Enough innovation in South African Supply Chains?



Innovate.jpgToday, a high-performance supply chain is a strategic asset, the complexity of which is increased by numerous factors, making constant innovation a necessity, Tech-Pro Personnel tells SmartProcurement.

Historically, innovative companies that build strategic, high-performing supply chains quickly gain competitive and financial advantages. The PwC Global Supply Chain Survey 2013 found that companies with leading supply chains achieve 70% higher performance and “significantly better financial results”.

And, as factors like intensified global competition, shorter product lifecycles, discerning customers, increasing regulation, improvement in technologies and pressure on natural resources deepen supply chain complexity, innovation has become pivotal to survival and long-term success.

Tom Nightingale, writing for Value Unchained, said that “the historical lesson here is that, with supply chains, innovation is an important accelerator”.

Innovation in South African supply chains

Recent research suggests that South African supply chains share Nightingale’s view that innovation is an ‘important accelerator’.

Some 90% of respondents to Barloworld’s supplychainforesight 2013 Survey believe that ‘new business models require supply chain innovation’, while 91% of respondents to GE’s Global Innovation Barometer 2013 agreed that innovation is a strategic priority for their companies.

Despite this, many feel that they are not yet innovating enough.

Supplychainforesight 2013 found that while 73% of respondents ‘regularly evaluate and modify supply chain strategy to align with business strategy’, 51% feel that their supply chain and logistics functions “don’t innovate regularly enough, often due to company culture, lack of skills and fear of change”. GE’s Innovation Barometer labels this ‘Innovation Vertigo’ - or “uneasiness with the pace of change and confusion over the best path forward”.

Yet, innovation is definitely an intrinsic part of many South African supply chains, as the winners of the 2013 Green Supply Chain Awards show. The awards are a joint initiative between CILTSA, CGCSA and Supply Chain Today magazine.

As examples, Unilever won the Best Project award for the implementation of a local programmable lighting control system at its Jozi Park Distribution Centre that reduced kilowatt-hour usage by an average of 43%, with corresponding cost savings. The RTT Group, who received a ‘Highly Commended’ for their ‘Delivering a Greener Tomorrow’ project, achieved reductions of 57% in energy usage, 61% in waste to landfill and saved 35-million litres of water.

Another innovation that has drawn attention is SEW Eurodrive, an ACM gearbox specialist that overcame dependence on a single customer by shifting the company’s product mix to higher priced products in alternative industries, increasing turnover by 22% and production volume by 10%.

The future

Experts agree that the future of supply chain innovation lies in collaboration and people.

Barloworld’s supplychainforesight 2013 found that future SCM success lies in “serial innovation – built on the principles of continuous improvement and operational excellence; and smart partnerships – strategically selected partnerships with key players across the supply chain”. Both of these concepts drive sustainable advantage.

Similarly, GE’s Innovation Barometer found that the key to innovation lies in “partnership – or collaboration – and people – or workforce preparation and talent mobility”.

But while collaboration between partners in the supply chain is being hailed as the way forward for innovation, there are barriers to be overcome – most notably, according to GE, a lack of IP protection, lack of trust and talent poaching.

As Clem Sunter said “competition in being original has just undergone a quantum leap”. South African companies need to find ways to continually take that leap as innovation is pivotal to future SCM success.

Are South African supply chains innovating sufficiently to stay competitive? What innovative SCM ideas have you come across? Join our discussion on LinkedIn.

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