SUPPLY CHAIN
SUPPLIER INNOVATION A DRIVER OF GROWTH , SAYS OLIVER WYMAN REPORT
For example , the company ' s annual ‘ Cherry Pack ’ exhibition provides suppliers with the new consumer trends that will be investing in developing packaging solutions harmoniously with these trends . Additionally , P & G shifted its R & D strategies from 100 % internal to a 50 / 50 split , improved productivity by 60 %, and contributed 50 % of the new product innovations to the market .
A study from global management consultancy Oliver Wyman suggests innovation is a key driver of profitable growth – but that development costs can eat up the benefits of growth .
“ This is one reason why leading companies are reconsidering their internal capabilities and are moving to integrating suppliers into the development process ,” according to the study .
It continues : “ Supplier innovation is about leveraging the innovation power of the supply base in a systematic way to increase one ’ s own innovation performance .
“ If managed successfully , supplier innovation has many benefits – including fresh ideas , shorter time-to-market , and higher margins , all of which can lead to profitable growth .
“ Up to 70 % of total lifecycle costs are defined during the design phase . The ability to influence the total cost of ownership decreases rapidly the further out along the development curve you get .
“ The earlier suppliers are integrated , the greater the potential impact on lifecycle costs .”
The study says companies should follow three guidelines for maximising supplier innovation :
• Prioritise development capabilities for supplier innovation
• Focus on profit improvement instead of cost reduction
• Simplify collaboration processes on innovation supplychaindigital . com 51