Innovation: Igniting New Ideas

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Transforming a supply chain through innovation and ingenuity starts with understanding what you're trying to accomplish.

"Setting clear, aggressive goals in a collaborative way is the best thing organizations can do to foster innovation," says Judith Anderson, partner and founder of consulting firm Anderson & Rust, Allendale, N.J.

Critical success factors that enable companies to reach their innovation goals include the following:

Culture and leadership. "To become a supply chain innovator, a company must have people in positions of authority who allow their staffs to be creative and innovative," says Georgia Institute of Technology's John Langley.

"If the rules of creativity are the norm for a company, creative people will be the norm," says Jim Gilmore, co-author of The Experience Economy and co-founder of Strategic Horizons LLP, Aurora, Ohio.

In companies with innovative cultures, everyone—from secretary to scientist to senior executive—is seen as a potential innovator. At IBM, for example, innovation is included in every employee's job description and evaluation.

"If companies don't consider innovation part of their fundamental mission, they won't foster an innovative environment," says Patricia Pepper, IBM Integrated Supply Chain (ISC), Raleigh, N.C.

Management commitment is critical because "it takes time to be creative and think of new ideas," she says.

This commitment should include appointing "a visionary to drive the transformation," says Capgemini's Sundi Aiyer.

Fostering a culture of innovation does present risks, however. "The first thing companies discover when allowing employees to be creative is that they might make poor decisions," Langley says. If companies don't establish a culture that accepts poor decisions, however, they won't encourage innovation, he warns.

A case for change. In order for innovation to occur, there must be an impetus for change, whether it's an urgent need in the organization or simply a desire to do something differently, says Aiyer.

In today's competitive, dynamic business world, it is crucial for logisticians to become innovators. "Logistics professionals have to show that they can handle change and be innovative," Anderson says. "Otherwise they won't have a seat at the table" as innovations are developed and implemented company-wide.

People. Having the right people in place is a critical element for innovation. "Look for employees who are creative and entrepreneurial," Pepper advises.

"Seek people who are open to change, to thinking differently about the future, and doing business differently," suggests Accenture's Bill Read.

This may mean exposing staff to new and different strategies through education and training, benchmarking, and professional development; or bringing in fresh talent, perhaps from another industry.

Rotating staff across functions also helps drive innovation by bringing different viewpoints and approaches to addressing challenges, says Lalit Panda, Harman Consumer Group.

"When new people come into an organization, they bring new ideas and thoughts, and question long-held beliefs," Lalit says.

A new approach. Enterprises with a culture of innovation encourage new ideas.

"Innovation, creativity, and enthusiasm are all linked," Anderson says. "When you walk into a warehouse and the manager can't wait to show you what the staff has accomplished, you can feel the enthusiasm, excitement, and pride. When that energy doesn't exist, there probably isn't much innovation or creativity going on."

Cultures that are not receptive to or ignore new ideas will stagnate over time.

In a culture of innovation, managers encourage creativity by reinforcing good ideas, coaching others to do the same, and being receptive to suggestions.

"Rather than flatly turning down a request for flexible work hours in a distribution center, for example, the DC manager might ask associates, 'How will you handle the 4 p.m. peak time?'" says Anderson. This approach keeps new ideas flowing rather than drying up.

"The best way to innovate is to question the basic assumptions under which you operate," Lalit says. He encourages his staff to think critically, to question and justify operations and procedures, and to continually seek improvement.

"Setting high goals for your staff, and guiding them to think with an out-of-the-box mentality is important," Lalit says.

Awareness. Some logisticians need help thinking of themselves as innovators.

"Logistics professionals are operational by nature; they tend to think only other people innovate," Pepper says. "But operational employees innovate every day. Companies need to equate the definition of innovation to operational employees' daily jobs, and send the message that they don't need to be Einstein to be innovative.'"

Line managers should seek opportunities to innovate, finding ways to improve processes and communication, and streamline handoffs or touchpoints with other areas, Aiyer suggests.

"Look at opportunities for improvement within your span of influence," he advises.

Managers should also make an effort to focus on issues other than cost. "Look at your function from a customer's viewpoint," Aiyer recommends. Switching the lens through which employees examine the business may bring about important innovations.

Recognition. Innovation is more likely to become an integral part of a company's culture if it is recognized. IBM's ISC team in Scotland, which has developed 200 innovation projects over the past two years, honors the best innovations.

And the ISC Singapore team rewards workers who apply for patents in manufacturing and fulfillment with gifts and time off.

Data. "Harman Industries is open to new ideas as long as they can be justified with data," notes Lalit. "Having the right data to implement innovations correctly is crucial."

Thanks to Harman's enterprise resource planning (ERP) system, which it has had for 10 years, the company has plenty of data on which to base its decisions about implementing new ideas.

"Because we have an integrated ERP system that produces consistent data over the years, we can exploit the information to come up with cost reduction and strategy improvement ideas," Lalit says. "Data makes it easier to justify these innovations."

Got Innovation?

In today's competitive world, supply chain innovations can mean the difference between survival and success. What actions can you take to drive innovation within your company?

Here is a checklist:

Evaluate your organization's current level of innovation.

"Benchmark your company against the competition, watch trends in the market, and look at ways to drive higher performance from your service providers so you can customize your supply chain to the nature of your product," recommends Lalit.

"Benchmarking provides an inventory of creative changes that other companies have enacted," says Langley.

Determine how other companies innovate, and see if you can apply those ideas to your business.

"Look at your company's overall performance for the past five or 10 years and compare that to other companies in your industry," says Accenture's Bill Read. "Also, gather data that shows how innovation has improved other companies' performance. Use the information to demonstrate why your team needs to continually innovate to survive."

Consider what message your company sends about innovation—is it seen as a high priority and a responsibility for everyone in the company?

"You have to foster the belief in every employee that innovation is important," Read notes. "It starts with an employee's first day. You can't flip the switch when people reach middle management, and tell them to start thinking about new ways of doing business."

Understand the impact of innovation.

"Recognize important innovations, reward employees who come up with innovative ideas, and broaden your definition of what is considered innovative so your company values supply chain innovations as much as product innovations," says Patricia Pepper of IBM.

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