Unlocking Growth Through Supplier Innovation

The research is clear. Supplier partnerships provide powerful opportunities for innovation and growth. McKinsey finds that companies that regularly collaborate with suppliers demonstrate higher growth, lower operating costs and greater profitability than their industry peers. It also finds that externally sourced innovations are typically commercialised 40% faster than home-grown ideas. 

These statistics provide valuable food for thought in a world where customers seek solutions that work harder and perform better so they can increase their strength and resilience. It means increased innovation and bringing solutions to market more rapidly are important requirements of modern business. 

The question is, then, how does a business collaborate with its suppliers to create innovation partnerships? And how can finance play its part? 

Why Is It Important to Build Trusted Relationships with Suppliers? 

When you think about supplier innovation, your mind will often jump to co-partnered products or joint ventures. But there are wins at a much lower base simply being a good partner to your suppliers.  

Building strong relationships with your suppliers means you don’t have the expense or disruption of seeking new suppliers.  

The reassurance of regular repeat business also gives you leverage to seek discounts or preferential rates. You may also be prioritised in more troubled times, minimising the disruption your own business faces.  

You can also work together to create mutual gains: refining processes that deliver benefits for both your business and your supplier businesses. This has the benefit of increasing efficiency and effectiveness, which in turn frees up cash to fund your own growth and innovation.  

How Can Finance Improve the Business’s Relationship with Suppliers? 

The critical first step to unlocking growth through supplier innovation is being the kind of partner your suppliers want to work with. 

This is where finance comes in.  

The most important requirement is paying your suppliers on time. In the current market, this will gain you a significant boost with your suppliers. Nearly 60% of UK SMBs are currently waiting on late payments from customers. (It is also worth noting that 80% of businesses struggling with late payments would refuse a job with a potential customer if they were known for paying late, so if you’re a late payer you may face the possibility of a reduced pool of suppliers to choose from.) 

You can also keep an eye on the financial position of your suppliers to put yourself in the driving seat. You might choose to bring on additional suppliers to overcome potential disruption. You may also be in the position to talk to suppliers to see how you can help them (so that they in turn can help you).  

Once you have these basics in place, it’s time to consider the bigger opportunities. 

Driving Innovation Via Your Supplier Network 

The first thing to say is obvious. Not every supplier offers the potential for partner innovation. Procurement consultant Brian Seipel divides a business’s suppliers into four categories.  

• Non-critical suppliers – high-volume, low-spend purchases that you want to be as friction-free as possible. 

• Bottleneck suppliers – suppliers that could disrupt your own operations and where you should seek to expand your network to reduce the risk. 

• Leverage suppliers – suppliers where you have the stronger position and can negotiate discounts and special rates. 

• Strategic suppliers – suppliers where the opportunities lie. 

When managed correctly, the first three categories help you free up cash for home-grown growth.  

It’s the fourth where the partnership innovation magic happens. When the finance team has done everything it can to enhance the relationship, your R&D team is in its strongest position to open discussions about potential collaborations. Bear in mind too that closer partnerships with suppliers can help you identify potential acquisition targets for vertical integration or to acquire additional strategic capabilities. 

SAP Concur as a Partner for Growth 

The role finance plays in supporting supplier innovation depends on your own choice of suppliers. With SAP Concur solutions in your business, you have the tools you need.  

Concur Invoice takes care of the basics by automating the AP process. This speeds up your systems and puts you in control so you can pay invoices on time. It also gives you valuable visibility so you can enter price negotiations with all the information you need at your fingertips. And because it streamlines the AP process for everyone in the business, people have more time to do the work that matters.  

Plus, as an SAP solution, you can be confident it will integrate with wider business technologies that help you unlock your own innovative capabilities and be a stronger partner to your suppliers. 

It’s a win-win for everyone. 

Learn more about what makes SAP Concur Solutions a superpower partner to work with and how SAP Concur can give your business the confidence it needs to drive growth and change.