This is a tricky one. How can procurement incentivize supplier innovation? Essentially, this involves a focus on mutual value. Create a “win-win” environment for both your organization and the supplier if they bring forward an idea.
Suppliers don’t want a situation in which they hand over an idea and the benefits flow in only one direction. For example, an incentive might be that the two organizations share the savings created through the implementation of the new idea.
In the end, it’s clear that an important part of procurement’s role is to look for value beyond cost savings and help facilitate the flow of ideas into your organization.