The Sourcing Innovation Series: Part IV

Just when you think you’re going to have a nice relaxing sourcing-innovation free weekend … BAM! … they pull you back in. Although most bloggers, including Jason “The Prophet”* Busch, take the weekend off, this is when The Blogging Thunder from Down Under often unleashes his masterpieces. (* This one’s mine.)

In an aptly titled post Rogers and Hammerstein: The Future of Sourcing, Doug tells us that the future of sourcing revolves around the purchaser and the vendor creating a new relationship structure and that the purchaser simply finding a new vendor in an effort to cut costs or improve supply is not the answer.

An example of a new relationship structure is the vendor and purchaser using a novel distribution strategy that creates operational efficiencies for the vendor and a competitive advantage for the purchaser; or the vendor and purchaser working together to impact demand rather than unit cost. The critical feature of the new relationship structure is that it is created by the purchaser contributing internal knowledge about such things as its purchasing patterns, logistical challenges and payment requirements and the vendor contributing its market knowledge to produce an item or service that perfectly fits the purchaser’s needs and the vendor’s ability to service those needs.

I think Doug is right on the money here … after all, I’ve been saying that sourcing is not going to be the same five years from now and that it is going to get a lot more strategic. This is one of the ways its going to get more strategic – once you’ve rationalized your supply base and found the right partners, the only way you are going to improve is by working with them. However, when he asks what technology will enable this type of collaborative innovation, he makes a good point … this collaboration is going to require new processes, which are going to need to be embedded in new technologies to maximize efficiencies.

So what are these technologies going to look like? The nature of technology is that it’s always almost impossible to predict where it ends, but I believe I can tell you where it starts. Enhanced Product Lifecycle Management (PLM) solutions, real-time supply chain visibility software, and innovation software.

I briefly discussed PLM in my Sourcing Based Product Lifecycle Management post back on June 30 (2006) and will discuss it further in my third Purchasing Innovation series, which is slated to run over on eSourcing Forum the weekend of September 8 (2006). Simply put, PLM is the process of managing the entire lifecycle of a product from its conception, through design and manufacture, to service and disposal. In the future, these products will be collaboration centric and all supply chain partners will be able to collaborate though a single platform to effectively contribute and improve the process.

Supply Chain and Spend Visibility Software, being promoted by new players such as Apexon and Zycus, lets you know, in real time, what product you have in stores, in warehouses, on route, and on order at any given time and provides real time alerts of any delays or potential issues before they impact your supply chain so you can make alternate plans or take alternate actions as well as letting you know who you’re spending your money on, when, and for what categories.

Innovation software is probably the newest category of software solutions hitting the market appropriate for your emerging supply and spend management needs. Most of these products are still very process focused, but I suspect they will expand to incorporate strategies and domain knowledge as time goes on. As indicated in my recent post indicating that Innovation Matters, you could always start with‘s On Demand Innovation Management Software, which gets you up and running immediately. Of course, this isn’t the only choice. You could also try Jenni‘s Idea Management Software, Centric Software‘s Product Intelligence software, or Imaginatik‘s Idea Central Software.

Of course the big question is – will they merge into a single solution or be replaced by something entirely new?