Accessing Innovation: the speed dilemma when engaging with start-ups
Jumping on a new and promising idea is the smart way to stay one step ahead - but the paperwork and process involved in engaging with innovative start-ups and smaller 'boutique' style suppliers can oftentimes hamper any idea of stealing a march. So, if you want better access to more innovative start-up suppliers, how can you fast track the process?
The truth is that corporate procurement procedures and startups often don’t mix. Procurement is a process, after all - and often, the due diligence of onboarding a new supplier can take months with many procurement professionals feeling that some of the processes can put the brakes on the effective acquisition of innovation.
For start-ups, who's 'make or break' period very heavily relies on good cash flow, this time-consuming process can swamp them with paperwork, delaying the start date of a vital new contract. For corporates, it can hinder the ability to adapt to market forces and drive efficiencies in costs or processes.
No wonder it’s a timely process: vetting, risk assessments, IT security considerations, onboarding to ERP/finance systems and satisfying legal and financial checks doesn’t just happen overnight, but when you’re trying to bring on board a small new company, the job can be even more complex.
One of the specific challenges of onboarding startups is often the lack of a track record. It’s hard to check out financials when the company may not yet have submitted their first annual accounts with an absence of history also working against them when credit checking.
So access to the sort of agile innovation which puts any business on a leading-edge can be tricky for larger corporations. But that’s not to say there aren’t ways to mitigate the corporate + startup problem.
Make a difference in-house
The biggest challenge CPOs face is to ensure processes don’t stand in the way of innovation and progress - but there are definite steps you can take right now to alleviate some of these problems yourself.
- Start pre-vetting early - get onto a financial and basic director check as soon as suppliers become of interest. This gives you a head start on the process
- Consider proactive sourcing - in areas you feel are lacking in innovation. This allows you to be prepared if projects arise. This has its limitations but does ensure you have a wide pool of pre-approved suppliers at your fingertips
- Create a fast-track process - for onboarding specific types of suppliers. To satisfy legal and financial obligations, it could be that fast-tracked suppliers can only work on projects up to a certain threshold to limit your risk exposure. This threshold can then be increased as time goes on.
Seek support from a third party
The measures above certainly offer some scope within procurement departments for remaining as agile as possible in terms of onboarding new innovation but there are still limitations. Most will require changes to the way procurement functions within your company and this may take time to get sign-off and adoption. In these circumstances there are strong arguments for outsourcing some - not all - of your procurement needs, enabling your team to focus on their skill set in core contracts.
There are a variety of providers in the market who now offer solutions for some of procurements challenges when wanting to engage with start-ups and smaller boutique suppliers:
- Security, credit and risk assessments - specialist companies may be quicker at vetting than you can achieve in-house so suppliers will be green-lighted more rapidly. This can get the ball rolling quickly but ultimately, unless other processes are streamlined further up the onboarding chain, delays in engaging are only marginally alleviated.
- Work with a supplier sourcing company - an offering now quite abundant in the market. Several agencies offer to find suppliers in each niche, saving time. This is ideal for procurement teams strapped for time at the front end of the tender process but it doesn’t solve the back-end stage which tends to slow things down.
- Subcontract some areas entirely - best when you are in niche markets. A subcontracting agency allows you to work with talented individuals in that field quickly but the drawback is that you’d need a specialist subcontracting agency in each of your vertical spend categories - and they tend to only deal in people, not services.
A true solution which not only offers ease of sourcing, efficient vetting, painless onboarding and an element of risk management is not easy to find. We know because it’s the foundation upon which our company was built.
When we started Maistro, one of our main goals was to take away the “new supplier set up” pain. As a Procurement-on-Demand provider, we give businesses the ability to buy services quickly, efficiently and compliantly. We act as the contracted customer on your behalf, you get fast-track access to startups, freelancers and boutique agencies with no delay in getting work started because we are already a trusted and 'onboarded' part of your system. We are a 'secure shortcut' to innovation.
Whether you’re ready to move to PaaS just now or not, it’s still worth mulling over the issues we’ve discussed. Even small incremental changes can improve your organisations agility - which in turn leads to bigger and better things.