Drivers of Supply Chain Innovation

This article discusses the drivers of supply chain innovation and their impact on business performance. It highlights the importance of people, customers, and technology as key drivers of innovation. The article also emphasizes the role of a skilled workforce and the integration of technology in supply chain operations. Overall, the article provides insights into the factors that drive supply chain innovation and the potential benefits for businesses.

PROCUREMENT AND
SUPPLY CHAIN
MANAGEMENT

Letter to Editor
Yash
Address
City, State, Zip
Email ID/Contact No.
Date
The Editor
Procurement and Supply Australasia
City, State, Zip
Dear Editor,
Supply chain innovation has been one of the recent trends in the industry and managing
an efficient supply chain structure helps and organization to do well in the competitive
market. Innovation through technology is the new revolutionary drift being observed by
the market. The article published on a similar context on the Procurement and Supply’s
official website for dimensions and drivers of innovation are under observation in this
report. The article titled ‘What are the drivers of Supply Chain Innovation?’ published on
July 17, 2019 by PROKURIA is one of the most effective and impactful articles,
highlighting the key drivers of change, calling the need for upscaling the management
principles in the stream.
The article states the fundamental factors to run a well-to-do business. Cost-
effectiveness is considered to be an important business parameter, but the primary
objective of business is stated to be creating customers of service offering. The process
highlights the positioning and targeting to be the attributes for developing customer
base and retaining existing ones. The ability to creating market value through market
penetration, by utilizing the innovation and its techniques is one of the most successful
methods (Oke & Prajogo, 2013). The primary direction shared by the article, that
explains the importance of innovative strategizing for expanding consumer base is a
strong thesis, and I completely stand by the statement.
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Technology has always excited human interest in any product or services. As we moved
towards automation and the internet, the demand for alternative to manual tasks
through automation surfaced. Slowly and gradually, technological innovation has had a
breakthrough, to an extent that most of the operations in the supply chain are now
closely collaborated with the technological upscaled innovations. Innovations brought
transparency, precision, shorter delivery cycles, options and preference settings to
customers, cost efficiency and speed in the service sector, which has helped in
developing a new customer base (Rimiene & Bernatonyte, 2013). Therefore, the
primary objective of innovation is strengthening the supply chain and to act as a key
driving force. The article refers to various drivers, considering that people, both
employees and consumers, should be the major driving force behind innovation, yet
supporting internet and technological interventions to enhance supply chain mechanism
are all acclaimed motivators for a good supply chain management, to which I strongly
agree.
Consumer trend drifts almost every day, with alternatives and service offerings from
various contenders in the market. A study by Kim, Thomas, Paul, & Brown (2015)
reflects that collaboration between people and knowledge acquisition, of consumer
meta-data, are often the key indicators of innovation in the supply chain. But it was
Ageron (2013), with others, who designed a study merging theoretical concepts of
technological, process, product, and marketing capabilities as performance
measurement methods as supply chain innovation drivers. The driver mentioned in the
article, that relates consumers and people to be the primary forces in supply chain
innovation, is justified with enhanced literature review where recurrently the
collaboration between people has played a major role in driving the need for innovation.
Another crucial driver in supply chain innovation, as covered in the article is technology.
Extensive usage of technical gadgets, high-quality performance, reliability, and
transparency are the key achievements attained from the internet of things. The article
mentions the reluctance of usage of drones in everyday life, as service innovation
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equipment, but later it proved to be one of the most effective measures to support in
conditions relating to catastrophic and crisis scenario. A study by Singhry, Abd Rahman,
& Imm, in year 2014, highlighted technology as one of the conceptualization factors of
innovation in supply chains. A study with Arlbjørn (2011), coins the term of supply chain
technology, by elaborating advanced manufacturing technology and information
technology together. Advanced manufacturing technology and IT are extensive
technological innovation as seen in the modern world. Therefore, technology as a
driving force of innovation is a very valid argument.
Despite technology being a driver for innovation, the writer also emphasizes the
important role of the skilled workforce that operates the technology. A past research by
Lee, Lee, & Schniederjans (2011), considered supplier role and member collaboration in
efficient business innovation. These research contexts not only uncover the hidden
factors that drive innovation in today’s scenario, but also provides a strong evidential
research support. The Supply Chain Operations Reference model or SCOR has been
utilized by many organizations to quantify the dimensions for evaluation of effective
supply chain performance (Lavastre, et al., 2014). The complexity in supply chain
systems is also high. Very recently, over 70% of the organizations stated their supply
chain systems to be extremely complex (Tan, et al., 2015). Therefore, it is very
necessary to measure the performance using the drivers of innovation, to keep the
management decision making risk free and in control of the outcomes.
Overall, the major identified drivers of innovation in the supply chain, as directed in the
article, people, technology and consumers act as the most suitable drivers measuring
supply chain innovation in recent times. Also, the literature review of previous studies
supports the attributes set. These drives would not only open opportunity windows for
service excellence in the supply chain, but would also help manage the costs, thereby
retaining customers, making business profitable and environment-friendly as well (Seo,
et al., 2014). The analysis of the drivers of supply chain innovation as mentioned in the
article have been found to be relative and justified. Research on these driving forces
can open new avenues for smarter systems and economically viable solutions, that
would help in customer retention and attractiveness, benefitting the businesses.
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Sincerely,
[Signature]
Yash
College/University Undergraduate
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References
Ageron, B., Lavastre, O. & Spalanzani, A., 2013. Innovative supply chain practices : the
state of French companies. Supply Chain Management: An International Journal, 18(3),
p. 265– 276.
Arlbjørn, J. S., de Haas, H. & Munksgaard, K. B., 2011. Exploring supply chain
innovation. Logistics Research, 3(1), pp. 3-18.
Kim, C., Thomas, Y. S., Paul, F. & Brown, S., 2015. Buyer–supplier embeddedness and
patterns of innovation. International Journal of Operations & Production Management,
35(3).
Lavastre, O., Ageron, B. & Alain, L. C., 2014. Innovative Supply Chain Practices
( ISCP ) in Supply Chain Management. Development and Validation of a Measurement
Scale, 17(4), p. 263–298.
Lee, S. M., Lee, D. & Schniederjans, M. J., 2011. Supply chain innovation and
organizational performance in the healthcare industry. International Journal of
Operations & Production Management, 13(11), pp. 1193-1214.
Oke, A. & Prajogo, D. I., 2013. Strengthening the innovation chain: the role of internal
innovation climate and strategic relationships with supply chain partners. Journal of
Supply Chain Management, 49(4), p. 43–58.
Rimiene, K. & Bernatonyte, D., 2013. Supply chain management trends in the context of
change. Economics and Management, 18(3), p. 596–606.
Seo, Y.-J., Dinwoodie, J. & Kwak, D.-W., 2014. The impact of innovativeness on supply
chain performance: is supply chain integration a missing link?. Supply Chain
Management: An International Journal, 19(5/6), p. 733–746.
Singhry, H. B., Abd Rahman, A. & Imm, N. S., 2014. The Potential Moderating Role of
Supply Chain Capabilities on the Relationship between Supply Chain Technology and
Concurrent Engineering in Product Design. Int. J Sup. Chain. Mgt, 3(2), p. 132–139.
Tan, K. H. et al., 2015. Harvesting Big Data to Enhance Supply Chain Innovation
Capabilities: An Analytic Infrastructure Based on Deduction Graph. International Journal
of Production Economics, Volume 165, pp. 23-233.
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Appendix
What are the drivers of Supply Chain innovation?
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
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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.
Link: https://procurementandsupply.com/2019/07/what-are-the-drivers-of-supply-chain-
innovation/
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