Reverse Innovation and Supply Chain

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Think Supply Chain - Jason WheelerSharon Rice: I’m pleased to welcome guest blogger Jason Wheeler, CPIM, CSCP, to “Think Supply Chain.” Wheeler is Process Improvement Engineer, Warehouse Operations for Roche Diagnostics Operations and the APICS chair-elect.

I recently heard the term “reverse innovation” used during a discussion at work. Not being familiar with the concept, I quickly did a little research to find out more about it. The broad definition means goods are developed as inexpensive models to meet the needs of developing nations and, then, repackaged as low-cost innovative goods for Western buyers.

Wanting to learn more, I began looking for articles or a book that could provide more insight on the topic. A quick search brought up “Reverse Innovation: Create Far From Home, Win Everywhere,” written by two Dartmouth professors, Vijay Govindarajan and Chris Trimble. The book provides a better understanding of the concept while also discussing why large corporations have struggled with this idea.

Using the reverse innovation mindset, GE designed a portable, low-cost ultrasound machine that could be used in rural China. That same product now is used in many ambulances right here in the United States. GE went on to use the same process to design a low-cost portable electrocardiogram (ECG) unit for rural India. After the initial unit was completed, GE designed additional products with some minor enhancements. Similar to the portable ultrasounds, visiting nurses and primary care doctors are able to use the ECG units at rural clinics that could not afford the high-end units.

Where are some other areas where reverse innovation might be put to use? How might it be applied to improve supply chain and operations management?

The Total Scope of Supply Chain Management

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Defining the total scope of supply chain management—as an association professional, advocating for supply chain professionals—is one of my biggest challenges.

@ Supply Chain Management is an excellent blog run by Chris Jacob, a senior consultant for IBM. I am a little behind on my reading, so only today did I come across his post from February 11 in which he reproduced a graphical history of logistics and supply chain management originally published by SCM-Operations.com. It is a really interesting and valuable chart; however, it fails to present supply chain management as a holistic discipline that is more than the sum of its parts.

We do not share a common definition of supply chain management across the industry. Just take a look at the various professional associations to which you belong. Procurement organizations and logistics associations alike claim supply chain management as their expertise. And to be fair, APICS, which defines supply chain management from end to end, has its roots in planning and production. Even so, the APICS Certified Supply Chain Professional designation uses the SCOR model to validate candidates’ knowledge and skills from planning through returning.

Defining supply chain management

The APICS Dictionary, 13th edition, defines supply chain management as “the design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally.” This definition of supply chain management first appeared in the 9th edition of the APICS Dictionary in 1998. As we are in the midst of producing the 14th edition of this reference, it is a good time to ask: Is this an accurate definition of supply chain management? Does it adequately capture the scope of supply chain management today?

Supply Chain Workforce Development in India

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Think Supply Chain - Sharon RiceI have returned from a truly extraordinary trip to Mumbai for the APICS Asia Supply Chain & Operations Management 2013 conference. We are really pleased with the outcomes. It was a 360-degree educational experience and the participants, speakers, and APICS staff all learned so much.

What continues to resonate with me is the participants’ desire to acquire more practical knowledge. During the opening panel on workforce development, we learned that internships are not nearly as available in India as they are in other parts of the world. As a result, students do not have the same opportunity to apply theoretical knowledge to real-world situations. Bhaskar Majee, director of sales planning and operations for Philips, shared that his internship experience in India was absolutely critical to his early success. But when Abe Eshkenazi asked the audience who had participated in an internship program, only two hands raised.

Practical Supply Chain Knowledge Is Key

Internships improve the employability of students post-graduation. But equally important to professional development is the opportunity to learn about different areas of the business once individuals are on the job. Antonio Galvao, vice president of supply chain for Diversey, now part of Sealed Air, talked about how valuable his 18-month rotation in sales and marketing was for him. Although he learned he was better suited to supply chain management, he gained a deeper understanding and appreciation for the work of his marketing colleagues. These types of rotation opportunities strengthen individual performance and the contributions people make to the business.

Dan Castle, vice president, Tata Sons, Tata Quality Management Services, talked about how opportunity is a door that can be opened from either side. Managers need to actively seek opportunities for their staff, but staff need to take more initiative in asking to be given opportunities as well. Professional development of the Indian workforce must start as a partnership between companies and their employees, both taking responsibility for continual learning.

As we continue to discern how best APICS can contribute to the advancement of the workforce in India, I am convinced we will also gain the insight we need to continue to advance the supply chain and operations management workforce across the globe, including in the United States. That is the wonderful thing about education: it is never a zero-sum game.

