Special Thanks to our friend Susan Avery at MyPurchasingCenter.com for the great interview and article!
The Innovation Garage and Ideas on Procurement
By Susan Avery
February 18, 2015 at 1:07 PM
Our Contributing Editor Nikita Saharia Chaturvedi caught up recently with Craig Demarest of R.J. Reynolds to talk about ISM-Carolinas Virginia and its spring conference on March 13 in a podcast interview. Demarest is Vice President of ISM-CV and frequent contributor to My Purchasing Center. He’s participated in our Executive Roundtable discussions we hold with ProcureCon. Demarest was happy to talk about the ISM-CV spring event.
The agenda as he described looks great. The folks at ISM-CV put a lot of work into developing it and it’s worth attending. One session in particular caught our eye: The presentation, Get Ready for the Innovation Economy, by Jon Washington.
We did a little research and found that Washington has a degree in mechanical engineering and began his career in the field. He’s held various roles and eventually ended up working in procurement and supply chain. He tells My Purchasing Center that he’s “the crazy guy” who took on assignments that challenged others.
Today Washington is the founder and proprietor of The Innovation Garage, a company that provides services to help others collaborate, innovate and generate revenue for their organizations. “We make things, make things better and teach others,” is how he puts it, adding that “a thing can be a product, service or supply chain.”
Washington is most passionate about innovation education, teaching others how to generate ideas to grow revenue. His presentation to ISM-CV looks at lessons he’s learned collaborating and innovating and includes simple steps for procurement teams interested in following a similar path. His talk also provides practical examples and a review of tools and technology available to help.
Procurement and Engineering
Given his background, Washington continues to be interested in getting engineering and procurement to be open with each other, and bringing down walls in organizations. He says he still sees some with more traditional views of procurement that have planner and expeditor roles. Other more progressive organizations have procurement and engineering working more closely together.
At these organizations, procurement is much more strategic and CPOs play a key role in corporate initiatives. In fact, having that seat at the table is expected. “What’s changing now is the realization that procurement can generate revenue,” he says. “The big focus is on innovation and collaboration.”
What does that mean and how does procurement generate revenue?
As Washington sees it, procurement is poised to help companies generate revenue through innovation. Few people went to college thinking they would land a job in procurement when they graduated. So procurement teams have people with diverse educations–engineering, operations and finance, among others.
“Procurement is very business savvy,” he says. “Depending on how the organization is structured, procurement can drive a huge amount of value.” He sees procurement as the hub of a wheel, educating suppliers on ways to help organizations generate revenue–if the leadership thinks that way.
“Procurement is a huge driver for innovation and revenue growth,” he says.
We asked Washington how procurement can help change that more traditional mindset and market the function to the organization. He says that it all comes down to value and how it’s defined: Is it savings or revenue?
“One way to do it is for the CPO have a conversation with his or her peers in the organization and take steps to generate opportunities for positive margin revenue,” he says. He recommends looking at net margin which should indicate if operations are under control and whether the organization is growing.
Procurement also needs to understand the what, why and how of innovation as a value engine, Washington tells My Purchasing Center. Educating the team on a common language and approach then cascading that to the supply chain will help build open innovation networks.
From what we hear from procurement, a team is only as innovative as the metrics management uses to measure performance. If procurement has goals to reduce cost then that’s where the team is focused. Of course, managing costs will always be procurement’s role. But if management also wants procurement to play a role in innovation and revenue generation then it has to use metrics to measure that. We asked Washington about that. He agreed, suggesting organizations start by looking at supplier ideas (and potential revenue) in the pipeline as a metric. “Generating ideas isn’t a big challenge,” he says. “It’s the execution.”
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About The Innovation Garage
The Innovation Garage is a business Innovation Firm driving long-term growth of companies and non-profits, from start-up to the fortune 1000.
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