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A Blueprint for the Future of Supply Chain Innovation

As the supply chain works continuously to combat the ever-changing landscape brought on by online giants like Amazon, this industry needs innovation.

The supply chain is a complex and costly industry. As such, it is incredibly important yet often difficult to focus on the areas within the supply chain where improvements can be made and costs can be cut. And beyond the incremental improvements, supply chain innovation, while desired, is difficult to define. The supposed innovations making headlines, like package delivery drones or robotics in warehouses, are not necessarily the technologies or solutions that your facility may need today nor the ones which will change the industry in the short term.

As the supply chain works continuously to combat the ever-changing landscape brought on by online giants like Amazon, as well as the rising shortage of truck drivers, warehouse employees, etc., this industry needs innovation. In an effort to pinpoint the best ways to improve and address the supply chain’s biggest challenges and drive it into the future, Kenco brought together some of the industry’s top players to have a conversation. The company hosted a roundtable of supply chain leaders at the 2017 CSCMP Edge Conference to discuss the challenging, but essential road to innovation. In attendance were executives from Coca-Cola, Chervon Technologies, Kids II and Georgia-Pacific. All who sat at that table agreed on four key themes that will enable this industry to succeed.

To help guide the industry and its leaders into a truly innovative future, Kenco took the results of the roundtable, consolidated the key themes, 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 get the C-Suite on board, too.

Buzzword headlines are tempting, and will make you think that IoT, drones, and driverless trucks will be the best way to improve your business. While these might play a role in the future, the investment is not worth the ROI just yet. Truly progressive change is seen with the technologies that have been tested and proven—and the best way to get C-Suite buy-in is with data and case studies.

Jel Sert Company, for example, was having a hard time with damaged deliveries. They were able to pinpoint the issue on faulty pallets, and when they redesigned their display pallets, they saw immediate improvement. Product damage was eliminated and Jel Sert was able to avoid releasing 100K lbs. of carbon dioxide and reduced waste by 130K lbs.

Your Takeaway: Improve the process without overcomplicating the solution. Identify a supply chain process improvement or business model innovation that you can unilaterally test and prove within 30-90 days. Use its success as a proof of concept to persuade management for a broader organizational process re-think.

2. Breakdown silos across the organization; innovation can only happen when there is collaboration amongst peers.

A study from Deloitte on supply chain leadership showed that a “lack of cross-functional decision-making can lead to misalignment of plans and sub-optimal execution.” In other words, leaders are more likely to collaborate with other company functions than supply chain practitioners.

By breaking down silos to enable idea and information sharing, supply chain leaders can create innovative solutions that not only impact the bottom line but also improve customer communications, leading to better partnerships. Internally, it is wise to establish an open communication policy. 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 processes can make certain tasks easier to accomplish.

Your Takeaway: Eliminate the barriers amongst leadership and entry-level and find a time and place to foster conversations that can lead to collaboration.

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

The saying goes “there is no reward without risk” and it holds true in the supply chain—particularly where money is concerned.  Too often, companies shoot down innovative solutions because the potential price tag is “too high.” Fixating on costs halts the innovation process, and it is a good way to fall behind the competition.

Your Takeaway: To see company-wide progress, remind top leaders that innovation 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 suppliers and vendors—again, alliance is a vital piece of progress.

4. Realize that even Amazon has limitations

“The Amazon Effect” is a foreboding presence in the supply chain, and a difficult one to ignore. However, they are only one example of a successful supply chain leader. Just because one business’ strategy sees success does not mean that it will translate to an entirely different organization.

Focus on one or two improvement areas within your own supply chain, then look to Amazon’s approach, and conceptualize how you can use it to better fit your company goals. Indochino, a made-to-measure online men’s clothing company, is a great example of this process. 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. Customers must make their purchases online, safeguarding Indochino from managing in-store inventory.

Your Takeaway: Companies like Walmart and Amazon set a high precedent. Capitalize on their processes and approaches. Understand the difference between modeling and innovating. How can you copy best practices from others and improve your operations?

To move into the future, the supply chain will need innovative solutions, but there should be an industry-wide understanding of what innovation means and how we can achieve it. Identifying the techniques and technologies that bring about significant and measurable change is possible, but only when industry leaders make visible their successes, shortcomings, and opinions. Continuous collaboration, connectivity and agility, and resilience are key. We need to work together across all levels internally, and among all supply chain organizations to continue bringing innovation throughout the industry.

Kristi Montgomery is vice president of innovation at Kenco Logistics.

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