Delivering Successful Supply Chain Innovations

Volume Twelve 2015 SPRING
Delivering
Successful
Supply Chain
Innovations:
Lessons from CSCMP’s
Supply Chain Innovation
Award Winners
Innovation happens in business firms,
sometimes intentionally, sometimes seren-
dipitously. But just what is a supply chain
innovation? How can supply chain manag-
ers get better at finding/developing innova-
tions? And how can they make their innova-
tion efforts more successful?
CSCMP Explores… is published by the Council of Supply Chain Management Professionals (CSCMP)
CSCMP Explores... helps you keep up with the latest trends and information that affect your profession, when you are
short on time. Each issue is written by a renowned thought leader and provides in-depth coverage of an important sup-
ply chain topic in an easy to read and convenient publication.
To submit a topic or suggest an
author for CSCMP Explores…,
please contact the Research
Strategies Committee via e-mail
Table of Contents
at cscmpresearch@cscmp.org.
Introduction ......................................................................... 3
Written by: Innovation Is Really Important! ................................................. 3
Dawn DeTienne, Associate Professor CSCMP’s Supply Chain Innovation Awards – A Look Back
of Entrepreneurship, Colorado State and an Update ................................................................... 3
University A Brief Description of the Research ........................................... 4
Susan Golicic, Herbert Family Re-
What Is a Supply Chain Innovation? ................................. 4
search Fellow and Associate Profes-
sor of Supply Chain Management, Describing Supply Chain Innovations—The Takeaways ............. 6
Colorado State University What Factors Contributed to Innovation Successes? .... 6
Morgan L. Swink, Eunice and James Finding High Value Opportunities for Supply Chain
L. West Chair, Supply Chain Man-
agement and Executive Director, Sup-
Innovation ......................................................................... 8
ply and Value Chain Center, Texas Making a Compelling Case for Supply Chain Innovation ...... 10
Christian University Designing Supply Chain Innovations for Success ................. 11
Implementing Supply Chain Innovations with Passion and
Editor: Madeleine Miller-Holodnicki Diligence................................................................................. 12
Direct Line: +1 630.645.3487
E-Mail: mholodnicki@cscmp.org Innovation Success Factors—The Takeaways .......................... 13
Call to Action ..................................................................... 14
2014-2015 CSCMP Research
Strategies Committee
List of Figures
Morgan L. Swink, Chair
Texas Christian University Figure 1: Types of Supply Chain Innovations ................................. 5
Lee Beard Figure 2: Motivations for Supply Chain Innovations ....................... 6
Nike Figure 3: Status of Supply Chain Innovations................................. 7
Soumen Ghosh
Georgia Institute of Technology
Glen Goldbach List of Tables
PwC
Table 1: SCIA Winners ................................................................... 5
Susan Golicic
Colorado State University Table 2: Are You a Supply Chain Innovator? Innovation
Scott Grawe Scorecard ....................................................................................... 9
Iowa State University Table 3: Examples of “Option Value” from Supply Chain
Jeffrey Jagiela Innovation ..................................................................................... 11
Pfizer, Inc.
David Kaduke
Introduction
Limited Brands/MAST Global Logistics
Glen McIntosh
Dominos Pizza, Inc.
Gilbert Nyaga
Northeastern University
Steven Raetz
C.H. Robinson
Judith M. Whipple
Michigan State University
© 2015 Council of Supply Chain

Management Professionals
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Introduction
Innovation Is Important!
Whether we call it “improvement,” “development,” “transformation,” or any of a host of other names, in-
creasingly dynamic marketplaces are making innovation an important new focus for supply chain man-
agers. Most product lifecycles have shortened considerably, and the rapid pace of technological
change in many industries calls for continual redesigns of supply chains. Even in industries that operate
with relatively stable technologies, economic swings and global competition are forcing managers to
continually deliver new “solutions” that more effectively and efficiently manage resources, processes,
and relationships within their supply chains.
Innovation happens in business firms, sometimes intentionally, sometimes serendipitously. But just
what is a supply chain innovation? How can supply chain managers get better at finding/developing in-
novations? And how can they make their innovation efforts more successful? This issue of CSCMP Ex-
plores… provides the initial findings of a research project that investigates answers to these questions.
CSCMP’s Supply Chain Innovation Awards – A Look Back and an

