The 8 Modules, 31 Focus Points and 5 Collaboration Phases of the SEIC Methodology provide a path to success

View

Our Diagnostic Tool provides a gap analysis of SEI capability to support the strategic planning process

View

In-depth explorations of the approaches and techniques used by leading organizations in the field of SEI today

View

Thought leadership and insightful articles on the most important issues for companies pursuing an SEI agenda

View

Insight calls are available to join for all members of the SEIC and will be addressing a number of topics

View

Useful downloads, from unique research to practical templates, frameworks and tools being used by SEI leaders

View

The 11 modules of the SEI methodology focus on the key processes that enable the successful rollout of SEI

View

Our Capabilities Assessment tools provide the means for organizations to gain insight into their own SEI approach

View

In-depth explorations of the approaches and techniques used by leading organizations in the field of SEI today

View

Thought leadership and insightful articles on the most important issues for companies pursuing an SEI agenda

View

Useful downloads, from unique research to practical templates, frameworks and tools being used by SEI leaders

View

Can procurement become a key part of startup engagements?

Procurement struggles to play a meaningful role in startup collaborations. To change this, the function must do away with old processes and adapt to the startup ecosystem

Startup egg

 

Procurement has its eye fixed on the world of startups. Driven by a need to access innovation from new and emerging sources, most functions recognize early-stage businesses as vital to work with – but few succeed in doing so.

 

These findings are captured in the latest report from the Supplier-Enabled Innovation Center (SEIC). While our Establishing procurement in the startup ecosystem paper highlights how procurement sees startup collaborations as valuable, it also finds that most functions are not essential to their company’s startup strategy.

 

This is borne out in the report’s research. Some 85% of procurement functions identify startup capability as either ‘very important’ or ‘quite important’ to their business. These functions come from a range of different industries, including manufacturing, consumer goods and healthcare, indicating that the value of startups is recognized across procurement and not restricted to just a handful of sectors.

 

But despite this clear interest in working more formally with startups, procurement generally lacks a seat at the table when it comes to corporate engagements with these early-stage companies.

 

Just 17% of functions are seen as “very important” to startup engagements. The majority (50%) say they are “quite important”, while 33% are “not at all important,” illustrating how procurement doesn’t currently occupy a central position in the startup ecosystem.

 

There is a consistent reason for this. Similar to the way in which procurement isn’t largely viewed as being able to advance innovation in a business, most functions say the perception of procurement – namely, as a cost-saving function – is a major roadblock. In other words, it isn’t seen as a natural fit for working with startups.

 

Compounding this reputation is the function’s reluctance to alter how it operates for new businesses. The report highlights two important examples of this: the request for proposal (RFP) process, which is predominantly kept the same for startups; and risk profiling for startups, which is just as stringent as it is for conventional suppliers.

 

A refusal to change these processes can act as an inhibitor to working with startups. For procurement to be essential in startup engagements, it must be willing to adapt how it operates to better suit these companies. The function can then simultaneously become a key component of a startup strategy and establish itself as a business unit for startups to reach out to.

 

Five steps that procurement functions can take to fast track its engagement with startups are identified in the research. These include the development of new internal and external communication plans; the simplification of several procurement processes, such as RFPs and due diligence; and the agreement of shorter payment times. For several of the companies that took part in the report, these five steps have led to a transformed role for procurement in the startup ecosystem.

 

Not all these steps can be rolled out immediately, of course. Depending on maturity and organizational set-up, some will be more feasible and relevant to implement than others. But regardless of a company’s ability to follow them, the steps and the report’s findings represent a warning for procurement: to access startup capability, it must have an ‘adapt or die’ attitude. Those functions that stand still and do not change old processes will remain unimportant; those that evolve will have the chance to make procurement a crucial part of the startup ecosystem.

 

The SEIC’s Establishing procurement in the startup ecosystem report is available to SEIC members. To learn more about membership, please email us.

Powered by:

Procurement Leaders Logo

© Procurement Leaders Limited and its contributors. All rights reserved. www.procurementleaders.com Procurement Leaders Limited accepts no responsibility for advice or information contained on this site although every effort is made to ensure its accuracy. Users are advised to seek independent advice from qualified persons before acting upon any such information.