While reducing costs is important, it’s not fundamental to run a successful organisation. The primary responsibility of any business is to create customers, and in order to do so you need the right product, at the right place, at the right time, at a cost that will attract and retain customers. Meeting these expectations requires constant innovation.
What is supply chain innovation?
As products become commodities, the need to differentiate yourself from your competitors drives supply chain innovation. Examples include shorter supply cycle times that allow for next day delivery and increased customer choice requiring integrated data management and order execution throughout the supply chain.
There are many innovation areas in the supply chain, such as IT architecture, organisation, talent development, process optimisation, quality warning, supply chain collaboration, risk management, etc. Key enabler factors on innovation include velocity, visibility, variability in the process of time to market, market to opportunity, opportunity to order and order to cash.
However, innovation is in the eye of the beholder, so something that may be innovative to you at the time may be an established process for someone else. This is why supply chain professionals need to keep their eyes open for ‘new’ ways of doing things (new to them at least). This could be from attending conferences, industry conventions, school/education, or reading.
What are the drivers of supply chain innovation?
The primary driver of innovation should be the people. All managers should be held responsible for delivering savings to the company year after year. If you and your department can’t pay your way, then what good are you to a company, right? This separates a well-run organisation from a mediocre one and supply chain professionals from clerks.
Another driver of innovation is the customer. By nature, supply chains evolve based on external forces as well as internal factors, typically to improve efficiencies and reduce costs. As a result, customers’ supply chains have to adapt to these changes in order to remain competitive.
Industry leaders cannot ignore the fact that the Internet of Things (IoT) also has the potential to revolutionise the supply chain. By integrating physical and digital operational components, the IoT creates opportunities for more effective and efficient supply chain processes.
Drones are the best example of innovation through Internet of Things. While some industry folks chuckle over the thought of drones making deliveries, they are indeed doing just that particular within areas hit by natural disasters and in remote locations. For example, UPS has partnered with a couple of drone providers in Africa to deliver blood and other needed medical goods to remote areas of Rwanda and the Chinese e-commerce provider, JD.com, is using drones to deliver to rural China locations.
Deploying advanced sensor networks and data-collection platforms alone, however, will not innovate business practices. Organisations need savvy operators, supervisors, and leaders with the knowledge to successfully manage IoT technology.
But before you start thinking about how you can implement IoT technologies within your organisation, maybe you should start with something more approachable like supply chain automation. A cloud-based sourcing and procurement solution can help organisations automate at least a part of the supply chain and achieve significant cost and time savings without much hassle.