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Role of supply chain in enabling innovation
There is 100 times more creativity in the supply chain than in your own organisation.
An important thing about supply chain is that there are many times, maybe 100 times more creative and innovative people in your supply chain than there are in your own organisation. So part of making use of the supply chain and innovation is to take the skills, and the creativity, and the knowledge of all those people and help apply it to your problem. So when it’s done well, using your supply chain can absolutely completely change your thinking about the product, the service, what is possible. You only know a tiny bit of what is technically feasible. We need to draw all those expertise from all those different people, all those technologies into your innovation framework.
So I think an excellent example of the way a supply chain can really help innovation comes from the construction sector. So a group of house builders came to us and said that in the future they wanted to be able to deliver homes with radically improved energy efficiency, but they had to do it at today’s prices, so no increases. And they also had to do it in a way that was acceptable to the consumer, because consumers are quite fussy about how their houses look. And to do that, they needed to change the design of the house. They needed to change the materials it was made out of and how it was put together on site all at the same time.
Now they’ve got architects and designers, but this was a challenge that they just couldn’t tackle on their own at all. So we worked with them to bring not only their existing supply chain but new players into their supply chain that could provide some of those answers. And it was a truly collaborative co-invention effort, where different suppliers and different parts of the system were talking to each other, sketching out ideas, coming up with possibilities. By capturing and using all of that innovative capability, they were actually able to come up with practical designs for new kinds of homes, achieve the goal but would be acceptable to the consumer both in terms of the way they work and in terms of the price.
Another example is that Jaguar Land Rover wanted to use more recycled aluminium in their construction of their vehicles. The problem they had was that the quality of recycled aluminium was not up to the engineering performance that they wanted. And so they were a bit blocked. So the consumers wanted to see more recycled aluminium. They wanted to have more recycled aluminium, but it just wasn’t available in the marketplace. And that’s a problem they can’t solve on their own. They can actually say, here’s the issue. Here’s the opportunity. But as good at engineering as Jaguar Land Rover are, they can’t solve a problem like that on their own.
So we were able to help them bring together a consortium of university academics, metals recyclers, aluminium research organisations to work on this challenge. And of course, it becomes a conversation. It’s not about Jaguar Land Rover just saying this is what we need, go away and deliver it guys. There’s a conversation about do you really need that? Do you need it in that way? How much volume do you need? There’s a whole backwards and forwards conversation in which the specification of what’s required subtly changes. And that’s been a successful project. That’s now happening.
That’s now going into production, but it’s really based on this back and forward conversation and a recognition by Jaguar Land Rover they cannot fix this problem on their own. They need to work with their supply chain to get those different kinds of expertise into the project. Probably some of the biggest problems we face today where the supply chain can really help I would say are about resource availability and material security. There are lots and lots of materials we build our world out of where future supplies are in doubt. Everything from lithium for batteries, rare earths for rare earth magnets, natural rubber, access to water.
As you look to the future with a growing population, with climate change having its impact, so what you’re seeing is a whole bunch of resource crunches in the future that are going to be happening. So clearly the existing model of how we run our industrial society is going to have to change. I think one example is if Chinese people lived the same lifestyle as Americans, then there isn’t enough copper on the planet to actually do that. It’s not a question of whether it’s economically viable to mine it, there just isn’t enough copper. So we’ve got to be thinking about some of these key resources in a different way.
And that then takes you to the idea of the circular economy, having expensively got these materials out of the ground, won the materials, captured them. What you want to do is you want to see them circling round in productive use for as long as possible, not going into landfill. So that needs to change the way we think about end of life of products, of the way we think about sourcing materials, thinking about re-manufacturing, design for re-manufacturing. So it’s going to involve the whole supply chain. It’s going to involve changes in consumer behaviour.
It’s going to involve changes in the design of products, the design for manufacturability of the products, the way in which the material is handled at the end of life, the way in which it’s brought back into use. It’s a complete change to the supply chain. And therefore, only the supply chain can tackle it. Trying to define a supply chain is very difficult. You can do the obvious and say, well, it’s all the bits and pieces that go together to create the product.
But it’s really important that we extend it beyond that to think about the circular economy, what happens at the end of life and how does that end of life of a product become the feed stock back into the sector. What is the role of the consumer? What are the role of the designers in the choices they make? If you’re thinking about environmental impact, the statistics is that 80% of the environmental impact of a product is locked in at the design stage. So the design of the product, the thinking about the whole cradle to grave or cradle to cradle thinking is a critical part of the supply chain. Everybody involved in that is a player in the supply chain.
The problem with the term “supply chain management” is it implies that it’s something which can be controlled, which is structured and organised and needs to be managed. There is an element of that of course, but I think in every aspect of our industry we need to be looking wider than the existing connections. We need to be thinking about other players both now and in the future. And therefore, supply chain management should become supply chain conversations. Because there are so many stakeholders, and there is nobody in charge of it who can manage it.
It’s about recognising that, opening up to those conversations with all of the stakeholders, both the industries you work with, the regulators and the consumers in society, opening up those conversations. If we could move to supply chain conversations, I think that would be a great step forward.
There is 100 times more creativity in the supply chain than in your own organisation. By using the supply chain you can change your perspective on what is possible.
In his role as Deputy Director Innovation in Industry for Innovate UK, Dr Richard Miller is responsible for creating a two-way conversation between UK industry and Innovate UK to find and drive the science and technology innovations that will grow the UK economy. In the video he stresses the important role that the supply chain plays in enabling innovation. From sustainable housing to recycled aluminum components in cars, the problems industry faced were too complex to be solved alone. They required a collaborative, co-creative approach from a range of companies across the supply chain to find an innovative solution.
Going forward Richard believes that resource availability and material security will be the defining challenges for society. He introduces us to the concept of the circular economy, which will be the focus for week 6.
This article is from the online course:
Supply Chains in Practice: How Things Get to You
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Supply Chains in Practice: How Things Get to You
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