There are many factors to consider when designing a new product. What is the product trying to achieve? Is there a problem the product is trying to solve? How much will it cost? Who will use this product and in what capacity?
While procurement professionals may be synonymous with cutting costs, many organizations fail to recognize the benefits of a procurement professional’s perspective when creating a new product or enhancing an existing one.
No matter the product, it’s important for all parties involved in its success to play a part in the design, development and implementation process. Here’s a quick list of areas procurement professionals can provide insight on when designing a new product:
- Seeking the right suppliers: Today’s consumers crave quality and differentiation. So naturally, when designing a new product, figuring out how you’re going to source the materials needed is of the utmost importance. This involves identifying current available suppliers through supplier relationship management (SRM) tools, as well as potential future suppliers that are not in the database that may have emerging technologies.
- Engaging with suppliers: Detailed conversations need to take place to explore and discover potential strategic partnerships. Co-development activities require a high degree of trust and communication to be successful. Many suppliers are on the front lines in product development – and they know what works, and what doesn’t. By engaging with suppliers early in the process, procurement can tap into a wealth of experience and expertise, and potentially uncover a few new ideas.
- Bringing the product to market: As the product is developed and brought to market, careful monitoring must be done to ensure it is not only working correctly, but also distributed correctly, on time, and through the right suppliers. If the product exceeds expectations, how quickly can your suppliers ramp up production? And what if the opposite happens? Companies should clearly evaluate their motivation for working with a supplier, and can envision the type of relationship they desire and the level of access and flexibility required. Considering potential pockets of risks from day one – and ensuring high levels of supply chain transparency — are also important.
Procurement professionals have been focused on cutting costs and meeting stakeholder interests for so long that many other departments overlook them when it’s time for product development. Value creation through product innovation, supplier networks and industry knowledge is one of the most important attributes a procurement professional can offer.
To learn about how to deliver value and be an active member of your organization, check out our whitepaper: Quick Wins for New Procurement Leaders.