Innovation in procurement

A new era of innovation in procurement process

Firms that include their suppliers in the early stages of innovation projects seem to substantially outperform their peers that do not. Yet a large proportion of companies, does not include suppliers in over 90% of their New Product Development projects. This is based upon our initial findings from World Café sessions and survey respondents.

Over the past decade we have seen a significant increase in turnover in procurement as companies focus on core capabilities and outsource others. This has increased the influence of the procurement function – typically controlling all spend one way or the other. At the same time, the nature of innovation – recognized by most successful companies as the key to sustainable growth – has evolved from a purely internal capability to something to be delivered in collaboration with the external network of supply partners. From this concept of Open Innovation, Capgemini expects two key developments: 1) A greater focus on value chain optimization and interaction, and 2) A broader role of supply partners in the innovation processes. In practice, however, these two developments have not emerged as prominently as expected. In fact, the role of procurement in managing supplier involvement in innovation continues to be very limited.