Innovation in the Supply Chain: Yesterday, Today, Tomorrow

Blog abstract: Innovation for today’s supply chain leaders is not always defined by the latest gadgets and gizmos. Often, its definition lies within innovating the business model and improving supply chain processes, both of which positively impact the bottom line. And, while adopting emerging technologies plays a role within innovating the supply chain, leaders are most interested in implementing proven, reliable solutions for today, not tomorrow.

This blog post will focus on what supply chain leaders are truly seeking when looking to innovate, with supporting data pulled from the Kenco State of 3PL Innovation Survey, and how those insights can help 3PL providers prepare for Innovation Today.

 

By, Kristi Montgomery, VP of Innovation, Kenco Logistics.

There is much chatter, in the supply chain world, around innovation that focuses on bleeding-edge technologies, such as package-delivering drones, driverless trucks, and collaborative robotics. For supply chain leaders, this is interesting and eye-catching; but intrigue does not always mean adoption. As the VP of Kenco Innovation Labs, I frequently work with customers who are trying to find the balance between making impactful and proven investments in new technologies, and knowing when to take a leap on piloting a promising but unproven innovation. The decision is rarely an easy one: especially when there is so much at stake in a finely tuned supply chain.

We wanted to get to the bottom of this tension, so, recently, Kenco conducted a survey with supply chain leaders from a range of industries, and from organizations of all sizes, to get a deeper understanding of how they define innovation, which technologies they think will have the greatest impact on the supply chain, and what their plans are for the future of innovation in their companies. One of our leading questions was how top executives and supply chain leaders defined the idea of “innovation” in their organization. The survey found that nearly 85% of these respondents defined it as “process improvements” or “business model innovation” – not as “adopting emerging technologies.” This is an interesting point: while most chatter in the industry suggests all companies have their eyes on flashy new technologies, this data signals that what is most important to supply chain leaders are new technologies and solutions that can have incremental but impactful changes TODAY in their supply chains.

This point continues to bear out throughout the data. An “innovation” pain point has always been around “Supply Chain Visibility” and to this day, it remains an innovation challenge for leaders. In fact, by looking at specific trends supply chain leaders are planning to invest in, the top three areas of interest are:

1. Supply Chain Visibility (83%)
2. Robotics and Automation (58%)
3. Sensors and Internet of Things (42%)

On the other hand, the lowest areas of interest to currently invest in are:

4. Driverless and Self-Driving Vehicles (14%)
5. Drones (8%)
6. Augmented Reality (8%)

And when asked how important each of these technologies are for their businesses, 64% of leaders deemed supply chain visibility as a high priority, while drones (42%) and driverless vehicles (40%) were equally indicated as not a priority.

These insights are not surprising to me – my customers are running a “tight ship” and, with so many moving aspects that can have great impact to the business, they can’t afford to take a gamble on a new technology that might slow down their processes or fail entirely. However, just because a supply chain leader can’t monitor the innovations for tomorrow, that doesn’t mean these innovations won’t be a priority and shouldn’t be on your radar.

Working closely with customers, my team and I investigate which emerging technologies can be utilized to better serve the supply chain industry both today and in the future. Take the LoadProof app for example – a customer was seeking ways to improve the manual process of documenting correct loading of product including labeling, pallet condition, product placement, and trailer placement/cubing. When my team looked at the landscape of this challenge, we recognized that this was one many other customers face and has impacted their finances. Without proof of compliance, customers dealt with significant financial penalties for products arriving in non-compliant conditions. With those challenges in mind, our team prototyped an application and website that was beta-tested at five Kenco locations. After a successful pilot program, we partnered with Smart Gladiator to develop a scalable, secure, enterprise-ready application for both Apple and Android devices. The creation of LoadProof was an innovative solution to the supply chain as it brought our customers one step closer to having supply chain visibility, an innovation pain point noted in Kenco’s State of the 3PL Innovation Survey.

Inevitably, the emerging technologies will start to become more reliable as they are tested and prototyped in different scenarios. And that’s where partners like 3PLs come in. 94% of respondents feel that it’s important for their 3PL provider to have a competency in technology and innovation, and more than half expect their 3PL provider to be investing in innovative technologies (another 32% want to co-invest).

The supply chain industry needs to continue thinking innovatively to create business value. As many supply chain executives are focused on the here-and-now, it’s up to the 3PL providers and supply chain partners to think ahead, prototype, and create proven results on emerging tech before their customers inquire about these technologies.

Kristi Montgomery, Vice President of Innovation, Kenco Logistics

Promoting transformational change in supply chain through delivery of innovation for customer-centric solutions

Like you, Kristi knows that innovation cannot just be a buzzword.  She is a dynamic explorer of strategic innovation that drives revolutionary change.  With 27 years of logistics and supply chain experience, she leads a dedicated team of specialists in Kenco Innovation Labs who identify, research, and prototype creative ideas with the potential to impact the supply chain. Collaborating with customers, entrepreneurs, and vendors from multiple industries enables Kenco to think “inside” the supply chain box and create unique, customer-driven solutions.  As the senior innovation officer, recognizing that no single approach works for every customer, Kristi leads research and development utilizing design thinking and open innovation to deliver business value for the 200+ customers that Kenco serves in North America.  Kristi is passionate about the relentless pursuit of innovation as an enabler of business growth and driver of strategic advantage. Executing on the innovation promise compels her to be a transformational agent of change.

Kristi received her BS in Organizational Management from Covenant College She is a certified Specialist in Design Thinking and Innovation as awarded by the Darden School of Business, University of Virginia.  She also received her Certified Information Executive designation from the Institute of CIO Excellence at the University of South Carolina.

Kristi serves on the Board of Directors for ChaTech, a non-profit dedicated to the promotion of technology and STEM education, is the Co-Chairman of the International Warehouse and Logistics Association Education Committee, and serves the industry speaking, participating as a panelist, and publishing articles promoting supply chain innovation.