Despite good intentions, old-school procurement tactics often create tension with suppliers and fail to uncover meaningful, long-term savings. Instead, what if the solution lies in collaboration—not competition? Meet Collaborative Process Improvement (CPI)—a groundbreaking strategy that fosters partnerships with suppliers to unlock shared value.
This podcast, based on a GEP paper, dives deep into CPI’s potential to redefine supplier relationships through trust and shared goals, uncover hidden savings by aligning incentives across the supply chain and drive innovation while optimizing processes for mutual benefit.
What You'll Hear:
- Learn how to build trust and strategic partnerships that drive efficiency.
- Implement CPI to identify and sustain cost-saving opportunities beyond quick fixes.
- Discover how collaboration with suppliers can foster innovation and agility across your organization.
Transcript
Speaker 1
Hey everyone. Welcome. Today, we're diving into saving money in procurement. Well, not just like, you know, the typical belt tightening stuff, this is different. Looking at a new strategy called Collaborative Process Improvement, CPI for short. I have to admit, when I first heard about CPI. I was a little skeptical. Like, come on. This is another one of those. Buzzwords, but I gotta say, digging into this stuff has been eye opening.
Speaker 2
It's not just a buzz word. That's for. It really flips the script on how we usually approach procurement.
Speaker 1
Yeah, because usually it feels very us versus them, right. But with CPI, it's more about working together. Actually collaborating with suppliers to find savings that work for both sides.
Speaker 2
Exactly. And that's where the real magic happens, because you're tapping into their knowledge, their expertise. I mean, think about. They know their stuff better than anyone.
Speaker 1
O instead of just trying to beat them down on price, we're like, hey, how can we team up to make things more efficient for both of us?
Speaker 2
Right, because oftentimes there are hidden savings that neither party would have found on their own.
Speaker 1
It's like, have we just been leaving money on the table this whole time because we weren't talking to each other?
Speaker 2
In a lot of cases. And that's a key difference between CPI and you know those one off cost cutting measures. This is about strategy long term partnerships, not just quick fixes.
Speaker 1
So we're not just haggling over a couple of cents, we're talking about like potentially changing how things are done at a fundamental level, right?
Speaker 2
Exactly. And to understand that better, it helps to think about CPI in the broader context of things like, you know, strategic sourcing, those long term relationships we build with suppliers.
Speaker 1
As a reminder, strategic sourcing is well instead of justice buying things when you need them, you're thinking ahead. Hmm. You know, building those relationships, getting good deals, that sort of thing.
Speaker 2
Exactly. And CPI takes that even. It gives you a way to really unlock the cost savings that those relationships can create. All about continuous improvement.
Speaker 1
It's not a one time thing. It's like always looking for ways to do things better.
Speaker 2
Exactly, always improving. Now you might be asking yourself, OK, but why should I care? Does this actually help me?
Speaker 1
He kind of reminds me of trying to put together a puzzle. You know, but without the picture on. Box OK I.
Speaker 2
Like where you're going with this.
Speaker 1
You have all these pieces, but you don't know how to go together and you get frustrated because you can't see that big picture.
Speaker 2
That's a great analogy, because that's what it's like with those old school cost cutting tactics. You run into issues with like tracking savings, keeping suppliers motivated, even just being transparent.
Speaker 1
Right. And then you might think you're saving money now, but later down the line. It's a mess.
Speaker 2
Exactly. And that lack of transparency, it can really hurt those supplier. They feel squeezed so they don't want to go that extra mile, you know.
Speaker 1
Which makes the whole collaborative thing kind of hard. If no one trusts each other.
Speaker 2
Exactly. It's a vicious cycle. But that's where CPI comes in. Breaks that cycle. You know, it shifts the whole. We're not talking about just taking, it's about shared gains working together.
Speaker 1
Oh. I'm seeing how that puzzle analogy really.
Speaker
Yeah.
Speaker 1
It's like we all have the picture now, right? We're on the same page.
Speaker 2
Exactly. And because we have that shared understanding, we can actually find those win, win solutions, things that are good for everyone.
Speaker 1
You mentioned earlier contractually bound cost reduction initiatives. I gotta be honest, that sounds a little jargony to me. What does that actually look like in ractice?
Speaker 2
Sure, sure. So basically it means the cost saving goals, the how TOS it's all built right into the supplier contracts from the get go. You're not just haggling over the price tag, you're figuring out how you and the supplier are going to work together. Know find those efficiencies, lower those costs throughout the entire contract.
Speaker 1
So it's less about squeezing every penny up front and more about setting up a system where everyone's motivated. To make things more efficient over the long haul, exactly.
Speaker 2
Exactly. And there are a lot of different ways to do. For example, you could agree on a target like OK, we want to reduce cost by X percent, and if the supplier hits that target, they get a cut. The savings.