Update
Since 2005, the Council of Supply Chain Management Professionals (CSCMP) has evaluated company
nominations for its annual Supply Chain Innovation Award™ (SCIA). The purpose of the award is to
highlight and recognize the best in supply chain management when it comes to innovative programs,
projects, and collaborations. Each year between 40 and 50 company submissions are reviewed by
CSCMP’s Research Strategies Committee (RSC) and the editorial board of SupplyChainBrain. Using
criteria such as innovativeness, significance of the solution, ability to impact an organization’s supply
chain, and quantifiable and sustainable performance results, the reviewers narrow down the submis-
sions to the six or seven most innovative finalists who are then asked to present to a live audience as
part of CSCMP’s Annual Conference. The winner and runner up are selected by a panel of judges from
the RSC and SupplyChainBrain, and the award is presented at the conference’s closing session.i 2014
marked the 10th year of the award.
Given the increasing importance of innovation within firms, the RSC commissioned a research study to
examine the success factors and long-term implications of supply chain innovations, largely drawing
upon the stories of past SCIA finalists. The purpose of the project was to understand supply chain inno-
vation, examine how to implement and sustain it, and measure its impact on a firm’s performance. As
part of this effort, the research team set out to identify circumstances, incentives, organizational struc-
tures, relationships, and other factors that foster supply chain innovations, as well as factors that con-
tribute to success and failure in bringing innovative ideas to life. For more details on the research meth-
od, see the box, “A Brief Description of the Research.”
A Brief Description of the Research
The research team first reviewed the literature on innovation, then it reviewed and coded the
existing SCIA finalist cases and presentations. The majority (73%) of the 74 SCIA finalists
from 2005 to 2014 were large companies (> 1,000 employees) from industries including elec-
tronics (24%), transport/3PL (12%), food and beverage (12%), chemicals (8%), consumer
packaged goods (7%), and defense (7%). The research team attempted to interview repre-
sentatives from all of the finalists to establish the origins of the innovation, assess its current
status and impact, and log important insights and lessons learned. Remarkably, 28 of the con-
tacts from the original innovation teams were not available, mainly due to work transitions and
retirements. Seven companies declined to participate, and we omitted the six finalists from
2014 since these innovations had just occurred. In total, we interviewed 33 of the 68 finalists.
The interviews were recorded, transcribed, and analyzed, along with the other sources of in-
formation in order to gain insights into supply chain innovations.
What Is a Supply Chain Innovation?

CSCMP defines an innovation as the development or new application of processes and technologies
that creates quantifiable and sustainable results in terms of cost savings, revenue, customer satis-
faction, etc. After reviewing related literatures and examining the scope of innovations included in the
SCIA process, we further defined supply chain innovation (SCI) as “a change in products, supply chain
networks, technologies, or processes that involves inter-organizational collaboration, is led by supply
chain managers, and is intended to create new value for customers.”
The SCIA finalist cases cover a variety of different supply chain innovations. Following our definition,
we grouped the innovations into products (e.g., a change in packaging), networks (e.g., obtaining a new
supply chain partner such as a 3PL), technologies (e.g., new forecasting software application), and/or
processes (e.g., implementing direct shipping to customers). Figure 1 shows that most of the innova-
tions involved changes to processes (74%). Most were incremental innovations that were new to the
firm (76%), with few radical (5%) or “new-to-the-world” changes. The SCIA winners tended to represent
some of the more ambitious innovations (see Table 1 for a summary). More information on these and
other cases can be found at cscmp.org/education/case-studies/practitioner and at
www.supplychainbrain.com.
All of the SCIA innovations were driven by supply chain managers who occupied various levels ranging
from entry- to C-level management. Fifty-one percent of the innovations directly involved suppliers, with
7% involving customers, and 22% involving both suppliers and customers. Interestingly, many of the
innovations that involved suppliers did so in fairly limited ways. In some cases, the “suppliers” were
vendors of software or hardware solutions. While some customization was required, these innovations
were essentially adoptions of existing programs and technologies (e.g., VMI principles, demand plan-
ning software).
FIGURE 1: TYPES OF SUPPLY CHAIN INNOVATIONS
TABLE 1: SCIA WINNERS 2005 - 2014
Applicant Year Innovation Description
HP Procurement Risk Launched procurement risk management program to quantify impact of

