The transformative effect of innovation in the supply chain

Genuine innovation by its very nature must be transformative to some degree or other but for it to be effective and impactful in the workplace it should be able to generate a business model that adds value to the bottom line, is competitive in the marketplace and can stand the test of time.

Innately most people would recognise that innovation is the lifeblood of the human race and in the workplace, there is little difference as it challenges the team to think differently – but what benefits are really generated if an innovative culture is managed correctly in a work environment?

Well, these benefits are likely to be broad ranging and some will be unique to an industry or function, but some are consistent with some of the more common elements likely to be:

Improved efficiency – workplace innovation will help organisations focus on their long-term goals and hence drives leadership in thinking and activity rather than spending time reacting to problems and surprises which will often lead to a loss of productivity and efficiency. Innovative companies also tend to have effective functionality such as order processing and production given the nature of their thinking and lower labour ratios as their employees are more likely to be forward-looking as it is likely they would have a strategic plan to follow.

Employee engagement – great innovation often comes from within, and successful organisations don’t just create new solutions for their customers, they also foster an innovative culture within the business. Where innovation is embedded as a core business value and recruitment provides logical balance to perpetuate this, then the creation of new and workable solutions becomes self-generating that should only require a little ongoing maintenance.

Attracting new talent – the greatest asset of any organisation is its people and by being known as a front-runner or innovator in the field, you have a far greater opportunity of bringing in employees who are at the top of their game. Conversely, organisations that don’t use innovative practices or challenge their employees to reach new heights will no doubt be at risk of losing key staff members, which in turn may lead to a loss of productivity, knowledge, and expertise.

Increasing brand awareness – one of the undisputed benefits of an innovative workplace is the increased brand value and awareness that will be achieved. This glow will be noticeable in some form to your customer base and will have a direct impact on both top & bottom lines, often both at the same time as margins can be enhanced whilst sales are driven.

Conversely however, organisations that continue to take the same approaches consistently and avoid or naturally don’t try new things will miss important opportunities to develop their business with long-term sales and profitability being another likely casualty.

So, does the same hold within your supply chain?

Well, yes and probably more so than most other business departments.

All the benefits noted above will also add glow to the procurement and supply chain departments however, particularly procurement is also unquestionably uniquely positioned to lead the way in organisation-wide innovation. Its procurement professionals are ultimately responsible for identifying and selecting innovative suppliers, finding new ways to create value for the business, and working alongside a diverse range of external and internal stakeholders to create reality from the theoretical proposal. Done well each of these aspects will drive an innovative culture within the function creating an engine room for development.

Embracing innovation and a ‘thinking outside the box’ mentality will of course help drive down costs, it will also help solve business problems, increase productivity, and boost an organisation’s reputation (as the vast majority of the population will, at some stage, gravitate towards an innovative organisation) and hence gives a significant competitive edge.

Although after saying that, it is always worth remembering that innovation doesn’t mean that you have to create the next piece of startling and new technology, i.e. it doesn’t have to be earth-shattering, sometimes the simple innovative thoughts within the procurement function can generate the best ROI – these may include things such as:

Build broad-ranging relationships – to drive innovation, procurement needs buy-in from two distinct groups: the business decision-makers (whether it’s the CPO, CFO, or CEO) and the organisation’s suppliers.

Suppliers may be a great source of often untapped innovation which can be unlocked through building the right relationships and delivering a collaborative approach hence a key will be to ensure that the supplier selection process prioritises innovation on a similar footing to other determining business requirements.

This will allow procurement to provide its innovative value-add for an organisation, however relationships need to be in place with the organisation to ensure the trust is in place internally and thus the green lighting process can occur more smoothly were aligned with business goals and appropriate.

Targeted innovation – to give the customer what they want you must first identify who they are and what they require. Once you understand what is needed by your customers, you can then direct your efforts, alongside the supplier, towards working on identifying solutions to answer the specific challenges provided.

Do your research, collect the provided data and identify trends to decipher what it is coming into your customers’ line of sight – from there you will be able to identify the required innovation.

CSR and sustainable innovative solution – many organisations historically have been wary of CSR and sustainability programmes and, if completed at all, were often tolerated rather than embraced particularly given the costs and disturbance associated with this type of programme and the limited ROI they provided.

However, as the CSR requirements become more mainstream it has become increasingly clear that associated policies are now likely to drive significant benefits into your business whilst also ensuring that often more innovative approaches and ways of working will need to be adopted.

It is also clear that multiple surveys guide us that employees who work for ethical organisations tend to be more motivated, more productive, and more innovative. Believe it or not, more than 50% of people say that they would not work for a company that doesn’t have CSR commitments and is not sustainable which significantly reduces the potential for attracting future business leaders.

Measure innovation – often innovation may be difficult to measure however to drive future innovation it is imperative to measure and analyse progress achieved.

Whilst accepting that it is often not too easy to provide a clear set of CSR metrics, identifying related key challenges to overcome through innovation whilst recording and reviewing the progress made will more often than not help create a long-term, innovation-based culture with an organisation

Innovation within a procurement or supply chain function will also help ensure efficiency in delivering products to the consumers but, as the global marketplace continues to evolve, procurement and supply chain managers must think more innovatively, and proactively to balance the flows and costs throughout a product’s life cycle; the risk of not doing this is significant and potentially even terminal.

Innovation within the supply chain does not have to be huge or costly and it may simply be an ongoing process of continuous improvement but however you drive it within your business, don’t get left behind and make sure that it at least occupies a meaningful point on your ever-growing list of activities. If innovation is not on the ‘to-do’ list, it is a surefire way of ensuring that the list itself will continue to grow into the future.

In a highly uncertain world, looking retrospectively to improve procurement functionality will not be sufficient. If you would like to understand more about 4C’s transformation service offering and/or want to review our 2021 Procurement Professionals Annual Survey on ‘The Case for Change: Procurement Reinvented’, please contact Jonathan Williams ( or Paul Ireland (

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