APICS CPIM and Global Workforce Development

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When you read this post, I will be on my way to Mumbai, India for the 3rd annual APICS Asia Supply Chain & Operations Conference, April 4– 5. Traveling and working in India is a privilege that comes with my job. It also comes with much responsibility for APICS.

As Western nation workforces continue to age, BRICS (Brazil, Russia, India, China, and South Africa) stand out based on their potential to fill labor gaps. BRICS represent 45 percent of the world’s workforce. But, in the case of India, access to and outcomes of education remain a serious problem. Gaps and shortages in skills, especially related to manufacturing, are impacting growth. When I travel to India and hear stories, I am reminded of the important role professional education can play in filling the gaps. There are many APICS Certified in Production and Inventory Management (CPIM) designees who credit obtaining the credential as being a pivotal career turning point. Many of these individuals do not have degrees, but the CPIM validates their operations management knowledge.

A little more than 40 years ago, the United Negro College Fund in the United States ran a campaign under the slogan, “A mind is a terrible thing to waste.” It was a very impactful message. Also, it reminds me, even today, of what a great responsibility it is to be involved in workforce development. It is not only about meeting the needs of corporations and spurring economic growth. It is about providing opportunities for individuals to improve their lives through productive and rewarding employment.

APICS in India

APICS also has unfilled potential in countries such as India. We have a contribution to make. This is why APICS CEO Abe Eshkenazi is so passionate about workforce development. During the opening session for the Asia Supply Chain & Operations Conference, Abe will share his thoughts and aspirations about the role APICS can play as a partner in India. He will lead a discussion with panelists and participants on how we can all work together to make a difference. Abe and I both hope to gain insights into how APICS and the APICS Educational & Research Foundation can make a positive contribution to workforce development in India.

What role do you think APICS can and should play in workforce development around the world? How can APICS be more impactful?

Is Innovation Your Next Game-Changer?

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The bold headline on the P&G site reads “Connect+Develop.” If you haven’t been there, you need to go. The site is designed to attract partners with whom P&G can collaborate to deliver innovative solutions to the marketplace. It is an interesting approach to attracting partners: “Got a great idea to help better meet people’s needs? Come to us first!” According to the site, the thought process is simple: “Times have changed, and the world is more connected. In the areas in which we do business, there are millions of scientists, engineers, and other companies globally. Why not collaborate with them?”

P&G recognizes that the way we do business today is vastly different than it used to be. Innovation used to happen within a company. Now, firms are working together to innovate across supply chains. A particularly interesting story on the site explains how the Tide Pods were developed.

Tide Pods are individually packaged units of laundry detergent. They are genius, if you, like me, have a tendency to put too much soap in your high efficiency washer (resulting in epic overflow). You just toss the Tide Pod into the washer, the coating dissolves, and the detergent is dispensed. Others must agree because, according to P&G “Tide Pods is on track to becoming a $500 million dollar brand in its first year … while still only available in one market.”

P&G collaborated with a long-term supplier, MonSol in Indiana, to design and develop the pods. While they had worked on similar projects in the past, producing this product was more challenging because, “three different cleaning solutions are encased in separate chambers in each pac, all of which need to remain separate until fully immersed in water. Additionally, the film surrounding the cleaning solutions had to be designed to dissolve in a range of water temperatures, from hot to cold.”

P&G and MonSol each have special competencies that they bring to the table when working together. Each organization trusts the other based on its unique competencies and the relationship they have built over the years. Taking the attitude that they were one team, P&G and MonSol professionals worked together until they got it right. So right, in fact, that P&G recognized MonSol with its 2012 C+D Partner of the Year award.

Trust and collaboration are important not only to fostering innovation, but to creating high-performing supply chains. Yet many firms continue to struggle with the creation of trust-based relationships. So I wonder, what gets in the way?

Find, Frame, Focus

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I drink fair trade coffee. Until this weekend, I never thought too much about it. On Saturday I started reading The Practitioner’s Guide to Governance as Leadership, by Cathy A. Trower. Richard Chait, professor emeritus, Harvard Graduate School of Education, writes in the foreword that governance practiced at the highest level allows boards to “find, frame, and focus on matters of paramount importance to the organization’s current and future welfare.” That got me thinking.

I googled “supply chain governance” and the most prominent results were related to the fair trade coffee movement. The fair trade movement began in the 1960s as a way to create supply chains in which small producers could receive a fair price on their labor. In 1988, an organization based in the Netherlends created a labeling standard for coffee produced by supply chains meeting certain fair trade standards. In 1998 the German organization FLO began to administer a supply chain certification process. This certification process is an interesting example of supply chain governance.

