Innovators Don't Always Produce Breakthrough … 5 - Innovation Lab/T5S8... · – Zara Fast...
Transcript of Innovators Don't Always Produce Breakthrough … 5 - Innovation Lab/T5S8... · – Zara Fast...
• Email: [email protected]• Phone: 617.258.8584• Website: https://ctl.mit.edu/
Jim RiceMIT
Deputy Director – MIT Center for Transportation and Logistics
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Abstract
Innovation requires more than just great ideas and out-of-the-box thinking. It also requires persistence, hard work and a laser-sharp focus that factors in roadblocks, but that doesn’t let those obstacles get in the way for long. Even the most innovative companies stand to lose market leadership as new competitors rise and take over the market. And, the same practices that lead the business to be successful in the first place can eventually result in their eventual demises. In this session, you'll learn how innovators don't always generate breakthrough organizations and take away sage advice on how to take your company to the next level.
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Agenda
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• The Cool and Sexy Stuff• Problem and Issues• Let’s Get Clear• Supply Chain Innovation, Sustaining and Disruptive• Substitution and Combination• Key Takeaways• Conference Cloud• Questions?
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The Cool and Sexy Stuff
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Industrial Internet of
Things
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Cognitive Analytics
Autonomous Vehicles
Additive Manufacturing(3D Printing)
Digitization
ReshoringBlockchain
Self-Assembly (4D Printing)
PredictiveAnalytics
Prescriptive Analytics
Descriptive Analytics
Virtual Reality
Mixed – Augmented Reality
What are these?
Sharing Economy
Digital Supply Chain
Omni-channel
Wearable Computing
Drones
Social Media
Robotics
Automation
Artificial Intelligence
Machine Learning
Part of the Problem: IBM’s Innovation Man
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I’m here to fire you up about Innovation.
Are you fired up about Innovation?Yes, sir!
Why are you fired up about
Innovation?
Uhh, I don’t have any idea…
Ahhhh!
Ref.: IBM Innovation Man: https://www.youtube.com/watch?v=xXrIoF-sVi8https://www.youtube.com/watch?v=MudaxA80eI4
Some of the Issues
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• Product or process innovation?• Invention or innovation?• Big or small?• Fast or slow?• Disruptive or incremental?• New or rehash?
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Let’s Get Clear on Product & SC Innovation
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Product Innovation ≠
Supply Chain Innovation
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Product Innovation
Process (Supply Chain)
Innovation
Dominant Design Emerging
Rate of
Innovation
time
*Graphic based on Utterback, Mastering the Dynamics of Innovation 1996 / Utterback and Abernathy, 1975, 1994
What’s the difference between Product Innovation and Supply
Chain Innovation?
Let’s Get Clear on Technical Invention & Innovation
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• Technical Invention ≠ SC Innovation
1. Invention: Something originated by experiment, etc.; new device or contrivance***
2. Innovation: The use of a new idea or method*
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• Technical Inventions1. RFID2. Drones3. 3D Printing4. Autonomous Vehicles
Scope, Speed, Impact and Newness
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• Scope requirements – does it have to be big?• Speed requirements – does it have to occur quickly?• Impact requirements – does it have to be disruptive?• What constitutes ‘new’?
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So how would you define supply chain innovation?
What is Supply Chain Innovation?
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• My proposed definition: SC Innovation is the combining and application of a mix of inventions, existing processes, and technologies in a new way that achieves a desirable change in cost, quality, cash and/or service. Important attributes:– Created by applying and adopting desirable change
– No distinction on time to achieve
– No distinction on impact (i.e. sustaining or disruptive)
– No distinction on what is ‘new’
• Key Success Factor – applying the mix in creative and clever ways, and focused application that can be brought to scale.
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Sustaining SC Innovations
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• Sustaining SC innovations maintain the primary structure of the existing supply chain but provide incremental improved performance in one or more areas: cost, service (cycle time), quality, financial resource requirements.
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• Common Initiative Examples:– Kaizen– Business Process
Reengineering– Continuous Improvement
• Examples:– Dell smooth demand, tailor PL– P&G Continuous Replenishment – Intel Copy Exact!– UPS standardization– Niagara & Bottle configuration
•
Sustaining SC Innovations – One Example
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• A discarded idea – initially too small and risky to pursue – But a small competitor saw promise
• Numerous tweaks, initiatives, downstream collaboration• Wins all around!
– Lower transportation cost/unit for shipper– More product in same shelf space for retailer– Fewer packing materials lower cost for shipper, less waste for retailer– More stable package, less damage for all
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Disruptive SC Innovations
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• Disruptive SC innovations change the dominant design of the existing supply chain and offer potential improvements in one or more areas: cost, service (cycle time), quality, financial resource requirements.
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• Focused Examples:– Warehouse robotics automated
fulfillment– Inspectorio mobile reporting– Bose JIT II In-plant Buyers– Calyx & Corolla Direct flowers
• Broad SC Examples:– FedEx Overnight shipping– SeaLand Containerization– Dell Make-to-order– Zara Fast Fashion– Uber open-source taxi mkt
So….
