The Five Key Components for Supply Chain Innovation

From the March-April 2015 edition of Supply Chain Management Review.

March-April 2015

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In today’s highly competitive global market, firms are constantly striving to improve their performance. However, in many instances, the low-hanging fruit has already been picked. That has led some to ask where they can look next to gain a competitive advantage. Many leading firms recognize that they can’t do it alone: The biggest opportunities are the innovations they develop with supply chain partners. In the context of the supply chain, that includes not only new product development but also process improvements, which span across partners in the supply chain.

Indeed, several recent reports tout the need to innovate in a supply chain context. For example, Deloitte Research’s 2005 report on mastering innovation stresses that the pressure to innovate is unrelenting, increasing, and will determine the future success of firms. The 2014 Deloitte MHI Industry Annual Report calls on supply chain executives to capitalize on innovation in order to improve supply chain performance (See Innovations That Drive Supply Chains in the May 2014 issue of SCMR).

While that all sounds well and good, the fact is that today’s supply chains may not be prepared to support innovation by themselves; a firm working alone may not be able to generate the level of performance demanded by the competitive markets it now faces. Therefore, innovation spanning supply chain partners may well be the key to how firms gain a competitive
advantage.

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