Speaker 1
Mutually beneficial.
Speaker 2
Exactly. And that's where those strong strategic partnerships are so important. When you have that trust, those shared goals, it's so much easier to implement this stuff.
Speaker 1
So you're not just like switching suppliers, you're switching to a whole new way of thinking about how you work with them.
Speaker 2
You got it. And like with any big change, you need a road map. And the materials you sent over mentioned GEP. They're experts in this whole CPI implementation thing and they really stress having a structured approach.
Speaker 1
Do we even begin? It's easy to say let's. But how do we actually make that happen in? Way that gets us real results.
Speaker 2
Well, GP, they recommend a phased approach. Just jump in head. You know, it starts with really taking stock of your current procurement setup where the bottlenecks? Not working. Which areas have the most potential for? Know those collaborative savings?
Speaker 1
Just like giving your procurement process a check.
Speaker 2
Yeah.
Speaker 1
Figure out what needs work.
Speaker 2
Exactly. And once you know where you're starting from. Then you can set realistic goals. You know, what are we trying to achieve with this whole CPI thing?
Speaker 1
So it's not just we want to save money, it's we want to save this much money in this timeframe on these specific things.
Speaker 2
Exactly. That specificity is key, and this is another point where that shared understanding with your suppliers is so important.
Speaker 1
Because they've got to be on board with those goals too, right? Not a one way St.
Speaker 2
Absolutely, it has to be a two way. Their goals, their incentives, they've got to align with yours.
Speaker 1
So how do we find those like Green team? The ones who are really open to this kind of collaboration.
Speaker 2
That's the $1,000,000. You want suppliers with a good track record of innovation, the kind of companies that are willing to share information and insights. They see themselves as partners, not just vendors. Know what I mean?
Speaker 1
They're invested in your success, not just their own bottom line.
Speaker 2
Exactly. And once you've found those partners, then it's all about communication. Sharing what you know. Being open to new ways of working. GE they really emphasize that cultural shift. It's important.
Speaker 1
Like that saying teamwork makes the dream work. But in this case, the team includes your suppliers too.
Speaker 2
Remember, CPI is about breaking down those walls, fostering a culture of collaboration both inside and outside your company. Company that means sharing information, working together to come up with creative solutions, being open to new ideas.
Speaker 1
So it's not just about squeezing every last penny out of what you're already doing, it's about finding new and better ways to do things, optimizing those processes, you know, unlocking that hidden value.
Speaker
Mm.
Speaker 1
That's where things get exciting, because CPI isn't just about cost savings. It can actually Dr. innovation too. And that's where, you know, having those strong relationships already in place really makes a difference. Because if you're already working well together, it's easier to be like, hey, let's put our heads together. Can we take this to the next level?
Speaker 2
Absolutely. When suppliers feel like they're part of the team, they're going to bring their best ideas to the table. More invested in finding solutions that work for everyone.
Speaker 1
Like instead of that tug of war, you know where someone's got to lose. We're both working together to build something.
Speaker 2
I love that analogy because it really highlights that shift that CPI represents. Not about one side winning and the other losing. It's about realizing that we can both come out ahead when we collaborate.
Speaker 1
So we've talked about why CPI matters, how to get. But let's get down to brass tacks here for the folks listening. What does this actually mean for? You know their bottom line, their careers, their companies.
Speaker 2
Question right at the end of the day, it's got to deliver results.
Speaker 1
Exactly. So, besides just saving money, what kind of impact can CPI have on a company's overall success?
Speaker 2
Well, I'll. You the research is pretty clear on. Companies using CPI, they see improvements all over the. Of course, you've got the cost savings, which can be huge. But it goes beyond that. We're talking about things like processes getting more efficient, products getting to market faster, reduce risk, even increased revenue.
Speaker 1
It makes sense when you really think about it. When you're all working together to make things better. Those benefits, they don't just stay stuck in one department. It affects the whole company.
Speaker 2
Exactly. It's bigger than just saving a few bucks here and there. About creating a company that's more adaptable, more competitive. You know, ready for whatever comes next. That's something every company wants.
Speaker 1
You know what this whole conversation had me thinking. If we can do all that with CPI, I mean, if it can really change not just the bottom line, but a company's ability to innovate and adapt, shouldn't we be thinking even bigger? How do companies need to rethink their entire strategy? To really take advantage of these partnerships.
Speaker 2
That is a fantastic question and I think it's something we're going to see more and more companies wrestling with because things are changing so fast these days. The companies that figure out how to collaborate, both internally and with their partners, those are the ones that are.
Speaker 1
Going to thrive absolutely couldn't. Well, folks, that about wraps up our deep dive into CPI. This has given you plenty to think about. We'll have some additional resources in the show notes, including information about GE and their work in this area. So until next time, keep those collaborative fires burning.
