Why is supplier innovation important? It fuels ideas and helps front end innovation and product development strategies.
Working with suppliers can be challenging, but when they help drive innovation within your organization it can be an amazing experience. Leveraging supplier innovation helps businesses drive front end innovation and support product development strategies which last. Suppliers see things their customers don’t so can often contribute to new ideas that can become the seeds of new strategy, products, services, and business models.
One of the greatest thrills of a career is when you see a nice client thrive and prosper. Recently, I was flown to the West Coast with a client to co-present the findings of a few innovation projects. We had an esteemed audience SVPs of marketing, procurement, sales, and a few VPs, too.
At the end of the meeting, one of the SVPs turned to my client and said, “Congratulations, you now have the highest possible score on the Vendor Scorecard for Innovation.” Their savvy client knows how to manage strategic relationships and how to inspire new thinking on their behalf.
My client was a supplier to a multi-billion dollar company. By taking a market-based view of the market they share—and doing detailed business-to-business design thinking projects in various segments and by doing in-depth ethnographic insights generation to figure out the real needs of end users—they are adding brain and muscle to the relationship, making them a more valued partner for marketing and product development.
What’s even more exciting is when you realize you are in the middle of a healthy trend—and that is what was typified by the meeting detailed above.
In a variety of industries—office supplies, packaging, consumer goods, OTC, durable goods, and manufacturing—we are seeing suppliers becoming more valuable strategic partners to their customers by handling more Front End Innovation projects and bringing the insights learned and new product, services, and business model concepts to the relationship.
Let me be careful to make two points.
The first one is that the supplier remains the subject matter expert on making helpful things (such as packaging, containers, equipment parts, etc.) and that technical R&D doesn’t stop because of this trend. In fact, it may speed up and be even more prolific.
The second point is that now these suppliers are not only serving in the role as the Subject Matter Expert on the technical and cost side of what they do.
Now, they are providing insights from the field, growth concepts, and new thinking about the market segment itself—all based on the jobs-to-be-done and unmet needs in each segment. This kind of thinking is of premium value to the brands they serve.
Instead of dealing with just the technologists (chemists or engineers) about the thing itself and procurement about the costs at scale, they now interact deeply with those in insights, marketing, sales, and product pipeline.
Essentially, by taking both an asset-based and a market-based perspective, suppliers become stronger strategic partners to their clients, breaking the bonds of the vendor-customer paradigm where price is the main criterion.
In many cases, the suppliers are empowering many of the innovations for the brands they serve. This is a triple win: for the supplier, for their client, and for the end users who benefit from the innovation.
Michael Graber is the founder of the Southern Growth Studio. He helps smart companies grow by fusing design thinking, innovation methods, brand and business strategy, behavioral economics, market research, ethnographic studies, and focused creativity.
