Supplier-Driven Innovation and Sourcing in the IT Category

At the 23^rd CPO Executive Roundtable in Philadelphia AT Kearney brought together thought leaders to discuss key topics such as Innovation and Sourcing related to IT in the Supply Chain. Here, a summary of key points:

• Innovation
  • Partnering with nontraditional suppliers – often from noncompeting industries to bring in new „outside-the-box“ ideas
  • Companies increasingly weighing innovation capability in their supplier evaluation process
  • Suppliers are essential contributors to idea generation, product and process development, implementation and lunch
  • Customer, academics and market research to be involved in ideation activities
  • Earning supplier trust takes time. Needs right reward mechanisms.
  • Involving general public via crowdsourcing through innovation portal
• Sourcing
  • IT supply management framework is highly complex with multiple stakeholders from the business units and corporate functions.
  • IT category by itself may easily encompass more than 50 different spend areas across hardware, software, network carrier services, consulting and technical services, and staffing.
  • IT sourcing decisions should center around IT differentiators and commodity spend
  • Must manage well tremendous trade-offs between service and costs
  • Fear of mega-supplier deals, but seek value in central sourcing
  • Telecommunications spend is fragmented due to national markets having different providers. Seek deals to achieve global coverage.
  • Important to align assets, processes, tools and people with desired business outcomes. IT transformation efforts can bring a step change in both cost and capability.  
  • SaaS and other services may replace many traditional maintenance-heavy enterprise applications. Evaluate how to move out data from corporate data centers to internal or external cloud-based storage.
  • Tailor negotiation strategies to individual services according to their criticality and degree of market competition.
  • Reduce supplier switching costs through building credible alternative supplier options.

Personally, I like to drive transformation across supply and value chain. It allows to work across all key business functions and bring industry best practices to maximize innovation, value contribution and efficiency.

Supply chains are becoming increasingly the differentiator between success and failure of companies. In today’s digitalization age, no company can or should try to do everything itself. Key is to focus on what a company does best and then leverage those strengths allying itself with the right partners and temporary cooperations.

The focus must be on the bigger picture: building a strong, effective, agile ecosystem to compete with other competitors and face the massive challenges of a massively complex world.

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