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Innovation in the Supply Chain: lessons from the CBI/QinetiQ Innovation Survey

Innovation in the Supply Chain: lessons from the CBI/QinetiQ Innovation Survey. Hugh Morgan Williams Chairman, Canford Group Vice Chair, CBI SME Council. High revenue. Medium revenue. Low revenue. Overall. % turnover on innovation. 0 10 20 30 40 50 60 70. Main Findings.

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Innovation in the Supply Chain: lessons from the CBI/QinetiQ Innovation Survey

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  1. Innovation in the Supply Chain: lessons from the CBI/QinetiQ Innovation Survey Hugh Morgan WilliamsChairman, Canford GroupVice Chair, CBI SME Council

  2. High revenue Medium revenue Low revenue Overall % turnover on innovation 0 10 20 30 40 50 60 70 Main Findings Business Models and Processes Products and Services Equal Focus

  3. High revenue Medium revenue Low revenue Main Findings Business Models and Processes Products and Services Equal Focus Smaller Companies % turnover on innovation 0 10 20 30 40 50 60 70

  4. Internal profits 94% Gov’t grants & initiatives 25% Innovation partners 17% Banks 17% Equity 7% 6% Venture capital 5% Other Funding for Innovation Funding sources Ease of accessing external finance for innovation 23% 31% 15% 27% Veryeasy Balance = -31% Overall Veryhard Fairlyeasy Fairlyhard Neutral/Don’t know 4% Smaller companies Balance = -39% 27% 31% 15% 27% 27% 32% 12% Veryeasy 2%

  5. Future trend 1 4 2 3 5 63% companies agree stronger links with academia would boost their competitive advantage External Collaboration Effectiveness of collaborationwith external partner Most frequent Least effective Most effective 85% Companies in thesupply chain 77% Universities 75% Consultants 67% Companies not in thesupply chain 40% Government researchinstitutes Least often 40 % 20 60 -40 0 -20 CBI/QinetiQ Innovation Survey 2005

  6. Managing Innovation All Respondents Smaller Companies 80% Larger Companies Supply Chain Collaborators 60% 40% 20% Involve Customers/Suppliers Monitor Failure Reward Employees Formal Ideas Process Provide Resources Market Assessment

  7. SME Balance Balance +58% +57% Macroeconomic stability +18% +23% Intellectual Property policy +16% +16% Environmental legislation +3% -8% Health & Safety legislation +1% -9% Education policy -9% -12% -20% -25% Transport policy -20% -30% Procurement practices -28% -35% Planning policy -35% Business tax -46% -42% Employment legislation -45% Government Influence on Business Innovation Hinders Neutral Helps Corporate governance policy -80 -60 -40 -20 0% 20 40 60 80

  8. SME Balance Balance +58% +57% Macroeconomic stability +18% +23% Intellectual Property policy +16% +16% Environmental legislation +3% -8% Health & Safety legislation +1% -9% Education policy -9% -12% -20% -25% Transport policy -20% -30% Procurement practices -28% -35% Planning policy -35% Business tax -46% -42% Employment legislation -45% Government Influence on Business Innovation • Areas for improvement • More and better S & T technicians and graduates • Widen and increase level of the R&D tax credit • Use procurement more strategically • Fund more applied R&D Hinders Neutral Helps Corporate governance policy -80 -60 -40 -20 0% 20 40 60 80

  9. Why Procurement Matters £90m/yr £300m/yr £ billion/year CBI/QinetiQ Procurement & Innovation report 2006

  10. Balance (help - hinder) -31% -32% -7% Do Government Procurement Practices Help or Hinder Your Own Innovation Activity? Hinders Neutral Helps Supplier to central government Supplier to local government Not a supplier CBI/QinetiQ Procurement & Innovation report 2006

  11. Do Government Procurement Practices Help or Hinder Your Own Innovation Activity? Who is being hindered? Hinders Neutral Helps 30% Larger firms Supplier to central government 41%Firms with <500 staff Supplier to local government Not a supplier CBI/QinetiQ Procurement & Innovation report 2006

  12. Companies Reporting the Most Strongly Unfavourable Views on Government Procurement (%) Small companies consistently report more unfavourable views CBI/QinetiQ Procurement & Innovation report 2006

  13. A New Approach to Stimulating Innovation: Recommendations • Introduce innovation incentives and stretch targets in public procurement • Make outcome-based procurement a reality • Procurement on the basis of value • Take a rational approach to IP rights • Learn and adapt • Develop an ‘ARPA’ for the UK

  14. Conclusions • Smaller companies are committed innovators • Extra support for b2b collaboration • Regulatory Impact Assessments must be improved to weed out adverse affects on SMEs • Government must become an early adopter of new ideas to support the development of competitive supply chains

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