What is Procurement's Role in Innovation?

Aug 15, 2022 | Impact of procurement

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Aug 15, 20222 min read

Procurement drives innovation by allowing organizations to acquire resources needed for product and service development. Companies with strong procurement functions are 4x more likely to innovate, with the potential for 20% increase in revenue. By implementing strategic sourcing, organizations can access new technologies to drive innovation.

Procurement plays a crucial role in innovation, as it helps organizations to identify, acquire, and manage the resources needed to develop and bring new products and services to market. By effectively managing the acquisition of goods and services, organizations can access new technologies, materials, and suppliers that can drive innovation. 

According to a survey by Accenture, companies that have a strong procurement function are four times more likely to be innovative than those without. Additionally, a study by Deloitte found that companies that prioritize innovation through procurement can achieve a 20% increase in revenue. 

Apple and Amazon are examples of companies that have effectively leveraged procurement for innovation. The companies have dedicated procurement teams that work to identify and acquire the resources needed to develop new products and technologies. Through this process, they have been able to develop a number of innovative products, such as the iPhone and iPad by Apple and Echo and Prime delivery service by Amazon, which have had a significant impact on the technology and retail industries. 

In addition to driving innovation in products and services, procurement can also play a role in driving innovation in supply chain and logistics. A case study by Boston Consulting Group found that a large logistics company was able to improve delivery times by 30% and reduce costs by 20% through the use of innovative procurement and logistics practices. 

Overall, it's clear that procurement plays a significant role in innovation for companies of all sizes and industries. By implementing strategic sourcing initiatives and leveraging the power of scale, organizations can access new technologies, materials, and suppliers that can drive innovation in products, services, and supply chain and logistics.  

FactWise is an end-to-end procurement platform with the mission to delight users and provide sustainable positive impact to the product manufacturing organizations we serve, by providing transparency and insights to leaders, streamlining and automating processes to improve efficiency, and driving bottom-line impact by unlocking savings potential.  

About the Author

Stawan is the founder and CEO of FactWise. Before founding FactWise, Stawan was the NA TMT-Procurement Leader at McKinsey. Passionate about procurement, Stawan has 15 years’ experience in enabling clients of all sizes to achieve business impact via procurement.


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