Procurement has been gaining visibility through innovative developments that provide value to the enterprise beyond lower-cost goods. This new role for procurement led APQC to conduct the study Supplier Category Management: Driving Value Through the Procurement Organization, which looked at how procurement can maximize purchasing value through the use of strategic categories of suppliers.
One of the study findings was that procurement can provide value by getting involved in the early stages of product development. For the three best-practice organizations in the study, the procurement function uses the proposed materials for a new product to determine which sourcing decision would offer the best price or a secure supply of materials. In some industries, procurement can suggest that product development teams tweak aspects of the design to take advantage of similar materials with an overall lower price or from a more reliable sourcing location.
Procurement can also foster close relationships with suppliers that encourage innovation. Suppliers can often be a great source of innovative ideas for future products. In close relationships, suppliers have the freedom to lead innovation efforts that can result in a competitive advantage for both the supplier and the sourcing organization.
Is your procurement function involved in the product development process for your organization? If not, how would you get procurement involved in this process?
For more insights from this APQC study, download the free study overview or the full report.