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Key to Supply Chain Innovation? Early Adopters of Technology Do Well, Study Says

10/08/2018 By

With disruption upending every segment of business over the past decade, it may not be surprising that new research ties technological innovation to high supply chain performance. 

A 2018 web survey by Adelante SCM and BluJay Solutions polled retailers, manufacturers, logistics service providers (LSGs) and various companies across the globe. The report by the supply chain companies found that over 80% of companies that identified themselves as “innovators” or “early adopters” of new technologies (13.6% of all respondents) also ranked their organization’s performance as slightly or significantly above average. 

The report found that innovators and early adopters of technology were most likely to rank delivering an enhanced customer experience as the top factor in driving supply chain innovation within their organization. Creating a competitive advantage ranked second, and reducing costs was the least important of the three.  

On the other hand, companies that viewed themselves as “laggards” or “late adopters” of technology and those that described their performance as average tended to rank reducing costs as the strongest factor, with customer experience in second place, ahead of creating a competitive advantage. 

This divide also exists within supply chain performance metrics. In the study, 76.6% of innovators and early adopters reported that delivering an enhanced customer experience was a defined and measured objective within their organization, but only 51.2% of late adopters reported defining and measuring customer experience.  

Technology adoption is a key characteristic of innovative, high performing companies. But not every new tech trend is worth chasing. The survey found that some of the most buzzed-about technologies, such as blockchain and drones, were ranked the lowest by respondents for delivering value in the next five years. The findings instead placed mobile devices, control tower visibility and warehouse automation among the most valuable tools. 

The report suggests that the relative maturity of the latter three technologies may play a role in their popularity because they have a track record of delivering value, while emerging technologies still elicit skepticism from supply chain executives. But the report advises against ignoring trends altogether and instead taking an experimental approach, as a growing number of retail and manufacturing supply chains are doing with artificial intelligence and robotics.  

According to the research, another good area of focus for technological innovation is modernizing IT systems. The report said 20% of all respondents ranked “outdated IT systems” as the single biggest barrier to innovation within their organization, and the percentage was even higher among late adopters and average/below average performing companies. Laggards are also more likely to rely on Microsoft Excel spreadsheets instead of TMS and WMS solutions, and the report suggests that this may also correlate with low performance. 

The link between supply chain innovation and performance underscores the need for companies to avoid stagnation and stay ahead of competitive threats, the report said. But even if customer-centric innovation has taken the spotlight, costs cannot be completely ignored. 

The report ultimately recommends that supply chain management professionals find a “middle path” that is not fixated on “light-bulb revelations” or disruption for disruption’s sake, but rather achieving sustainable, incremental improvements that address problems or act on opportunities.