Defining and Driving Innovation in an Invisible Industry

The supply chain is truly undervalued by its primary audience. However, it’s contingent that supply chain professionals who understand the significance involved in the process to push for innovation in an industry that consumers rarely think about.

Kristi Montgomery

To the average consumer, the supply chain is invisible. Rarely do they think about the process, and are only concerned if there is a product recall, their order didn’t arrive on time or was damaged. The supply chain is truly undervalued by its primary audience. However, it’s contingent that supply chain professionals who understand the extensive scope and significance involved in the process to push for innovation in an industry that consumers rarely think about.

Recognizing the value in bringing the great minds of the industry together, Kenco hosted a roundtable of supply chain leaders at the 2017 CSCMP Edge Conference to candidly discuss this challenging, but critical road to supply chain innovation. Participating in this conversation included executives from Coca-Cola, Chervon Technologies, Kids II and Georgia-Pacific, and what emerged was a unanimous understanding: Cutting-edge technologies are not the definition of innovation to industry leaders. What is most interesting is that those technologies that have been tested, deliver proven results, and will positively and significantly impact their bottom lines.

Package-delivering drones and driverless trucks are dominating headlines, but when it comes to adopting and implementing new innovations, most supply chain leaders are taking a more measured approach.

Defining Innovation with Data

This understanding was backed up by metrics from the June 2017 Kenco Innovation Survey to ensure that the leading voices were cohesive with the majority. According to the survey, 70 percent of respondents either currently or plan to invest in supply chain innovation, however 85 percent said that they defined “innovation” as “process improvements” or “business model innovation.”

The definition becomes clearer with the metrics revealing exactly which areas supply chain leaders are investing in:

  • 83 percent are prioritizing supply chain visibility
  • Robotics and automation (58 percent)
  • Sensors/Internet of Things (42 percent)
  • Other technologies like drones (8 percent), augmented reality (8 percent), and driverless vehicles (14 percent)

From the roundtable discussion is that supply chain leaders want innovation for today. Some technologies are worth adopting immediately, while others are still emerging and worth watching.

What You Can Do to Affect Change

To help guide the industry and its leaders into a truly innovative future, Kenco took the results of the survey and roundtable, and outlined a Blueprint. Successful supply chain innovation will occur if an organization follows these actions:

  1. Stop thinking of “innovation” only as adopting emerging technology – and to get the C-Suite on board, too.

Buzzword technologies are tempting, but they may not be worth the investment just yet. True and progressive change will happen with the technologies that have been tested and proven. The C-suite always wants to see data and case studies to prove the worth of the investment.

For example, Jel Sert Company was having difficulty with the half pallets they were using to ship displays to retail stores as products were often delivered broken or damaged. With the help of CHEP, they created a better-designed half pallet that eliminated product damage, saved 100,000 pounds of carbon dioxide and improved the process without overcomplicating the solution.

The Takeaway: Identify a supply chain process improvement or business model innovation that you can unilaterally test and prove within 90 days. Use its success as a proof of concept to persuade management for a broader organizational process re-think. 

  1. Break down silos across the organization; innovation can only happen when there is collaboration among peers.

Transparency is critical in all industries these days. Both consumers and employees are demanding visibility into processes and organizations. With that said, it is also a wise choice to provide clarity to your company’s stakeholders.

Internally, an open communication policy across teams can only help to drive innovation forward. If you want to streamline processes in the warehouse: talk to the people on the warehouse floor to learn where the biggest improvements are needed and what new technologies or improved processes can make a certain task easier to accomplish. A study from Deloitte showed that a “lack of cross-functional decision-making can lead to misalignment of plans and sub-optimal execution.”

The Takeaway: Breakdown the barriers among leadership and entry-level positioning and find a time and place to foster conversations that can lead to collaboration. 

  1. Move beyond cost fixation; without risk, there is no return.

Going hand in hand with a buy-in from the executive suite acknowledges that there is no reward without risk—particularly financial risk. Too often, companies shoot down innovative solutions because the price tag is “too high.” By fixating on cost and not the potential for ROI, supply chain leaders halt the process of innovation, and they fall behind the competition.

However, the desire to invest is very present. Although more than half of Kenco Innovation Survey respondents expect their 3PL partners to invest in innovation on their behalf, 32 percent are interested in co-investing with partners.

The Takeaway: To see company-wide progress, remind the company’s top leaders that innovation can come along with a high price tag, but that the cost can be mitigated by practicing smaller-scale, low-risk proof of concepts to test and prove the assumptions and savings. To see industry-wide progress, allow for collaboration among supplier and vendors.

  1. Realize that even Amazon has limitations

“The Amazon Effect” is a foreboding presence in the supply chain, and a difficult one to ignore. Organizations should recognize that Amazon is only one example of a successful supply chain leader. Just because one business’ strategy sees success, does not mean that it is cross-functional to an entirely different organization.

It is a good idea to pick one or two areas that need improvements within your own supply chain. Look at Amazon’s approach and brainstorm how you can do it better to fit your supply chain goals. To illustrate this concept, take Indochino, a made-to-measure online men’s clothing company, who is innovating the retail business model. They recognized Amazon’s success in delivery and variety along with the decreasing popularity of brick-and-mortars. Now, Indochino also has storefronts, used only for showcasing styles and working one-on-one with a stylist, and customers must make their purchases online, safeguarding Indochino from managing in-store inventory.

The Takeaway: Companies like Amazon set a precedent. It’s okay to capitalize on their processes and approaches but be selective as to where your company is modeling and where your company is innovating.

Final Thoughts

Innovation is as misunderstood as the supply chain itself. By measuring the opinions and practices of supply chain leaders on key areas and hot buzzwords, we can identify the best practices in driving the industry forward. It is possible to hone in on the techniques and technologies that can bring about significant and measurable change, but only when the supply chain industry leaders make their successes, shortcomings, and opinions visible. The future of the supply chain rests on continuous collaboration, connectivity and agility, and most importantly, being resilient. We need to work together across all levels internally, and among all supply chain organizations to continue bringing innovation throughout the industry.