Our partner Celestica recently published the following article, ‘How to Turn Your Supply Chain into an Innovation Engine’. The author, Erwin Hermans, vice president of supply chain services, describes the areas to consider when turning your supply chain into an innovation engine:
- An Enabler for New Business Models
- Finding the Real Cost of the Supply Chain and Optimizing
- Tune the Supply Chain to the Demand
- Analytics is the Answer
- How to Take an Idea into Practice
So, how do you turn your supply chain into an innovation engine? Let’s find out.
Highest quality. Lowest cost. On-time delivery. That’s how companies typically view an effective supply chain.
But what if that thinking was replaced with a new vision of supply chain? What if business leaders start to view it as an engine for growth and innovation, a differentiator, and an enabler of product realization and marketing strategies?
Today’s modern supply chains are more than just a back-end conduit to deliver products on time. An organization’s supply chain can deliver value that goes well beyond cost, quality and efficiency.
Let’s look at how the old way of thinking can change.
An Enabler for New Business Models
To look at how the supply chain can be an enabler, business leaders need to shift away from looking at it as a back-end operations function and instead, as a front-end enabler.
Companies like Apple and Amazon have built their businesses by thinking differently. Apple has cornered the market in its supply chain to gain an edge in volume and scale, while Amazon has made supply chain its core business. Apple leverages its scale to lock up supply of key components, thereby shutting out its competitors and shaping demand by constraining supply.
Let’s look at another example, one from the painting industry, where constraints in the supply chain forced different thinking.
In the past, stores had to supply a wide variety of paint colors and finishes based on consumer demand estimates, building inventory and tying up working capital. Today, stores are able to mix and create paint colors on the spot, allowing them to easily respond to changing consumer demands.
The innovation which allows this instant paint mixing to occur is enabled by a supply chain working together with the product management and marketing teams toward a unified goal, reducing the theoretical lead time of paint from weeks to minutes.
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