2005
Management demand, price, and availability
Resource Optimization and Created new supply chain business unit to standardize and consolidate
2006
Innovation/Mercy systems, services, and purchases
Created portal—FreeClinic Link—between companies with excess medical
Aidmatrix Foundation 2007
supply to nonprofit organizations needing supply
Cisco Systems 2008 Transformed reverse logistics to a profit center, increasing product reuse
Created a process to receive and schedule customer orders, improving
Intel 2009
customer promise to delivery service
New case picking automation, and combined proprietary order manage-
Pepsi Bottling 2010
ment tools with breakthrough network optimization strategies
Ahold USA, Del Monte Created a grocery industry distribution center for suppliers and retailers to
2011
Foods, ES3 collaboratively streamline deliveries
Dal-Tile, Whirlpool, Werner, Developed an international co-load program to improve truck capacity utili-
2012
Convermex,Transplace zation by combining shipments from companies in different industries
Staples, Packsize Intl 2013 “Smart-size” program to produce customized packaging for each order
Flextronics 2014 Created a customer idea/product incubation program and support facilities
“Necessity is the mother of invention;” Figure 2 reinforces this common saying, as it provides a break-
down of the primary motivations that managers cited for the innovation efforts. Most (91%) were driven
internally due to poor prior performance, or in accordance with other larger company initiatives. The
remaining innovations were stimulated by changing customer requirements, regulations, competitor
moves, or shifts in the business environment.
FIGURE 2: MOTIVATIONS FOR SUPPLY CHAIN INNOVATIONS
Describing Supply Chain Innovations – The Takeaways

The innovations represented in the SCIA submissions mostly met our definition: they involved changes
in products, supply chain networks, technologies, or processes; they involved both internal, cross-
functional collaboration, and inter-organizational collaboration with suppliers and/or customers to im-
plement; and they were led by supply chain managers. However, the innovations also evidenced some
interesting limitations, the first relating to the interplay between “innovativeness” and “collaboration.” As
noted above, most of the innovations were incremental in scope, typically addressing things such as
automation of existing processes, product packaging improvements, implementing vendor supplied “so-
lutions,” and making organizational realignments. A second limitation we observed in many of the inno-
vations was a lack of explicit connections to customer value. Most of the innovations were cost-driven,
with only a few notable examples of changes that provided new services, opened up new market oppor-
tunities, or created new business models. While these innovations clearly created value for their respec-
tive firms, they often did not appear to be “customer driven.” In fact, many innovation ideas seem to
have come from mid- or low-level personnel. On the one hand, workers in these roles are closest to the
action, and often have the best ideas for improvements on the status quo. On the other hand, because
personnel at these levels are often consumed with operational issues, their ideas tend to be limited to
incremental improvements that may or may not directly address customer needs.
It is important to note that our sample of innovations is not necessarily representative of the totality of
supply chain innovations that firms everywhere are pursuing. Still, given the breadth of innovations that
we studied, it appears that the state of supply chain innovation could stand to improve in several im-
portant ways. First, there seem to be few major innovation ideas coming from top managers. Supply
chain executives need to take stronger positions in driving innovation, perhaps thinking more strategi-
cally about the roles of their functions. Another opportunity lies in the potential for greater collaboration.
While most of the innovation efforts involved partners, intensive collaborations that extended well be-
yond “buyer-seller” relationships were rare in this sample. As a result, many of the innovations are likely
to be easily copied. Thus, while most of the innovations were highly successful in meeting original im-
provement goals, few created new partnerships that could be considered truly unique and difficult to
imitate. Finally, these supply chain innovations tended to be dominated by a focus on cost savings.
Though several notable exceptions focused on safety, environmental sustainability and customer ser-
vice issues, many of the innovations fell short of the intention to create new value for customers. We’ll
talk more about some of these limitations and associated challenges in the following sections.
What Factors Contributed to Innovation Successes?

