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Do Companies Really Expect Their Suppliers to Be Innovative?

February 14, 2014
Bruce Tompkins

Bruce Tompkins

Guest post by Bruce Tompkins, Executive Director, Tompkins Supply Chain Consortium

This headline raises an interesting question that Tompkins Supply Chain Consortium tackled recently in a published survey on supplier scorecards for innovation. We learned that nearly 80% of companies utilize supplier scorecards to monitor and continuously improve supplier performance.

We also learned that the top three measures found in supplier scorecards are delivery (91.5%), quality (84.9%), and cost (80.2%). I wasn’t surprised by this data until I saw the percentage of companies who measure innovation. More than 38% of surveyed companies—or more than a third of the 155 companies across all industries—measured innovation on their scorecards.

When we asked how long companies have been measuring innovation, we found this be a fairly new phenomenon. Only 8.4% have been measuring innovation for more than three years.

The biggest obstacle to measuring innovation is determining a sound metric to use. Many companies have struggled to find a metric(s) that is clear and understandable. Some metrics suggested include Salesforce feedback, number of resources applied to new product development efforts, technology improvements, and surveys and data collection on innovation successes.

Another interesting finding is the number of companies who indicate that innovation influences the awarding of business. Nearly 22% of companies say innovation is a factor in awarding business, and the average weighting factor in an evaluation is about 25% for innovation.

So, what’s the big takeaway? Innovation is the real deal to many companies. If I was a supplier, knowing what I know now, I would put a strong emphasis on increasing my organization’s innovation skills.

Comments

  1. “Innovation” can mean so many things that establishing a metric for innovation is very hard. Is it the technology or the processes you are trying to innovate? And how do you determine if those projects were successful?

  2. Your perspective is right on target. It’s hard to define metrics for innovation, and the results of our survey actually backed up this statement. Few companies were able to really provide a solid metric for innovation with their suppliers, even though many believed they were engaging their suppliers on this topic. And it also depends on the industry you are in and the kind of supplier we are talking about. Innovation means coming up with new ideas – and when and where that occurs between a company and a supplier is difficult to know. Most companies indicated that innovation was developed early in the product or process design, using suppliers to add their ideas to the design parameters early in the development process. They also noted that innovation was found during review sessions and at scheduled one-on-one meetings. To me, this means that most innovation occurs between people talking and sharing information versus a hard and fast metric.

    Thanks,

    Bruce Tompkins

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