through Supplier Enabled Innovation

To increase Supplier Enabled Innovation, you have to enhance connectivity between R&D and the Supplier Community. Here’s why and how!

Since its inception, Philips has the vision to improve people’s lives with meaningful innovation. And until today this is still the compass for the company. In other words: Innovation is in the DNA of the company.

As the Head of Procurement at Group Innovation – what one could call the Philips Innovation Factory – I believe that two (2) key success factors will enable companies to grow fast, systematically and be successful:
– Strengthening the innovation capability, and;
– Improving the time-to-market, or speed

These two critical success factors will make it possible to (a) outperform competition and (b) – in the case of Philips – win, in the very promising, but also highly competitive markets of Health & Wellbeing.

However, companies still heavily rely on internal capabilities at this moment and primarily innovate in secret, trying to create breakthrough technology, business models and products that outmaneuver the competition from the-inside-out.

Unfortunately, focusing solely on internal resources limits the idea stream, it limits speed, and therefore it limits growth through innovation.

So … what to do? How to grow and develop the business in ever changing environments, changing customers’ needs and disruptive competition? And thus, in the case of Philips: how to improve people’s lives with meaningful innovation within this realm?

I truly believe – and even convinced – that many of the answers for growth, development, speed and – of course – innovation, can come from our supplier community. Due to the simple fact that significant short-term growth and productivity opportunities can come faster from those partners that already know your organization and/or business environment.

Tapping into the innovative potential of the supply base (existing and new suppliers) will deliver significant opportunities. As they know you and the sector, benefits can be achieved on the shorter term. Thus, from the-outside-in, or in other words, through: Supplier Enabled Innovation.

Studies* show that the use of tools, processes and the availability of talent will help companies to speed up the innovation process together with suppliers. But, it has been proven as well that connectivity even supersedes these important levers.* The more capable procurement is, with facilitating exchanges and understanding with the entire business ecosystem (incl. stakeholders, suppliers, consumers and third parties) the greater the results in and for Supplier Enabled Innovation. (*) Source: Procurement Leaders (www.procurementleaders.com)

Since some time we, at Philips Group Innovation, already organize and broadcast so-called “Supplier Pitches” to the R&D teams, in order to grow our match-making competencies and use tools for target searches. However, we can do much more than this!

We therefore started – a first step to a bigger ambition – to utilize the huge potential and capabilities of our supplier community. In particular suppliers that are part of the nearest shells of the Philips virtual value chain.

What did we do?

Together with our various cross-functional departments at Philips (eg. architects, designers, R&D, Procurement), we developed a clear and concise Open Innovation Event, intended to connect the dots between our supplier community and Philips’ R&D Department.

In the selection of the subject matter, one won’t be surprised that we decided to have the spot on sensors and sensing technologies. Companies such as Philips developed in the past years extensive expertise in using big data and information analytics. This leads us to what some call the era of data-enriched solutions, wherein sensing technologies play a crucial role.

In this case our procurement department took a key role as the enabler to make this happen. In other words, Procurement led the way to establishing contact and connection. The fact that we had 90% show up of invited suppliers, is clear evidence of everyone’s determination to collaborate, to share knowledge and experiences, to scan for the dots and connect them.

At the High Tech Campus in Eindhoven – the hub for open innovation and establishing new partnerships in the Benelux – we organized 14 roundtables sessions with 20 suppliers in one-day. We created a unique setting to discuss the future of sensors and sensing techniques for and with Philips.

The result?

Although our experience, and experiment was extremely successful, we are not claiming that open innovation and thus building trustworthy relationships comes without complexities or that it is a ‘one size fits all’ strategy. But, I believe, the opportunity to leverage for us all, supplier and customer is far too big to ignore.

Today, we know that open innovation practices lead to a rush of fresh new ideas that become instrumental in the company’s research and development departments. These ideas help people see matters in a different light and from valuable new angles, opening the door to various opportunities and previously unforeseen prospects.

But under this more or less generally accepted vision of collaborative or networked innovation, shelter many question marks. For example: what are the most effective drivers, which guarantee a strong return on investment for the innovation factory? Many companies struggle to resolve this question. We, at Philips Group Innovation, have put it into practice, cross functionally and with 20 suppliers. Therefore, if you want to know more about our experience with Supplier Enabled Innovation: please contact me!

Robrecht Maes, Manager Procurement at Philips Group Innovation. Robrecht and VANBLEND collaborated on Supplier Enabled Innovation.