To identify innovation success factors, we analyzed the interview comments from the 33 revisited cas-
es, along with the written descriptions for all 74 original case submissions. All these innovations were
highly successful, at least initially. Ninety-six percent of the cases indicated that the innovation had led
to significant increases in operating performance, typically in cost reductions, improved service levels,
and other efficiencies. Interestingly, only 43% of the cases specifically linked these improvements to
overall financial gains. Perhaps even more interesting are the results regarding the longevity of the in-
novations. As Figure 3 indicates, nearly all of the innovations we revisited have continued and are alive
today, with many expanding beyond their original targets. Three innovations that did not endure were
discontinued due to changes in upper management goals, customer demands, or organization struc-
tures. More than half of the innovations have been applied across larger networks and organizations, or
have created opportunities that surpassed originally intended applications. For example, one innovation
initially aimed at improving the process used to manage the creation and deletion of stock-keeping units
(SKUs) ultimately led to the creation of a much larger formal change management process for manag-
ing many types of documentation and data across the company. Several innovations at other firms
grew even further. A health system innovation originally aimed at internal error-proofing eventually cre-
ated a much larger opportunity to standardize supply chain processes across the firm’s 38 business
units, and ultimately produced a new business entity dedicated to supply chain management. This new
business now provides supply chain management services to other firms within the industry, and has
become one of the most profitable units within the firm.
FIGURE 3: STATUS OF SUPPLY CHAIN INNOVATIONS
To make innovation an essential, regularly occurring, and successful aspect of supply chain manage-
ment, we determined that supply chain organizations need to excel in four innovation capabilities: 1)
finding high value opportunities, 2) making a compelling case for innovation, 3) designing innovations
for success, and 4) implementing innovations with passion and diligence. Table 2 provides an “innova-
tion scorecard” that highlights the key aspects of each of these innovation capabilities; they are dis-
cussed in the following sections. Consider using the questions posed in Table 2 to promote a discus-
sion of your own supply chain organization’s innovative competence.
Finding High Value Opportunities for Supply Chain Innovation

Some organizations are better at finding, recognizing, and/or developing opportunities for innovation,
and this is a differentiating factor in innovation success. Many of the innovations submitted for the SCIA
were stimulated by recognized needs—a problem was identified and a solution was found. External
prompts for innovation included fuel price changes, regulation changes, changes in public perception,
and supply chain disruptions. The best innovators cast wide nets in searching for solutions by including
both internal and external sources in their scans, and scanning is continuous, not just a “once in a
while” activity. Larger firms tended to use more formal processes to guide internal solution development
effort, while smaller ones tended to focus more on finding partners who could help them. In either case,
a somewhat linear, problem-solving orientation often seems to drive “ideation,” and we have observed
that this is a fairly common mental model held by supply chain professionals. However, we also found
in the innovation cases some examples of more opportunistic approaches. Several managers pointed
to the genesis of innovations in articles they had read, conversations they had with colleagues at con-
ferences, discussions with lead suppliers, etc. One idea even emerged from a chance encounter at a
local CSCMP roundtable meeting!
Several managers highlighted the importance of continually scanning for ideas, along with the value of
being opportunistic in capitalizing upon them. For example, Intel (2014) developed its Thermoformed
Tray Technology (TFT) by having someone continually examine new shipping material developments.
By building an information-seeking culture, supply chain managers can more readily identify and cap-
ture solutions to problems that emerge, or more quickly capitalize on new opportunities that appear. For
example, scanners at Purfresh (2009) noted rising consumer concerns over food safety, and in re-
sponse developed a food protection and informatics technology. Intentional and regular business intel-
ligence gathering, environmental scanning, and benchmarking efforts are of course valuable. But the
leaders we examined also encouraged their supply chain personnel to make connections with lead
suppliers, customers, universities, industry organizations, and other potential sources of innovative ide-
as, so that serendipity could also play a role in driving innovation. Several interviewees indicated that
direct conversations with such sources led to new innovations. While such interactions may seem diffi-
cult to directly manage, significant value can be created when leaders create incentives and
logs/metrics for such interactions, and provide recognition for those that bring ideas from various
sources.
Important foundational changes are often needed to support more intensive and dispersed scanning
efforts, including communications and incentives that encourage innovation as a normal part of the
work life of supply chain personnel. Innovation is viewed by many supply chain personnel as an episod-
ic, “once every few years” phenomenon. Many organizations have strong “continuous improvement”
cultures, yet factors such as limited definitions of “improvement,” lack of identifiable innovation re-
sources, and limited connections with the external environment tend to relegate them to small, incre-
mental innovation efforts.
TABLE 2. ARE YOU A SUPPLY CHAIN INNOVATOR? INNOVATION SCORECARD
Finding
1 2 3 4 5 6 7
opportunities
How are innovation Ideas come along We occasionally scan for new We have intentional ideation
ideas generated? accidentally ideas processes in place
From a mix of internal person-
Where do ideas Mostly from front-line internal From internal personnel as well
nel, executives, partners, and
come from? personnel as customers and suppliers
other external sources
What are the Customer requests, regulatory Supply chain individuals are
Larger corporate initiatives or
typical stimuli for changes, or severe operational alert to ideas and identify new
leadership changes
innovations? problems opportunities
Not the responsibility of the
How is innovation An occasional effort to be un- A regular part of supply chain
supply chain; rather, innovation
viewed? dertaken management
comes from engineering / R&D
Making the case for

