Where is the hotbed of business innovation in your organization? Is it in the creativity of your people? Is it in your technology? How about your suppliers, customers and competitors?
These are the traditional sources of innovation but they don’t have to be the only ones. Some of the best sources of incremental and disruptive innovation can come from outside a company’s sphere of contacts and even outside its industry. And while the search for cross-industry innovation isn’t new (we witnessed it with Coca Cola’s “freestyle” soda fountain dispensers and FedEx’s overnight package delivery, based on methods developed at Delta Airlines), cross-industry assessment is just not happening, according to some studies. This month, we show you how to implement a cross-industry assessment and break down the market scan steps necessary to achieve higher supply chain performance.
Get past status quo supply chain strategies
Typically, supply chain performance is judged by various attributes such as agility, asset management, cost, reliability and responsiveness. The trade-offs between these attributes tend to be between cost efficiency and responsiveness. The objective is to achieve a supply chain with higher performance—greater responsiveness at the same cost efficiency, or greater cost efficiency at the same level of responsiveness. And the pathway to that higher level of performance is the market scan, which is an assessment process with distinct phases in which each successive part results in greater quantity and quality of innovation. The output of the market scan is then screened and evaluated to produce consensus on which innovative ideas should be tested and deployed.
Most companies are familiar with the market scan process and have used it to make regular adjustments to their supply chains. Chief executive officers know the value of this approach. In a recent Wipro survey conducted with Forbes Insight, a majority of the more than 300 C-level executive respondents said they believe cross-industry examination is an effective way to foster innovation. Yet, too few companies take the first step in conducting a cross-industry assessment. By limiting their search to their own industry, these companies have lost the potential for true disruptive innovation—and in today’s competitive global economy, that’s like wearing blinders while crossing the street.
Breaking down the process
Step one in conducting a cross-industry assessment starts with a series of questions. What are the objectives and scope of the project? What is the plan for formulating a list of the outside industries and companies that are best aligned with your issues? With these addressed you can formulate a master list of potential companies to scan for solutions.
Step two consists of an analysis that has three main tasks:
- Supply Chain Diagnosis: To understand the existing state of your supply chain processes and functions, you conduct an outside-in analysis using experts in your organization or an external partner who can identify your existing pain points and business challenges.
- Comparative Assessment: Once the potential pain points, supply chain issues and drivers are known, you then look at your master list of outside companies and industries and develop a short-list of organizations to analyze and learn how they responded to similar challenges. The main question here is: Are the best practices and enablers that these companies have adopted translatable to your business?
- Hypothesis Development: Once you’ve analyzed the results of the comparative assessment, you develop a set of hypotheses for your business based on the adoption of the identified leading practices. These should include both the perceived advantages of adopting the practices and the potential pitfalls.
In the final phase of your cross-industry assessment, compile a list of possible actions and technology enablers for supply chain improvements that utilize the ideas gleaned from other industries. These should include how to address the potential pitfalls stated in your hypotheses. The list should set the direction for innovation and drive future initiatives in your organization.
Use your market scan to gain a competitive edge
While there is a well-defined process at work here, scouting around for new ideas in completely different industries is as much an art as a science. It takes a special kind of understanding and imagination to see a successful technology or process in one kind of organization and be able to imagine its potential to work in your own company. To get traction with a cross-industry assessment, some organizations may have to undertake staff training to overcome resistance to adopting and adapting innovation from the outside—or perhaps even to see it in the first place. You won’t derive the value you seek from a thorough market scan if the internal mindset is strictly “homemade.”
Organizations that lack the capacity to conduct a comprehensive cross-industry assessment on their own should consider a partner to manage both the outside-in analysis and the development of external sources and ideas. Understanding how to identify these potential companies may be one of the biggest barriers to engaging in cross-industry innovation. In the long run, having a partner can help reduce investment costs and ensure that opportunities are not lost.
Competition often comes down to who has the most effective and efficient supply chain. That makes innovation essential—a drive for growth and differentiation in the marketplace that's not limited by the experiences and knowledge of your own organization and industry.
A market scan that includes the cross-industry innovation component is both a process and a mindset. It's a way of systematically expanding your pool of ideas to access the best supply chain practices across industries and organizations. Businesses today can't be held back by the insular supply chain solutions that worked in the past. Look deeper for effective ideas and make them your own.
About the Authors: Brian Nolf is Partner & Supply Chain Management Practice Head, Europe, for Wipro Consulting Services. Ramanan Sambukumar is Senior Manager, Lead Distributed Supply Chain Centre, for Wipro Consulting Services. Panagiotis Tsiakis is Manager, Supply Chain Management Practice, Europe, for Wipro Consulting Services.