Innovation sourcing excellence: Three purchasing capabilities for success

Innovation sourcing has become more critical across many industries. As global value chains have become more fragmented, change and opportunity comes from all sides. As a result, companies need to excel at capturing innovation opportunities with existing and potential supply chain members. This article describes a simple framework with three essential innovation sourcing capabilities needed to excel in purchasing: (1) Purchasing needs to explore unmet needs and anticipate future competitive advantages by working closely with other functions and clients; (2) it needs to explore external opportunities beyond first-tier suppliers; and (3) it needs to involve suppliers in innovation projects that consistently deliver results over time. Our framework has been developed based on a combined qualitative and quantitative research methodology that takes into account practices and results at the purchasing and company levels. The framework will help C-level managers and purchasing teams benchmark their progress in innovation sourcing and understand what steps need to be taken to achieve excellence.