1 2 3 4 5 6 7
innovation
How are innova- Exclusively based on projected

Also includes estimates of
tions selected and cost, quality, and/or service Also includes “option value”
business unit financial impacts
approved? impacts
What is the role of An executive sponsor is re- An executive sponsor actively
A sponsor is found if possible
sponsors? quired advocates for the innovation
How are innova- Funding is available from larger Funding is also available from
Primarily from operating funds
tions funded? initiatives (e.g., Six Sigma) the greater R&D budgets
How are skeptics Efforts are made to convince They are included on the inno-
They are ignored
addressed? them vation team
Designing innova-
1 2 3 4 5 6 7
tions
Includes a rigorous “what-if”
What is the scope of Mainly focused on technical Addresses multiple stakehold-
process and transition plans if
planning? issues ers and customer effects
successful
Partners/experts are consulted
How are resources Choose among what is readily Limitations in in-house exper-
to help identify needed re-
chosen? available tise are considered
sources
Technical goals are aggres-
Stretch goals are set to drive
How are goals set? Feasibility is prioritized sive; schedule goals are con-
innovation
servative
Implementing inno-
1 2 3 4 5 6 7
vations
Also increase satisfaction of, Also capture learning and gen-
What are the Complete on time, on budget,
and reputation with, customers erate extensions and new op-
priorities? with desired quality
and stakeholders portunities
How are pilot stud- Application that has greatest Balance of “feasibility” and
Most convenient option
ies chosen? probability of success “fidelity”
Frequent progress discussions Also includes portals for real
How is progress Regular status reports to team
engaging customers and time issues identification and
communicated? members
stakeholders resolution
Stakeholder feedback sought
How are projects Successes celebrated; failures Rigorous post mortem and
and follow-on options dis-
concluded? forgotten application of lessons learned
cussed
Making a Compelling Case for Supply Chain Innovation

As one might expect, we noted substantial variance in our sample regarding both the formality and
scope of the business cases developed to support innovation proposals. Almost everyone recognizes
the need to specify the expected costs and benefits of an innovation. However, leading innovators
seem to be much more effective in engaging executive sponsors, stakeholders, and larger considera-
tions when they build business cases. To do so, it is important to first position the innovation within the
current business strategy, clearly showing how it aligns with corporate values and goals. One supply
chain manager noted, “It always takes the engagement of the team, and I think that starts by having it
be a priority for leadership.” Second, it is important to project benefits beyond the immediate innovation
outcomes. Many successful innovators pointed out achievements that were not originally anticipated,
including expanded applications to new processes or geographic areas, new capabilities (including be-
coming better at innovation itself), strengthened relationships with business partners, and greater visi-
bility and clout for the supply chain management organization within the firm.
Many business case documents often understate the scope of possible benefits associated with a sup-
ply chain innovation. Seldom to managers include larger visions of innovation outcomes. Better busi-
ness cases address the “option value” of an innovation, which describes the new capabilities, opportu-
nities, learning, and follow-on options that an organization will possess after completing an innovation
effort. Table 3 below identifies examples of specific “option values” that emerged from some of the in-
novations.
TABLE 3. EXAMPLES OF “OPTION VALUE” FROM SUPPLY CHAIN INNOVATION
New capabilities
• Became better at using existing data and technology, better visibility

