In recent years, increased demand from customers, shorter product lifecycles, competition, and economic downturns have caused supplier innovation to move up the list of priorities for many companies. Traditionally, R&D would usually work within their own teams when it came to developing new products. But procurement is increasingly playing a greater role to achieve design goals, boost innovation, increase competition, and improve the top and bottom lines.
In the recent Deloitte 2021 CPO Survey, "73% of procurement organizations see innovation as a top business priority." But many organizations are still behind the curve. R&D continues to involve procurement teams late in the innovation process, only looping them in when it comes time to procure a specific good or material. For many companies, procurement is seldom seen as a strategic innovation partner. The Deloitte survey adds that "39% of procurement organizations reported that they are rarely involved during innovation."
Solely relying on R&D can lead to several challenges, such as increased product costs, reduced savings, longer cycle times, and decreased quality. But giving procurement a seat at the table, creating an effective product development process, and collaborating with suppliers is proving to be more challenging than organizations thought.