Jim Rice, Deputy Director of the well noted MIT Center for Transportation and Logistics (CTL) has penned an opinion commentary, How Many Supply Chain Innovations Are Revolutionary?. This editorial is highly recommended because it concludes that most innovations in supply chain management are built on existing achievements and/or known practices rather than truly disruptive. The argument is that: “… incremental change represents one of the most powerful weapons companies have to stay ahead of the competition.”

Incremental change is contrasted to disruptive change which re-defines the value-proposition for supply chain capabilities. Disruptive change can involve how a product is offered or delivered to customers. The MIT stated premise is that sometime after evolutionary incremental change occurs, benefits trail-off and there comes a need for the next disruptive “big-idea’. There is a further argument that innovations can be both sustaining and disruptive.

The editorial concludes that in pursuing supply chain innovation, firms need to be clear about their goals and objectives, determining whether the required desired outcome is either incremental or disruptive, inferring that disruptive innovation will indeed trigger change management forces for the rest of the enterprise and supply chain leaders need to be aware of that effect. It is the all-important learning in enterprise level change management.

Supply Chain Matters offers some additional views and perspectives.

Incremental change will sometimes be the more comfortable and safe means for driving incremental change and innovation. Using familiar metrics of measurement and improvement helps to achieve operational and/or bonus performance targets but it can sometimes mask needs for step-changes or completely different approaches for the supply chain to contribute to a desired business outcome.

Supply chain leaders need the leadership experience to be able to understand the differences implied and clearly communicate the options for incremental vs. disruptive improvements to senior management. Today, many supply chain teams are called upon to make significant cost reductions in order to internally fund other strategic business objectives.  That leads to improvement programs directed at added labor cost or procurement spend savings. That alone is an acceptable practice provided there is clear understanding that termed improvements in supply chain will have no other ramifications to servicing customers or producing quality and market innovative products.

Too often, supply chain teams are trapped in the non-precise nature of these discussions. Supply chain innovation can sometimes be tasked in generating the cash savings to fund other internal objectives, which can lead to business process exposure. Today’s supply chain leadership requires the maturity and organizational leadership to be able to chart an agenda of innovation through calm or turbulent waters. That is when incremental vs. disruptive innovation requires precise definition.

Bob Ferrari