• Forced greater discipline in terms of data accuracy required for new system usage
• Learned how to better communicate across vertical layers of the organization and how to
develop training that engages the workforce
• Developed greater confidence in projecting impacts of network changes, along with developing
more collaborative planning and execution
• Built a stronger culture and greater awareness of issues related to supply risk
Expanded applications
• Found ways to apply VMI processes to additional product lines and geographic areas
• Original innovation laid the foundation for extensions to new applications in different industry
segments
Broader organizational changes
• Drove change from many autonomous businesses to more centralized corporation, “from holding
company to operating company”
• Grew the innovation climate, leading to the creation of “shark tank” annual idea competition
• Strengthened/deepened relationships with innovation partners
New business growth opportunities
• Created new, profitable service center commercial entity

• “Green” packaging innovation stimulated new conversations with customers who are concerned
with environmental issues
• Opened up new service opportunities with small start-up firms
• Created new capabilities that they can “sell into their customers”
Many of the benefits illustrated in Table 3 can be difficult to quantify in monetary terms. Nevertheless, it
is highly valuable to show how an innovation might affect larger organizational capabilities and oppor-
tunities. By involving executive sponsors and a broad set of potential stakeholders in the discussion
and development of the business case, managers are more likely to identify “option values” that make
the case more compelling.
Another interesting point that emerged from our analysis of the innovations was the importance of capi-
talizing on the momentum offered by higher level corporate initiatives. For example, supply chain man-
agers at one firm took advantage of a corporate-wide focus on analytics to garner support for the de-
velopment of supply risk analytics processes and tools. Similarly, taking advantage of leadership
changes, crisis situations, and major strategic thrusts can help bring sponsorship and support to inno-
vations.
Designing Supply Chain Innovations for Success
We asked the innovation managers about key factors that made their innovations successful, as well as
those things that they might have done better. Time and time again the managers stated the need to
anticipate and appreciate uncertainty. One supply chain manager noted, “you really have to be one
step ahead to be prepared…to be flexible. As things change with your partners, you are going to have
to change your solution in some sort of way.” Uncertainty often exists in technological capabilities, re-
sources availability, and organizational and customer acceptance. For technological uncertainties,
managers told us that partners and new talent were critical sources of expertise and advice. A first step
toward engaging partners is a clear acknowledgement of what your own organization doesn’t know
about a technology. For example, one innovative firm that implemented a new direct shipment process
brought in a freight forwarder as a partner to address shipment uncertainties.
Most of the managers we interviewed stated that the quality of people on the team was a huge factor
driving innovation success. By making a compelling case for the innovation, they were able to attract
the best and brightest to their projects. Another consistent success factor was the team’s abilities and
efforts to assess and mitigate resistance to change. Typical barriers to change included existing poli-
cies and procedures, politics and power structures, gaps in information systems and infrastructure, dif-
ferences in functional performance incentives, and the inherent risk aversion of top executives. For ex-
ample, one manager noted that he had difficulty convincing his chief operating officer to embrace an
innovation, because it promised to make operations so productive that he might have to reduce head-
count. Better innovators are able to anticipate perceived threats to power and scopes of authority, and
to identify and engage skeptical stakeholders.
Finally, managers highlighted the need to set aggressive technical and operational goals for their inno-
vations, while setting conservative budget and schedule objectives. This balance of aggressive and
conservative goal setting is most necessary when pursuing more radical (really-new) innovations. For
example, managers who implemented a new demand planning system intentionally designed a slow
roll out in order to work out system details process integration. One manager observed that a new
technical system might be 95% perfect, but skeptics will pay and inordinate amount of attention on the
5% that isn’t perfect. Thus, it is important to design rework and improvement cycles into innovation pro-
jects. In the words of one innovator, “It is difficult to overestimate the time it takes to make a fundamen-
tal change.”
Implementing Supply Chain Innovations with Passion and Diligence