I am sure there are many other examples of third-party organizations involved in some form of supply chain governance. Yet I wonder if supply chain governance, like most governance, often takes the form of a contract between parties? These relationships are likely to be quid pro quo rather than based on a shared set of standards outlining common values and purpose. If we elevate supply chain governance to finding, framing, and focusing on the issues that matter most to successful relationships between suppliers and producers, will we elevate the performance of the supply chain?

How do you define supply chain governance? What examples can you share so that others may learn? Can any readers illustrate how excellent supply chain governance leads to excellent performance and results?

Innovation by Surprise

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I am about to embark into dangerous territory – at least for me – and make a sports analogy. Innovation is about field goals and touchdowns. Both can add up to victory. At least that is how I am summarizing comments to my last post. Bob Trent, Paul Pittman, and Chet Frame write about the process of continuous improvement creating a culture of innovation. It’s about the discipline and, as Chet says, “the daily commitment to working better.” Field goals.

But Kevin Wurtz reminds us that touchdowns can lead to big victories. The concept of inward- and outward-facing innovation really is interesting. Kevin states, “inward-facing innovation is expected, it is why we do what we do. Outward-facing innovation is a surprise we didn’t anticipate.”

Continuous improvement obviously is not easy to achieve. It requires a sustained effort, a supportive culture, and absolute belief in the fact that no matter how well we are doing, we can do better. Although it takes a highly coordinated and dedicated effort on the part of employees at all levels in the company, it is in management’s control.

Outward-facing innovation, the big idea that emerges in part from the arrogance of knowing what people want before they do, comes as a surprise. But if it is not planned, can it be cultivated?

I wonder how many companies we can name that, year after year, create demand for products we didn’t know we needed? At the same time, companies continue to make those products better. How do they do that? What is their secret?

Innovation: a noun or a verb?

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“I am starting to cringe when I see the word innovation. I have placed this word on a list of terms that I maintain that are so overused that they begin to lose their meaning.“ I know where Bob Trent, who commented on my last post, is coming from. In the world of business education and communication, most of us are guilty of picking up on trends in nomenclature and beating them to death until pointed in a new direction by different trends. The problem with naming is that it allows us to seemingly embrace concepts without really understanding them. We can lose the complexity or richness of meaning.

So perhaps it is best to focus on innovation as a process as opposed to an outcome. What is required for innovative thinking and action to become a part of the way firms do business? Jennifer Kevlin, Value Stream Manager, WW Client Supply Chain & Delivery Solutions at IBM, shared this weekend how IBM seeks to create a culture of “collaborative innovation” through the use of technology. IBM Jam Events allow individuals from all over the world to think together about issues in different ways, taking different perspectives. These are structured, facilitated events where the input received is carefully culled through and evaluated. The outcome of these events can be new projects that drive value to the customer, the firm, or society.

Harnessing social media to facilitate collaborative thinking is a powerful way to embed innovation in process. Yet gathering input is not the end of the process. Companies still need to be able to not only make sense of all the input received, but transform it into something that is actionable and that ultimately drives value to the customer.

What ways are companies creating a culture of innovation in their organizations? Is value being created as an outcome?

Built to Last?

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Winning, earning profits, or creating customer value: What is the best focus for developing supply chain strategy? Commenting on my last post, Joe Wikowski points out Michael Porter might disagree with A.G. Lafley and Roger Martin’s emphasis on winning as the foundation for developing strategy. Witkowski writes, “winning, or beating your rivals, in the context of Porter’s 5 forces framework, is too narrow.” He says, according to Porter, customers, suppliers, substitutes, and potential and existing rivals all impact a company’s ability to earn profit.

Intrigued by the distinction and wanting to know more, I came across an interesting, albeit biting, Forbes article written by contributor Steve Denning. The article, “What Killed Michael Porter’s Monitor Group? The One Force That Really Matters,” appeared November 20, 2012, and is packed with provocative comments designed to incite conversation. Decide for yourself whether Denning’s commentary is fair or not. However, citing Apple, Amazon, Salesforce, Costco, Whole Foods, and Zara, Denning makes the interesting point that the purpose of the successful firm today is to deliver “more value to customers through innovation.” Focusing strategy on driving profit for profit’s sake will not lead to sustained success, Denning suggests.

If a firm is successful at creating and delivering customer value, it is more likely to create more profit and win over time. But if the focus is on profit or winning for its own sake, customer value through innovation is not guaranteed. Denning recognizes this, and sees continual innovation as the only means to sustain success in today’s global marketplace.

Consider the focus of your supply chain strategy. What is the balance between creating profit and delivering customer value?