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Team Up With Suppliers To Innovate For Customers

Flexibility. That's what it's going to take to adjust to the evolution ahead.

The Trend

Operators and suppliers will need extraordinary agility and flexibility, according to Bruce Reinstein & Tim Hand, partners at Kinetic12 Consulting.

In their Restaurant of the Future 6.0 report (2021), they predict a changing consumer landscape which has made operators reprioritise their needs. Moving up the list are: off-site delivery - slimming down menus and ingredients to simplify the operation, improving labour productivity, and driving new streams of revenue.

Quick Service Restaurants (QSR) operators tend to rely heavily on suppliers for innovation. From idea generation to ingredient formulation, packaging and food safety, they can be critical partners at various stages.

Research by Ottenbacher & Harrington (2009), found that QSR suppliers were playing a more significant role than previous studies had found and that they were critical to the overall success of new product development in particular.

Previous studies on food innovation did not find the amount of outsourcing done by QSR in this study. The relationship was such that it could be viewed as a strategic alliance. Operators’ innovation projects benefit from the alliance with lower food costs, reduced R&D expenses, faster development time and better product quality (Ottenbacher & Harrington, 2009).

Providing a customer-centric service is going to require flexibility and strong partnerships to successfully innovate in current conditions.

Operators and suppliers will need extraordinary agility and flexibility

Your Business Application

Collaborative innovation is a useful concept at this time.

Collaborative innovation is defined as ‘knowledge or products created cooperatively by members of a virtual team, bringing together various individuals and enterprises with complementary ideas, knowledge and skills’ (Encyclopaedia of E-Commerce Development, Implementation, and Management 2016).

Writing about collaborative innovation, Sam Jenks (kodiakrating, 2018), offers four guidelines for success. His final point is most relevant here.

Putting Trust in Supplier Competencies

He asserts that suppliers are experts in their fields, and, most likely, have a portfolio of clients. By communicating with key suppliers, they can be encouraged to create supplier-enabled innovation.

Jenks (2018) offers an example. If a supplier is doing a production run and sees an opportunity to cut costs, innovate within materials, create a complementary/new product, or something similar, their exploration of the innovation can be encouraged. This is the true essence of collaborative innovation with suppliers; creating opportunities for mutual gain and added topline value. Having close relationships with key suppliers puts operators in line to be co-innovators, rather than the supplier choosing another partner company.

Jenks (2018) does add one cautionary note - make sure, ‘… an IP protection process is in place, and that trust is established that a successful innovation will result in equitable and timely benefits. Preferred customer status may be accomplished through balanced and equitable approaches to intellectual property ownership‘ (Monczka et al. 2010).

Radical innovation, partners required

KFC has invested millions in R&D to offer an alternative to chicken or beef (orquest, 2020).

Firstly, by signing a partnership agreement with Beyond Meat to launch a plant-based version of its fried chicken in selected restaurants in Los Angeles, Orange County and San Diego. And secondly, by developing in Russia the world’s first lab-produced chicken nuggets, partnered with 3D Bioprinting Solutions.

To create a healthier product, KFC is trying to make its lab-produced chicken nuggets as similar as possible in taste and appearance to the original KFC product (orquest, 2020).

KFC is not the only firm to adopt the ‘no-meat’ experience. Burger King also sells the plant-based Rebel Whopper and just launched in USA the Impossible Croissan’wich, a breakfast sandwich. Even Starbucks launched its own Impossible Breakfast Sandwich in June (orquest, 2020).

All innovations need not be as radical as those mentioned above. The potential value of working with suppliers can be rewarding on a much smaller scale.

Ottenbacher & Harrington’s study (2009) found that QSR leaned heavily on suppliers for their culinary expertise. An operator told them that, for example, ‘when we want to develop a new salad, we ask our suppliers for support. Depending on the relationship with the supplier, sometimes we hand over the idea or part of the concept to suppliers and then they come up with items that are appropriate for us and then combine them with our existing ingredients’.

By leveraging their strategic supplier partnerships, this study found that QSR firms increased product quality, reduced total end product costs (balancing food cost with direct labour cost), utilised external knowledge and creativity, and increased consistency (Ottenbacher & Harrington, 2009).

Final Thoughts

Innovation needs to be built in to businesses operating in the current environment, allowing them to adapt quickly and sustainably to changes. By forming collaborative relationships with suppliers, operators can implement more valuable, consistent solutions.