Even a well-designed innovation can fail when implementation details are overlooked, or when support
for the project is not actively maintained. Managers we spoke with highlighted the need to continually
promote broad ownership of an innovation so that it is not perceived only as a “supply chain thing.” Re-
sources should also be spent on driving adoption and spreading applications. One interviewee pointed
out that the business case that succeeds in driving the initial implementation may be different than the
business cases needed to convince other organizations to adopt later on. Another noted the need for
patience in the implementation. When problems inevitably do arise, it is important to be absolutely
transparent, while asking for some tolerance of early failures. In today’s environment, managers tend to
be even more risk-averse than in the past, making it difficult to get them to buy into uncertain outcomes.
Consequently, it is important to set expectations for innovation trials and tribulations. New advocates for
an innovation should be continually sought so that eventually it becomes seen as an organizational
norm.
Pilot studies are particularly important events in the life of an innovation. Successfully executed pilots
with clear, high integrity metrics can be powerful means for converting skeptics. Thus, the choice of a
proper pilot study is crucial. As some managers noted, this choice can be a balancing act. On the one
hand, it is important to pick an initial application of the innovation that has a high likelihood of success.
On the other hand, you don’t want to be accused of selecting unreasonably easy or unrepresentative
applications. Pilot studies need to have high fidelity to real world applications as well. A great example
of this balance is provided by one office supply innovator who picked a West Coast distribution center
as the first location of its “green” packaging innovation. This location represented a fair sample of the
complexity and cost structure of other distribution centers in the network, yet it also offered a supportive
climate. Managers believed that the notion of a socially responsible supply chain innovation would be
more enthusiastically supported there. The value of a well-executed pilot study is clear. As one manag-
er said, “The fact that we took the time to do the pilot was painful, but the feedback from and the
changes we made to everything made it worthwhile—from the actual product itself to the entire com-
munication and customer socialization piece of it.”
Other managers stated the importance of moving quickly in starting and executing a project. While am-
ple time needs to be given to fully test and deploy an innovation, continual progress needs to be shown
because organizational priorities can change quickly. In several cases, managers noted that they nar-
rowly averted disruptions and even cancelations of their projects due to leadership changes and chang-
ing business conditions. In addition, communication was frequently noted as being especially important
to the success of innovation projects. An implementer of several major network redesign initiatives sug-
gested that a key success factor was his monthly conference calls to update progress and identify prob-
lems early. Another innovator noted the value of keeping executive sponsors engaged and ready to
help push through roadblocks.
Finally, managers identified supporting organizational structures that helped their innovations succeed.
In several cases, innovation implementations benefited from resources and skills provided by formal
project management offices within the firms, as well as defined innovation templates and supporting
communications infrastructures. For smaller firms that lack these supporting resources, consultants can
offer valuable expertise, not only regarding technical issues, but also on project management issues.
Innovation Success Factors—The Takeaways

