3What do we mean by innovation? Innovation is often confused with researchThey are in fact very different processesResearch is a way of turning money into knowledgeInnovation turns knowledge into moneyResearch is about doing things for the first timeInnovation is about using known things for a new purpose
4What do we mean by innovation? You don’t know the results of research in advanceInnovation is always targeted on known outcomesA key success factor for innovation is an accurate understanding of the unmet need it is targetingInnovation is the process of translating technology and knowledge into new, usable products and services
5Innovation procurement? Buying goods and services in a way that stimulates the supply chain to invest in developing better and more innovative goods and services to meet the unmet needs of an organisation
6The procurers view of innovation Sensible procurers worry when they hear the word “new”New products and services have risks. They might…..not work as expectednot be delivered on timecost more ….. and anyway, have no track recordWe try to avoid innovation because it is riskyBut in some cases (more than we admit) we have no choice – the old solutions don’t fit anymoreMany existing products and services cannot deliver what we need.If we keep buying them we will fail.How can we buy new goods and services sensibly?
7The suppliers view of innovation Developing new products incurs technical risk and requires investments of time and moneyRational suppliers develop new products only if they have to e.g.to protect marginsto win businessto retain businessTechnical and resource risks are under the control of the supplier and can be managedThe risk that the supplier can’t control is:Having developed the product will someone buy it?Is there a genuine and credible demand?
8Identification Market Engagement Procurement Forward Commitment Procurement (FCP) A practical innovation procurement (PPI) methodologyIdentificationMarket EngagementProcurement“It is the lack of credible articulated demand that is at the root of the relative failure of innovation in the environmental goods and services sector”.Dr Jack Frost, OBE
9Why innovation procurement - the role of demand side measures - the suppliers perspective It is all about investment risk - not investment costs for a supplierMany products and companies fail at the demonstration and scale up stageThe gap between development and commercial sales is often referred to as the ‘valley of death’ - in fact it is more a mountain of risk………….RevenuesRisk to companyGovernment grant supportmoreDecreases as the product approaches market and risks increaseInformation that a real market exists reduces the risk and enables a supplier to invest in anticipation of future revenuesRisk is at its highest when a supplier needs to commercialise - the risk is high because demand is not visiblelessDevelopmentDemonstrationScale upCommercial salesStages in bringing a product to marketEIAG 2006, developed by Whyles, van Meerveld, Nauta 2014
10FCP thinking drawn from innovation policy, procurement professionals, UK Office of Government Commerce, and critically, suppliersFCP mirrors the active approach to supply chain management taken by the private sectorClearly identify and articulate future needsSearch out and engage with potential suppliersProvide a credible promise of future salesProvide demand side information and support delivery(while maintaining competition)(compliant with the legal framework)
11The Forward Commitment Procurement Methodology 1. IdentificationRecognise problems, unmet needs & opportunitiesConsult with stakeholders and set up teamDefine an outcome based requirementPrepare a FCP project outline/business caseProject approval/sign off2. Market EngagementMarket SoundingMarket sounding review & analysisSupply chain feedbackMarket consultationMarket consultation report3. ProcurementDevelop a pro-innovation procurement strategyFeedback to the supply chain and stakeholdersImplement procurement strategyNegotiate Procurement Contract
12PPI and PCP in action: Peer Learning Workshop Birmingham, UK, Summer Birmingham City Council - JERA - Technology Strategy Board - Contact: (Free)
13Zero Waste Prison Mattress MINISTRY OF JUSTICEZero Waste Prison MattressThe problem?40,000 + mattresses to landfill / yearHigh and increasing cost of disposalSustainability targets not metTime consuming for staffUnmet need?Zero waste mattresses – no cost increaseOutcome FCP?No mattresses to landfillCost saving €5 millionInnovation in fabric, changing recycling process, ‘cradle to grave’ managed service
14ROTHERHAM NHS FOUNDATION TRUST Future Ward Solution The opportunity?Ward refurbishment over 8 yearsVision of CEO – hospital of the futureUnmet need?A ‘step change in the patient experience’Ultra efficient lighting, future ready, progressive improvementsCost effective based on whole life costs
16ROTHERHAM NHS FOUNDATION TRUST Future Ward Solution Outcome FCP?New off-site built solutionFuture ready for LED / OLEDSame cost as traditional refurbishmentLower operational costInnovation?New product on the marketLighting technology: LED, and OLED Lighting designOff-site buildAnd……new SME formed
17RAWICZ HOSPITAL Low Carbon Uniforms The need and opportunity?Budget to replace uniformsUniforms heavy and costly to launderUser consultation showed uncomfortable, poor quality, not fit for purposeUnmet need?Functional, attractive,and user friendly, easy to clean, durable, cost effective and environmentally sustainable.
18RAWICZ HOSPITAL Low Carbon Uniforms Outcome FCP?New uniforms with lower whole life costs (-20%)Comfortable nursing staffCarbon reductionMore sustainableInnovation?Eucalyptus fibreBiomaterialsEco-textileand….a local company!
19ERASMUS UNIVERSITY MEDICAL CENTRE Sustainable bed washing facility The need and opportunity?New hospital being builtOld bed washer end of life and resource intensiveNo longer producedUnmet need?Clean beds – 70,000 / yearResource efficiencyCarbon reductionCost effectiveSupplier consultation day at Erasmus MC
20ERASMUS UNIVERSITY MEDICAL CENTRE Sustainable bed washing facility Outcome?Auditable bed cleaningResource efficiencyCarbon reduction (- 63%)Lower Total Cost of Ownership (-35%)Innovation?Robotic bed washing solutionSteam jets patentedCross fertilization across supply chainsand….an SME, can be applied to other cleaning needs
24Innovation procurement v green procurement? Green/sustainable procurementInnovation procurementEfficiencyQuality ANDSustainabilityAn energy efficient bed bed lamp(future ready for Organic LEDS)
25EcoQUIP Associates Programme More information……EcoQUIP Associates Programme
26SummaryInnovation is needed to enable society to adapt, overcome societal challenges and prepare for the future.There is a wealth of untapped potential and creativity in the supply chainMany new and better products that deserve a marketThe way we buy things can release or inhibit an innovative responseProcurement as usual will not deliver what is needed.FCP has proved to be a valuable framework to create new options and manage the risk of innovation.BUT it means thinking differently and changing the way we approach procurement
27INNOVATION PROCUREMENT Making the world a better place one procurement at time