Disruptive Innovation In The Supply Chain
Tom Brouillette is a leader in Supply Chain Management with a major third-party logistics provider in the US. Tom is a respected business and technical leader with prominent 25+-year career delivering strategic enterprise solutions in the Supply Chain, eCommerce, CRM, B2B and B2C for some of the largest retailers. Tom has developed a proven track record of delivering solutions bridging the gap between strategic objectives of the business and available tools and technology and he brings these skills to these discussions and to share and guide. Tom has been recognized for successful strategy development and delivery of Supply Chain Management, eCommerce, B2B, B2C, CRM, aerospace, manufacturing, and health care initiatives to name a few. Tom is able to quickly understand and get to the root of the business requirements and strategy and then brings his experience to the tablet to define highly creative solutions that take advantage of operations, business acumen, and technology to define the most appropriate and cost-effective solution.
In addition, Tom writes a regular blog that focuses on supply chain trends and issues to provide thought leadership to the industry. Tom’s discussions range in topics from planning and forecasting to business culture change and collaboration. Tom has earned certificates in business process modeling from San Francisco University along with ITSM ISO Foundation Certificate in ISO/IEC 2000, in addition to a Leadership certificate from the Creative Leadership Institute.
Market disruption, especially in the retail marketplace, has been a growing theme for a long time and Amazon has been viewed in the marketplace as the ‘Great Disruptor’. While this is true from the perspective of vision and services that have changed the way consumers shop. From another perspective, the ‘Great Disruptor’ is really the consumer lifestyle and changes driven by the economy and technology. The consumer, after all, is the final judge and jury in determining the goods and especially the services that meet their lifestyle needs.
The shift in consumer demand from brick and mortar to eCommerce has triggered this new round of disruption and is the perfect example of change driven by consumer lifestyles. The speed with which disruption is sweeping the market requires a means to sense and respond, or even better, a practice of experimentation to define innovation that addresses the disruption.
Key factors disrupting the extended supply chain:
New consumer lifestyle technology
Consumers embrace of converging technologies of cloud, mobile, social, big data and the Internet of Things (IoT) fueling a ‘social economy.’
New technologies have dramatically raised consumer expectations and demands in all factors of their lives. Consumers have woven these technologies into their day-to-day lives to support their lifestyles. This means that retailers of all types are forced now to react to new consumer capabilities or they will be left in the dust.
Consumer embrace of technology has become a key factor in the disruption because of the way it allows the consumer to combine tools and capabilities together in ways that support their own changing lifestyles. These technology capabilities have also been disrupted through combining wireless, social and hardware, IoT capabilities. This has exploded because the technology provides a means for consumers to experiment in reshaping the market.
Shared services and point solution providers
Point solution providers are another important factor in the culture of experimentation within the extended supply chain to define changing consumer capabilities and also respond to the disruption in the marketplace. The point solution providers in many ways can provide the experimentation tools and services that help define the consumer needs before the consumer recognizes the needs themselves.
These new point solution partners support the ability of the extended supply chain to experiment with new capabilities without a great deal of investment, thereby reducing the risk to the overall supply chain. In the future, this will continue to grow as an area of focus for partners to react and even create market transformation. The partnership with point solution providers has the potential to transform the retail marketplace and early adopters will reap the benefits. This provides a means to quickly and efficiently react to consumer demands. The extended supply chain framework provides the means for point solutions to flourish as a value-add service.
Delivery and shipping expectations
Delivery and shipping services are continuously changing to meet customer lifestyle and shopping demands. Delivery disruption is driven by the simplification of the consumer experience rather than the retailer experience. Here’s how some major players are responding to a shifting landscape:
3 best practices for driving supply chain disruption
The extended supply chain brings three key practices to their partners that are critical to support and drive disruption in the market; collaboration, continuous improvement, and most importantly a spirit of experimentation.
Businesses that ignore these best practices, to be blunt, risk their existence. I think of this as a shark analogy where businesses must continuously react and respond to changing market conditions and practices in order to survive. The level and speed of market disruption mean there will be no time where the market will ‘settle’ and the business can catch up. Once the business begins to fall behind it will be nearly impossible to recover and this means the business will eventually wither and die.
Spirit of experimentation
This drive to experiment based on sensing market shifts to create the demand for goods and services is the actual driving force of disruption in the market.