Much like continuous improvement, larger scale supply chain innovation needs to be viewed as a journey
rather than a destination. For many of the firms represented in our sample, especially the larger ones, the
innovations they described were particular episodes in a fairly continuous stream of innovations over time.
For many of the smaller firms, their innovation successes provided the learning and excitement needed to
drive additional innovations, and the creation of more intentional ideation processes.
Our conversations with successful supply chain innovators revealed consistent patterns regarding the
identification, justification, design, and implementation of supply chain innovation opportunities. Success-
ful innovators have porous organizational boundaries, and encourage team members to continually scan
the environment, not only to find solutions to current problems, but also to identify possible opportunities
for growth and capability development. Once an opportunity is identified, good innovators develop a broad
base of support for the idea, and make the case by proposing a wide variety of benefits that extend be-
yond short-term cost savings and service-level improvements. Similarly, thoughtful innovators design pro-
jects that address a broad set of implementation issues, beyond technical and resource challenges, to
address myriad uncertainties, threats to power, resistance to change, and risks of poor acceptance by
both internal and external stakeholders. In addition, they consider what they don’t know, and they seek
out internal and external partners who can be trusted to provide needed resources and expertise.
Innovations that extend beyond typical continuous improvement efforts are not common in supply chain
management. After all, supply chain management is often about building stable, predictable systems
and structures. Leading firms are adding innovation to the mix of responsibilities for supply chain man-
agers, however. The boundary-spanning nature of supply chain managers’ jobs brings them in contact
with many sources of new ideas and opportunities from outside the firm. Progressive managers are re-
alizing and capitalizing on these opportunities, and in doing so they are creating advantages for their
firms. Among the traits that the SCIA finalist and winning companies shared, probably the most im-
portant was the presence of individuals in the firm who were able to look beyond day-to-day issues to
recognize significant, longer-term opportunities. Furthermore, each of these firms had executives who
were willing to take measured risks and provide sustained support for innovative proposals. One man-
ager we spoke with summed up many of the learnings of this study in a few important phrases: “Start
small but think big. Learn fast. Stay committed.”
Call to Action
We believe the importance of supply chain innovation is self-evident. The days of stable and predicta-
ble business environments are long gone, and probably not coming back. Supply chain executives
need to think of themselves as innovators and continual change managers who operate in a dynamic
world. To follow the prescriptions regarding the four innovation competencies described in this article,
most supply chain organizations will likely need to make significant and challenging organizational
changes. However, with challenge comes opportunity. We found considerable variation in the abilities
of even these leading innovative firms to identify opportunities that create customer value. While many
of the innovations submitted were stimulated by recognized needs, the best innovators cast wide nets
in searching for solutions and new opportunities from both internal and external sources. Foundational
changes to incentives, resources, and culture may be needed to support these more intensive and dis-
persed scanning efforts. Further, supply chain executives need to be sure to position proposed innova-
tions within their current business strategies. While this may seem straightforward, it may take signifi-
cant efforts to raise awareness of business objectives among the ranks of employees and partners who
serve as primary sources of innovation. Supply chain personnel need to be able to clearly communicate
the impacts that their innovations can make to the performance of their own processes, to other areas
of the firm, and in creating new business opportunities.
Can a supply chain organization get “good” at innovation? We believe so. While it can be argued that
novel innovation ideas are sometimes “accidentally” discovered, there is plenty of evidence showing
that some organizations have these happy accidents more consistently, and they are also more con-
sistent at bringing the promise of a good idea to fruition. While many writers have discussed related in-
novation competencies with regard to product innovation, there seems to be a lot to learn, and a lot of
opportunity for competitive differentiation, through supply chain innovation. As many of the managers
we spoke with pointed out, a foundational step is to get everyone in the organization thinking about in-
novation as a core part of their jobs. Once the ideas begin to come in, it is then incumbent upon supply
chain executives to build the supporting resources and structures to develop and profit from the winning
ones!

Delivering Successful Supply Chain Innovations

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Delivering Successful Supply Chain Innovations

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Volume Twelve 2015 SPRING

© 2015 Council of Supply Chain

CSCMP’s Supply Chain Innovation Awards – A Look Back and an

What Is a Supply Chain Innovation?

TABLE 1: SCIA WINNERS 2005 - 2014

Applicant Year Innovation Description

HP Procurement Risk Launched procurement risk management program to quantify impact of

FIGURE 2: MOTIVATIONS FOR SUPPLY CHAIN INNOVATIONS

Describing Supply Chain Innovations – The Takeaways

What Factors Contributed to Innovation Successes?

Finding High Value Opportunities for Supply Chain Innovation

TABLE 2. ARE YOU A SUPPLY CHAIN INNOVATOR? INNOVATION SCORECARD

Making the case for

How are innova- Exclusively based on projected

Making a Compelling Case for Supply Chain Innovation

• Became better at using existing data and technology, better visibility

Broader organizational changes

New business growth opportunities

• Created new, profitable service center commercial entity

Implementing Supply Chain Innovations with Passion and Diligence

Innovation Success Factors—The Takeaways

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