Implement Supply Chain Innovation – improvement | implement | management
Implement Supply Chain Innovation
The key to making improvements in any supply chain is innovation because that’s how we find new and better ways to create value but innovation comes in two different forms, sustaining innovation and disruptive innovation. So, let’s look at these two different approaches and then dig into some tools that will help you use innovation in your supply chain.
Sustaining innovations are improvements to an existing product, process or service. They’re changes that make something work better, faster or cheaper. Sustaining innovations are the way that companies compete against one another most of the time. For example, the companies that make cell phones are in a constant battle to make their phones a little faster or to make the resolution a little better but disruptive innovations introduce a totally different approach that makes the old process, product or service obsolete.
Automobiles are an example of a disruptive innovation in transportation because they basically replaced horses. And there are opportunities for disruptive innovation to occur in any industry. When it comes to products, we tend to see companies making products that are actually pretty similar. They all share a common set of characteristics called the dominant design. For cars, the dominant design includes four wheels, two headlights and one internal combustion engine. Any product that varies from this design is innovative.
For example, a car that’s powered by electricity instead of an internal combustion engine would be innovative. And if that innovative product takes hold in the marketplace and eventually makes the old, dominant design obsolete, then it’s disruptive. Big companies with strong processes tend to be good at sustaining innovations. But small, nimble companies are better at disruptive innovation.
Supply chain managers need to take advantage of both kinds of innovation. Tools like Lean, Six Sigma and Theory of Constraints can be useful for identifying and implementing sustaining innovations that lower costs and improve quality and service, but we also need to think outside of the box and look for ways to identify and implement disruptive supply chain innovations. If someone is going to figure out how to make your product or service obsolete, wouldn’t you rather it were you instead of one of your competitors?
Big companies can embrace disruptive innovation by partnering with universities as well as with smaller companies and technology incubators. They can also set up internal experiments and skunk work projects where teams have more freedom to try new ideas.
Small companies can embrace sustaining innovation by working with consultants, by implementing a continuous improvement program or by partnering with a larger company in a mentor-protege relationship. Innovation isn’t just a good thing, it’s an essential survival skill.
Learning how to cultivate both sustaining innovation and disruptive innovation can help you’d deliver a steady stream of improvements and ensure that your supply chain will drive real value for your business.