How can innovation support the supply chain

How Innovation Can Support the Supply Chain

By: Tad Haas

Supply chain disruption has been a major issue in 2022 and doesn’t look like it’s about to get better any time soon. In fact 40% of executives believe their exposure to supply chain risks has increased over the past 3 years. This blog details how to solve supply chain issues with innovation, and follows on from my presentation at InnoLead’s Impact 2022 conference.

Current Supply Chain Issues

Among the key supply chain issues discussed at InnoLead were traceability, visibility, and lead times. There are also four key ongoing issues withing global supply chains in 2022:

Aerospace Worker Shortages

Major companies including Boeing and Airbus are having major issues with their supply chains, caused by labor shortages. During the Covid-19 crisis, many aerospace businesses laid workers off, however the industry has recovered faster than expected, and they are struggling to recruit. This is especially tricky as many roles are highly specialized.

Truck Drivers Leaving the Industry

As a result of low pay and poor working conditions – such as long, lonely hours on the road – North America is currently facing a shortage of truck drivers. According to the American Trucking Associations, more than 80,000 new drivers are needed to solve the deficit. This is tough news for the US economy, where 71% of goods are transported by road.

Global Shipping Issues

Covid is continuing to have an impact on global trade – particularly as China introduces lockdowns to cope with spikes in infections – and disruption at ports is predicted to continue well into 2022. The war in Ukraine and sanctions Russia have also had a major impact on the manufacturing of components, particularly in the automotive industry. 

The Last Mile

With more and more people getting home delivery since the start of the pandemic, as well as Amazon’s next-day or same-day offerings, the Last Mile is becoming increasingly important. This has resulted in a rush to create new innovations and technology to make the last stage before delivery run smoother for companies. 

 

How to Solve Supply Chain Issues with Innovation

Improve Supply Chain Resilience with Digital Transformation

According to McKinsey, combining digital transformation with operational changes can help to solve long-term supply chain issues. Technology can help to predict when supply chain disruption is likely to occur, so that businesses can act accordingly. Some companies can also use blockchain to trace individual batches of materials and reveal where imbalance is starting to take place. This was a major focus for organizations who attended InnoLead.  

Changing Business Models to Adapt to a New World

Innovation can help to not only identify bottlenecks in your current processes, but help you find ways to solve them. In B2C sectors, they may also uncover ways to meet growing demand for an engaging omni-channel experience, and greater convenience.  

Use Open Innovation to Source Fresh Ideas

Open innovation can enable organizations to source direct feedback from employees – including those working offline, such as delivery drivers – and partner companies. This means that they can seek ideas for improving their supply chain from those people and businesses who work in it every day.

Open innovation is also a fantastic way of sourcing numerous ideas, quickly, and at low cost, especially if you use open innovation software.

If there are specific supply chain issues your company needs to solve, such as improving working conditions for delivery drivers, then you can create an innovation campaign to source suggestions related to that specific problem. 

Create a New Culture

Successful innovation also comes hand-in-hand with a culture of continuous improvement. A healthy attitude towards problem-solving is ideal in such a rapidly changing environment, and enables organizations to react quickly to challenges. Many of the supply chain professionals who attended my InnoLead talk said they were planning to prioritize sustainability initiatives.  

Creating an innovation culture needs buy-in from employees – they need to see the value in taking part in innovation. For more information, read our 8 tips for creating a culture of innovation. 

Improve Employee Retention

Finally, with so much pressure on supply chain workers, a culture of innovation can bring people together and give them a sense of ownership over their work and the company’s mission. People who feel they not only have a say, but will be listened to by management, are more likely to feel their jobs have meaning. This, in turn, improves job satisfaction and reduces turnover.  

 

How to Create an Innovation Culture to Solve Supply Chain Issues

Some organizations have internal cultures where innovation and idea-sharing are anything but the norm, which means that it’s harder to solve challenges such as supply chain issues. We believe that best innovation strategies are both ‘top-down’ and ‘bottom-up’ – they need buy-in from the C-suite level, so that ideas can make real changes to the business, and they need the support of a critical mass of employees. 

To move towards a culture of innovation, you need to: 

  • Put in place a clear process for innovation, and communicate it well to your teams. Having innovation software in place can help here.
  • Have a system that includes everyone – including those who work offline.
  • Appoint innovation champions, who’ll encourage their teams to take part in your campaigns.
  • Think about how you’ll reward people for their input, and which actions you’d like to reward. Don’t forget about people, such as innovation champions, who are essential for driving awareness and encouraging innovation
  • Reduce the perceived risk of carrying out innovation by having leadership take an active role and leading from the front.
  • Communicate the successes of your innovation program. People are more likely to want to take part if they can see that their ideas are being used.
  • Keep up momentum! Innovation needs support and encouragement to keep it ticking along.
  • Review your successes and failures, and make continuous improvements to your innovation strategy. This includes seeking feedback from teams taking part.

Find out more

You can find out more about creating a culture of innovation in our blog posts: 

Related Articles
How Can The Risks of Innovation Be Addressed?
Why is Open Innovation So Important? (Video)

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