Manufacturing and supply chain operations continue to invest heavily in innovation, but even the most successful companies are still struggling to understand how and when to adopt them.
* By Tom Gresham *
Interest in next-generation supply chain innovations has never been higher. However, barriers to innovation are keeping some organizations from adopting new technologies, limiting their progress and endangering their ability to endure in a rapidly changing supply chain landscape, according to the 2019 MHI Annual Industry Report, “Elevating Supply Chain Digital Consciousness.”
This recently released report indicated that manufacturing and supply chain operations continue to invest heavily in innovation, but that even the most successful companies are still struggling to understand how and when to adopt digital supply chain innovations.
“Falling behind on digital innovation in supply chain can have disastrous consequences in this increasingly digital world,” according to the report. Thomas Boykin, leader of strategy and operations for supply chain and network operations at Deloitte Consulting, said the risks to failing to embrace innovative technologies are clear—as are the opportunities for those willing to be more aggressive.
“As the world becomes more digital, supply chain complexity is rapidly increasing,” Boykin said. “The price of inaction is growing at an even greater pace. Leading companies will outpace their competitors faster than ever.”
Building the business case for investing in emerging technologies is a key barrier to innovation said David Schwebel, vice president, business development and market intelligence for MHI member Swisslog Logistics, because the business case is not always “crystal clear.” Boykin agreed. He said justifying investment in established technologies can be straightforward, but “estimating the full benefits and costs of disruptive technologies has led to underinvestment and constrained adoption.”
With established technologies, organizations benefit from “vast experience from previous investment decisions and implementations that provide a clear idea of what costs and benefits to expect,” Boykin said. “By contrast, justifying investments in new and innovative technologies is a much more ambiguous process,” Boykin said.
“Innovation, by default, is full of open questions—especially in the early stages—and information about costs and benefits is often imperfect and speculative. An effective business case needs to convey the true value of the proposed innovation, and should therefore be presented in the broader context of an overarching program that may involve multiple innovations—and should reflect the synergies enabled by the interplay between those innovations. For example, the value of sensors is amplified by the use of the Internet of Things to propagate sensor data, and by an analytics platform to turn data into insights that can be leveraged across the supply chain.”