This is the most difficult practice to incorporate because it requires two things:
- A long term view anchored by patience
- A willingness by the leadership to invest without a high degree of certainty in the success of the experiments.
The concept and practice, in this case, is the ability and encouragement to ‘fail forward’—in other words, building success on the results of failed experiments. Take Amazon, for example. Their culture of experimentation is also one of the factors that allow them to succeed as a great disruptor. This experimentation to define and then support or create consumer needs is the single greatest factor to market disruption. A great example of this spirit of experimentation is the Amazon Prime shipping. I believe this was the tipping point that changed the acceptance of eCommerce shopping for the consumer. Another great example is subscription purchasing for consumable necessities like pet food, laundry detergent, and cleaning supplies when combined with Prime shipping fully supports consumer lifestyle demands that were not previously recognized. I see the encouragement from leadership to experiment and the acceptance of failure that will come from many of the experiments as the key means of meeting the disruption.
The extended supply chain can provide a means for their partners to learn and collaborate with their extended partners based on the referential experience their extended supply chain partners have encountered over the years as a result of growing a robust extended supply chain.
The extended supply chain has developed processes and tools that focus on collaboration to sense and respond to the disrupting events and forces buffeting the extended supply chain. These tools are based on the continuous improvement process, PDCA and Lean Principles to remove waste from the process and then add to this mix big data tools to provide a method to extend the sense and respond capabilities. The result of all this effort is a collaborative foundation and framework that will guide and support a thoughtful reaction to the disruption. The same tools and ability to react to the events that temporarily disrupt the extended supply chain can also help the marketplace to respond to the forces that are now permanently changing the market. These processes provide the framework for the tools and practices required to support market disruption.
All participants in the market would do well to recognize the source of the disruption and also the importance of a robust continuous improvement model based on Lean Principles and PDCA model mentioned above that builds on a robust communication platform to encourage collaboration across all partners in the extended supply chain to the support of these disrupting factors. I cannot stress enough the importance of communication and collaboration in this new reality as the foundation for successful continuous improvement.
This is especially true in the retail omnichannel vertical where the supply chain provides an engine that supports this great money-making vertical channel in the retail market. The basis of disruption in the omnichannel vertical changes as so successfully demonstrated by Amazon in driving the change in purchasing capabilities. The supply chain then provides the capabilities to realize the consumer demands in shopping and purchasing. The supply chain has been preparing for the disruption since before the great recession and the recession pushed the collaborative capabilities as a survival reaction. The retail marketplace can use this as a roadmap to guide their own survival reaction.
Implementing a robust framework of processes that allow the extended supply chain partners to sense and develop innovative responses to redefine the extended supply chain in reaction to disruptive change in the marketplace.
Shifting demands from all corners of the market—ranging from product and consumer services to supply chain partners—contribute to supply chain disruption and in turn are driving innovation in the supply chain as a reaction.
- Consumers as the ‘Great Disruptor’ in the marketplace
- Spirit of experimentation required to innovate in the face of market disruption
- Data collection and analysis methods required to sense the disruption
- Collaborative methods to support response to disruption
- Continuous improvement (PDCA) and lean practices provide the guide to response to the disrupting factors
- Changing supply chain services to support innovation
- How can IoT and networking capabilities innovation?
- How can supply chain partners deliver the innovative response to realize consumer demands in the market?
Course Level - Intermediate
Who Should Attend
- Sales and Operations Forecasting and Planning management
- Financial Planning managers
- Operations Management
Why Should Attend
Disruption displaces an existing market or industry to produce something new and more efficient and worthwhile. It is at once destructive and creative. Supply chain disruption is the repurposing and realigning of existing capabilities to support changing consumer lifestyle demands. Then, just for good measure, the great disruptors add new supply chain capabilities to complete the innovation.
Historically, supply chain disruption has been described as a major break down in production or distribution nodes that comprise a supply chain. This definition of disruption implies an event-based disruption that occurs, and the reaction to the event is the recovery of the supply chain. However, technologies, especially eCommerce technology, driven by consumer lifestyle demands have added a new dimension to that definition. Rather than a recovery process, the disruption produces innovation in the process.
Currently, the waves of innovation in the market are driven by supply chain participants recognizing and developing features and functionality designed to meet customer expectations, partner needs and financial requirements. The best change agents in the extended supply chain implement these features and functionality before the consumer recognizes the need. This drive to experiment based on sensing a market shift that creates the demand for goods and services is the actual driving force of disruption in the market.