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This Week: Supply Chain Innovation

Published on June 9, 2021

Daniel Stanton
Mr. Supply Chain® - Subscribe to "Supply Chained" my free weekly newsletter 91 articles
at supplychained.com

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Looking at the world in terms of supply chains gives us a unique, end-to-end perspective on
the products and services we consume every day. It also helps us think about how we can
change things to reduce costs, increase value, or mitigate risks. But in order to make
improvements, we need to be willing to challenge the status quo. So this week’s newsletter
is focused on supply chain innovation.

Paradigms Matter

The conversation about innovation needs to begin with an understanding of paradigms, and
a great starting point for that discussion is Thomas Kuhn’s book, The Structure of Messaging

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Scientific Revolutions. Kuhn was interested in how our scientific view of the world
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evolves. For example, for thousands of years European scientists believed the world was
composed of four elements - Earth, Water, Wind, and Fire. That paradigm - a shared
understanding - dominated the scientific world because it was the best explanation available
given what was known at the time. The paradigm was disrupted, however, when scientists
developed new tools and began to learn about chemistry. It didn’t happen overnight, but a
new paradigm gradually became dominant, and the old one became obsolete. Today, the
benefits of this change seem obvious, but back then there was probably a fair bit of
resistance.

James Utterback applies a similar approach by thinking about business paradigms in his
book Mastering the Dynamics of Innovation. Basically, he argues that innovation is about
disrupting the established paradigms for products and processes, which he calls the
dominant design. We’ve all seen how the dominant designs for computers and telephones
have changed in the past 15 years, and now we're watching the dominant designs for cars
and trucks changing, too.

What gets me really excited are the innovations that we are seeing in supply chains! Much
of this paradigm shift is being driven by Amazon, but there are lots of other companies that
are doing innovative things, as well. James Rice has been one of the pioneers in trying to
define what is, and what is not, a supply chain innovation. And, more importantly, in
looking at how companies can use supply chain innovation as a competitive strategy.

“A supply chain innovation is basically any

variation on the dominant design.”

One of the interesting things that I've gleaned from Jim's work is that many of the most
valuable supply chain innovations actually involve repurposing processes, tools, and
technologies that are already well-established in another field or industry.

Two Types of Innovation

Clayton Christensen built a huge following with his book, The Innovator’s Dilemma.
Christensen argued that there are actually two kinds of innovation: sustaining innovation and
disruptive innovation. (A few years ago, Gartner began promoting a similar idea as
“Bimodal Innovation” where they refer to Mode 1 and Mode 2 approaches.) Sustaining
innovation is really aligned with what supply chain folks consider process improvement -
using tools like Lean, Six Sigma, and the Theory of Constraints to improve quality, reduce
costs, and eliminate waste. These innovations help to sustain and improve an existing
business, process, or product. But disruptive innovations represent a totally different
approach to making or delivering something. In other words, they are a challenge to the

Messaging

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established paradigm or the dominant design. So disruptive innovations have the effect of
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making an existing product or process obsolete.

The truth is that both kinds of innovation are good for some companies, and bad for others.
In order to be successful over the long term we need to master both kinds of innovation. One
of Christensen’s observations was that big companies tend to be naturally better at
implementing sustaining innovation practices, but smaller companies tend to be better at
disruptive innovation. While they may choose to play to their strengths, they also need to be
aware of their vulnerabilities.
Like Comment Share 71 · 6 comments

Drivers of Innovation

Right now, our supply chains are under tremendous pressure to adapt, and the only real
answer is for us to innovate. Here are five examples from a long list of forces that every
supply chain needs to respond to:

Sustainability - Circular, renewable, and ethical requirements

Geopolitics - Nationalism and trade barriers

Automation / Technology - Drones, autonomous vehicles, machine learning, quantum

computing

Demographics - Changing customer (and employee!) expectations

Health and Safety - Managing the risks from COVID and variants, along with other
health and safety concerns

We will see many innovations that change our supply chains because of these forces. So, we
really need to ask whether the innovations will help our business, or make us obsolete. And
that is why every supply chain leader with a long-term perspective should be looking today
at how to make sustaining and disruptive innovation processes an active part their own
organizations.

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How this affects supply chain professionals? The world around us is changing quickly and
unpredictably. Innovation is essential for survival, and can create new pathways for success.
Through the past two years we’ve seen how companies that were able to adapt quickly could
benefit from disruptive forces, while those that had a rigid supply chain were more likely to
suffer harm. We need to understand the dynamics of innovation in supply chains and
promote efforts to improve efficiency, while also exploring entirely new approaches that
Messaging
might disrupt our dominant paradigms.
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What do you think? What are some of the best examples of supply chain innovation that
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you have seen? How can companies get better at both sustaining and disruptive innovation?

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Additional Resources

Fostering Innovation learning path on LinkedIn Learning

Supply chain innovation: A conceptual framework by James Rice (MIT CTL

Whitepaper)

A Fresh Take on Supply Chain Innovation by James Rice (MIT Sloan MR)

Mastering the Dynamics of Innovation by James Utterback

The Structure of Scientific Revolutions by Thomas Kuhn

Who is Mr. Supply Chain?

Daniel Stanton is a supply chain industry veteran and the best-selling author of Supply
Chain Management For Dummies. He is dedicated to empowering professionals through
education and technology. His courses on LinkedIn Learning (formerly Lynda.com) have
been viewed by students around the world, and he's a frequent speaker at educational
conferences and industry events.

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Whether we're trying to improve quality, reduce costs, or mitigate My Network
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In this week's newsletter we take a look at supply chain innovation, and the challenge of overcome established
paradigms.

~Mr. Supply Chain

#AlwaysBeLearning #SupplyChain #Business #Technology

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Daniel Stanton • 1st 5h

Mr. Supply Chain® - Subscribe to "Supply Chained" my free weekly newsletter at supplychained.com

A quick shout out to a few of the folks whose work is mentioned in this week's newsletter: Jim Rice, James
Utterback, and Gartner / Gartner for Supply Chain.

Like · 2 Reply · 1 Reply

Alexis Bateman • 2nd 57m

Director @ MIT Sustainable Supply Chains Lab

Good call citing Jim Rice there - he has been a leading voice in resilience for a long while.

Like Reply

Stefan de Kok (Hey You/Dude/Him) • Following 4h

↜ Supply Chain Innovator ↝

I think there are a few innovations brewing in supply chain mgmt. In this regard I consider:

1 - 𝗔𝗜/𝗠𝗟 - 𝙨𝙪𝙨𝙩𝙖𝙞𝙣𝙞𝙣𝙜 𝙞𝙣𝙣𝙤𝙫𝙖𝙩𝙞𝙤𝙣.

Different approaches, better suited to today's VUCA world, but still aiming to do much the same
(per 4 below, still maximizing precision, not yet focusing on accuracy) …see more

Like · 4 Reply
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