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There are not that many disruptive Supply Chain Innovations.
Agree or disagree?
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Disruptive Supply Chain Innovation
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Do you REALLY want to disrupt your supply chain?
Consider the Innovator’s Dilemma….
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Lets Look at some SC Innovationsaka The Cool and Sexy in Use (or Trial)
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One-Hour Delivery
Pick-Pack Warehouse Robotics
GE One Piece Nozzle Design
DHL Delivery Lockers
Carbon-fiber Containers
that fold
Walmart Towers
Uber
UPS 3DP @ Stores
What’s new about each of these?
Crowdsourcing Demand
ABInBev Self-Driving Beer
Deliveries
Google and Levi’s
Garment Touchscreens
Dell MTOZara Fast FashionContainerizationFedEx Overnight
Hurricane Harvey Drone
Deliveries Musk’s HyperloopCrewless Ships
Flying CarsAmazon’s
Underwater Storage
Troubling Questions
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How is it that the core components of the cool and sexy supply chain innovations – are not really new?
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The Secret is Substitution and New Combinations
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Kanban
Containerization4DP Self Assembly
Cloud Computing
3D Printing
Overnight Deliveries
Invty Mgt
X-dock
JIT
quick response
CPFR
Kaizen
VMI
Real-Time SCM
POS systems
Dynamic routing
mobile platforms
EDI
JIT IIVendor Inplants
auctions
trade exchanges
Hub-and-Spoke
Prod Lifecycle
Mgt
Cybersecurity
Efficient Consumer Response
(ECR)
Continuous ReplenishmtProcess (CRP)
Make-to-Order
Postpone-ment
Direct sales
SC risk mgtStd process,
product , material, platforms
Dedicated fleet
IT integration
Customer/Supplier collaboration
S&OP
Outsourcing
Offshoringnear-market sourcing
Reshoring
SC Optimization
Vertical Integration
MRP
TMS
WMS
DRP
Portfolio approach
Production PlanningShipping & Distribution
Procurement Coordination & Integration
SC Design
BCP
Nearshoring
Intelli-sourcing
Disintermediation
Digital SC
Omni-channelMake-to-
stockDSD
Merge-in-transit
Mobile robots
Insourcing
Single, sole, multi-source
Resilience
Companies use different combinations for SCI
• Walmart – EDLP, Upstream supply management, store location impact on SCs• P&G – Efficient Consumer Response (ECR), Continuous Replenishment Process
(CRP), diamond customer teams, Streamlined Logistics, etc.• Dell – Make-to-order, sell direct, product line & SC tailored to mkt• Intel – Copy Exact!• UPS – IT integration across system, standardized and engineered processes• Lucent – Platform/component standardization, Margin Mgt in SN, shared risk• Zara – Integrated design and automated production, near-market production, near-
vertical integration• Li & Fung – 4P CM, extensive contract manufacturing
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Companies use different elements for SCI
• Toyota – Toyota Production System, SMED (single-minute exchange of dies)• Cisco – supply chain risk management, monitoring & measurement• Citibank – back-office optimization• Ford – assembly line at River Rouge plant• Caterpillar – service parts availability via integrated network• FedEx – hub-and-spoke system enables affordable service offering• Beverage bottler – used competitor’s packaging innovation• Reebok – redesigned SC for rapid response using postponement instead of forecast
improvement to serve flash-demand for NFL jerseys• Low cost SC – redesigns hi-vol mfg ops based on insights from low cost SC
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Product AND Supply Chain Innovation Together?
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Sometimes it is possible that an innovation serves as both a product AND a supply chain innovation.
Examples: FedEx Overnight ShippingSealedAir iBubble
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Product AND Supply Chain Innovation Example
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• Sealed Air iBubble Wrap– Product or Supply Chain Innovation?– Air-filled bubbles inflatable bubbles– Old bubbles + Postponement = inflatable bubbles,
nearly 50x more compact!– Product innovation (inflatable bubbles) enable
postponement (inflate at use point) lower logistics costs
Ref.: Images from WSJ July 1, 2015
Key Takeaways
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• Supply chain innovation is about improving the process by which you create and deliver your product and/or service.– Rarely is the supply chain innovation a product innovation too.
• Most supply chain innovations are sustaining • Pursuing disruptive supply chain innovation calls for
– Different skills & resources to imagine how to destroy the dominant design– A willingness to put existing near-term business at risk
• Successful supply chain innovators– Experiment a lot to get the right ingredients and application – Collaborate upstream and downstream (e.g. Niagara, Zara, Dell, Bose)
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Conference Cloud
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• For additional writing and reference material, see:– https://ctl.mit.edu/research/current-projects/supply-chain-innovation– SCMR Innovation Strategies Column
• Useful book references:– “The Innovator’s Dilemma” by Clay Christensen– “Managing the Dynamics of Innovation” by James Utterback
Additional Resources
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