Product Innovation Meets Supply Chain Innovation: A Match Made in Heaven

As a business person, specifically a supply chain professional, I have admired technical advances in high tech products from a distance for most of my career.  The innovations witnessed over twenty years have ranged from computer applications moving from their own room, onto our desk and now into our hands.  Software advances and the internet have enabled a global economy and even I can install just about any off the shelf program with confidence in lieu of hours on the phone with a help desk.  So these many innovations are not lost on me but in fact highly valued.  Engineers and product development teams everywhere have my respect.  I have even sought to learn more about their area of expertise and contributed wherever possible.

What I didn’t realize until recently was just how complimentary we can be to one another, potentially a match made in heaven.  This article examines a key area perfected by innovative product teams that can be extended to supply chain teams.

Most of us accept the competitive importance of our supply chains.  They should relate to how we plan to compete and in fact enable that strategy.  For that reason considerable effort goes into reaching out to a desirable target market that comprise one side of our supply chains, selecting the ideal suppliers, deciding where, how much and in what state inventory will be held and what means of transportation will be used to move product across the chain.  Designing an effective supply chain is a comprehensive task and for just that reason many, even the more innovative examples, are left in the same state with little change in their shape or capabilities.  Lots of reasons are offered for their static condition; not enough time to re-engineer what is working fine, too much risk associated with changing elements of the supply chain now, it is out of our control - customers / suppliers aren’t interested or willing modify the current supply chain.  In order for a supply chain to operate optimally it must respond to the dynamics that are effectively demanding different performance typically in the form of speed, cost and service.  A supply chain that is not changing will fail in its primary responsibility and may lead to the early decline of a product.  The proactive supply chains seeking a level of performance that is unheard of earn the position of innovative supply chain and reap the associated awards; profit, market share, customer loyalty and so on.

So back to the match making - meet the bachelor, engineering and product development teams.  If you can find your way into product labs or the nearby conference rooms, you will likely find some evidence of product development process dominating conversations or wallpapering rooms in companies everywhere. One of the more widely adopted approaches to development is the Stage Gate® system by Dr. Robert Cooper.   As described in his recent article, the process is a conceptual and operational map - moving new product projects from idea to launch and beyond. Stage Gate® as pictured below consists of a series of information gathering stages followed by Go/Kill decision gates.

Figure 1 - Stage Gate® System

This process takes on slightly different forms for many companies and the development process may be described as Innovation Value Chain including Ideation, Product Selection, Development and Commercialization.  In most cases the objectives, rigor and the results when executed well are similar and innovative products are the ultimate measure of success. 

So the chemistry should be heating up here.  Supply chain professionals, our bachelorettes, are attracted to success as much as anyone else and these engineers and product teams seem to be on to something with their innovations.  There are at least two ways to make the connection between teams and both depend on some knowledge transfer. What elements of Stage Gate® can be replicated for supply chain development?  With a greater awareness of what is happening in the lab, How can we align efforts and synchronize for both product and supply chain success?

The Supply Chain Innovation Stages

Discovery is the stage that fosters idea generation.  It can and should be a stage with no end, just a perpetual process of crafting new processes, new combination of partners, geographies, technologies that could deliver on the promise of an innovative supply chain

Scoping is a quick investigation and shaping of the supply chain concept.  Just enough definition to allow a cross functional team perhaps inclusive of customers and suppliers to apply the double sided litmus test; the new potential value is in fact valued and there just might be someway to make to deliver on the promise

Build the Business Case is the stage that demands the detail and in a factual manner.  The comprehensive collection and summary of associated costs, likely impact to profitability and service levels is critical here and shouldn’t be understated.  In fact in some instances more complex supply chain options might need to rely on advanced tools to model or simulate scenarios.

Development requires detailed mapping out of the processes, assigning the correct metrics and establishing the new or altered relationships with supply chain partners.

Testing and Validation is a stage that calls of pilots, verifying that was is mapped and contractually agreed can be executed.  Supply chains are seldom tested but imagine the feedback loop and lessons that would avert disruptions later.

Launch is ready for prime time, implementing the change or turning on the model to support full market demand.  Long before launch signals that might predict a supply chain problem should be integrated and monitored.  Further contingency scenarios should be at hand in the event of a significant disruption.

Post Launch Review is the disciplined process to examine and challenge our supply changes defending against the static condition and inspiring the next round of innovation

The Supply Chain Innovation Gates

The Kill or Go questions in Stage Gate are pretty straight forward and translate well from product to supply chain application.  The real test for the team is in the discipline to stop at each gate and proceed only when the light is green.

Gate 1 - Does the idea warrant any further work?

Gate 2 - Does the idea justify extensive analysis?

Gate 3 - Is the business case sound?

Gate 4  - Is the project ready for pilot?

Gate 5 - Is the supply chain ready to support the market?

With insight on how this development process is carried out in a given company, the question of how can we align our efforts for success can be more readily answered.  This knowledge transfer is then fruitful in both directions.   Supply chain teams will have the framework of a process to support their innovative efforts.  Reciprocally, with a greater understanding of the engineering and product development needs the operations team can better anticipate the supply chain support required for innovative products.  A degree of synchronization is bound to deliver the greatest benefits, ensuring a long and satisfying partnership.

So the recommendation for supply chain professionals to ignite an office romance that would likely be condoned by any company is to (re)introduce yourself to engineering and product development teams.  Maybe even start by paying them a compliment on their development capabilities and not too long after the learning begins the innovation will follow.