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Innovation and Supply Chain

Innovative Supply Chain

A successful supply chain requires an organization to be clear about its business objectives. A successful supply chain also requires innovation and adaptability.

An innovative supply chain is largely driven through sharp business focus and synergy generated from an integrated functional approach. Some key factors that are essential to build an innovative supply chain are:
  1. Culture and Leadership: Organizations must encourage employees to be creative and innovative. IBM encourages an organizational culture with innovation emphasized in every employee's job description and evaluation. Top management support for an innovative supply chain creates a positive environment for change. An innovative organization should also foster a culture open to ideas. An innovative organization must recognize poor decisions and failures as part of a normal business process.

  2. Reward Innovation: IBM's ISC team in Scotland has developed 200 innovation projects in two years. IBM awards the best innovations.

  3. Motivation to change: A successful implementation of innovation necessitates organizations to constantly motivate for innovation. The approach may be out of sheer necessity or the will to excel constantly. With integrated functions, it is necessary for supply chain managers to become innovators.

  4. Innovative employees: It is essential to have the right employees at the right place for successful innovation. Innovative employees are creative, enterprising, desire change for the better constantly and can visualize differently. Employees may be initiated into innovation through training, benchmarking, professional development, job rotation or even recruitment of fresh talent.

  5. Break traditional barriers to innovation: A supply chain is traditionally considered as an operational function. Hence, innovation takes a backseat. However, operational workforce led by line managers should explore opportunities to innovate, improve existing processes and restructure operations with other functions.
    Innovation is not a new discipline in most organizations. However, the usual strategies in innovation and approaches adopted and succeeded in the '80s and '90s, are no longer sufficient. Organizations must involve in exciting experiments and innovation to reinvent the way they create the future, for "business as usual" does not always produce the desired results.

  6. Evaluate the organization’s present state of innovation: Supply chain managers must benchmark the existing supply chain against the competition and keep track of business trends. It is also important to adopt constantly techniques that enable better performance from service providers so as to adapt the supply chain in accordance with the nature of product.

  7. Prioritize Innovation: Companies acknowledge that innovation is the only sustainable source for growth, competitive advantage, and new profits. However, only about 25 percent of the companies consider innovation as the key strategy to be successful in today’s competitive environment. Organization must consider innovation in the supply chain as top priority and a responsibility of all employees, even the lower level employees. Organizations need to understand and evaluate the impact of innovation. This will allow organizations to put supply chain innovations on the same level as product innovations.
In a dynamic environment, organizations are forced to adopt an innovative supply chain management strategy to ensure success and long term survival. For best results, innovation should be backed by the management and elicit the participation of all the employees. Innovation has always led organisations to stand out

Essential principles for managing innovation:

• Comprehensive approach to innovation.
• Innovation must include an organised, systematic, and continual search for new opportunities
• Involve everyone in the innovation process.
• Work constantly to improve the environment for innovation.

Case Study Quotes

"Pretty much, Apple and Dell are the only ones in this industry making money. They make it by being Wal-Mart. We make it by innovation". - Steve Jobs, Apple