This article will look at certain conditions that will facilitate a smooth vendor innovation process. As you can imagine vendor innovation is the process of identifying new and easy ways to render services to the customer or improving the functionality of a product. This process is always frost with frustrations because of the collaboration with the buyer and the supplier in some cases.
Vendor innovation is very important in the supply chain because, in most cases it’s the key to gaining competitive edge for many businesses because it leads to improvement in product quality and cost, hence enhanced customer satisfaction.
Building trust
There is need for buyers and suppliers to establish a long-term relationship based on mutual respect, transparency and alignment of goals. The condition creates an enabling environment, on the one hand, for buyers to involve vendors in the early stages of product development and the other hand for vendors, to share their capabilities, solutions and suggestions with buyer. Trust is essential for the free flow of information, ideas and feedback necessary for innovation.
Seemless alignment
The innovation process begins with aligning the various aspects of the vision, strategy, objectives, resources, timeframe and innovation metrics for both parties to know expectations, interests and priorities. This means basically that buyers and suppliers need to collectively create and adopt a shared innovation agenda that defines the purpose, value proposition, and desired outcomes of the innovation. As this arrangement will set the tone for a collaborative process that specifies the deliverables, tasks, steps, and feedback mechanisms to drive the innovation.
Harmonizing capabilities
Buyers and vendors need to assess their current capabilities and identify relative gaps and needs to support the innovation. By capabilities we mean skills, tools, systems, knowledge and culture that supports the transition. When this is in place, there are possibilities that buyer and vendor can generate, develop, test and deploy innovative ideas effectively and efficiently. At the same time scale the innovation across their operations and markets with relative ease. In the absence of these capabilities, investment could be made to enhance them by providing training, coaching, mentoring and support for the staffers involved in the process. In some situations, there may be need to use external assistance from experts and consultants with relevant experience.
Creating incentives
To facilitate vendor innovation, buyer and vendor need to collectively create and communicate a compelling business case for innovation to take place, that incentivizes buyer as well as vendor.
Incentives are the rewards and recognitions that encourage and make the innovation desirable. With these incentives the buyer and the vendor will demonstrate the interest and willingness to pursue innovation. The incentive system is designed to be fair and also align with interest of both parties, without which stakeholders, employees and regulators may resist the initiative for the fear of uncertainties associated with the innovation.
Flexibility as a competing tool
Buyer and supplier needs to adopt and sustain a culture of innovation that embraces flexibility, uncertainty and change.
Flexibility demonstrates that the parties have the ability and willingness to test, adapt and learn from innovation. This helps them cope with challenges and opportunities that arise from innovation. As this collaborative approach provide a standard for unlimited creativity, sometimes an agile and iterative approach to innovation is adopted to allows teams to test, learn and improve their solutions using quality data from buyer, vendor, stakeholder and customers.