JULY - 20228 logisticstechoutlook.comIN MY OPINIONInnovation can be anything from a business and category-defining enabler to an anxiety-inducing buzzword rife with financial and strategic failure. Since `crisis', `capacity' and `resilience' have become the current watch words for the global supply chain, how might we think practically and effectively about innovation? At a minimum, internal and external innovation can provide valuable sensing tools, generating customer insights and market-facing signals about the commercial and operational threats or opportunities created by novel technologies and business models. Beyond this, structured innovation programmes can deliver deeper value for firms, with real potential for long-term asymmetric returns on invested resources.External Innovation Making InroadsTechnology adoption and functionality curves within supply chain will be somewhat familiar to many from the venture and innovation community. Experiments and companies start small, frequently with questionable early economics, but hold significant ambition and a focus on large addressable opportunities.As examples, the ongoing development of supply chain "superapps" can provide the most modest of SMEs with tooling to procure, transport and manage the distribution and financing of international goods. Ubiquitous smartphones and connectivity create additional visibility layers for frontline operations or enable `personalisation at scale' for last-mile interactions. The application of machine learning techniques to supply chain data sets offers exciting opportunities for many planners, buyers and sellers of logistics.Normalising InnovationWith existing customers, capabilities, and deeper resources, internal innovation might seem a good place to start. Sadly, industry data from recent years indicates that much work must be done to unlock this latent potential.In the UK, a mature supply chain market, 2020 tax data indicated that UK R&D spend for the transport and storage industry reached all-time highs of a mere USD 94M (GBP 72M).These low levels of indicated R&D investment seem common across the globe. Such levels of industry-insider commitment to innovation seem incompatible with the current and future demands on global supply chain, not least for growing industry ambitions to reach lofty decarbonisation goals.IEA data indicated that within the maritime industry, R&D investment fell 40 percent to USD 1.6BN in the 3 years to 2019. Recent research from the IMO and Ricardo highlighted a need for over 200 projects to address critical challenges linked to 2050 zero carbon emissions targets, and a capital need of over USD 4BN.By comparison, recent Venture Capital (VC) data from Pitchbook indicated that US and EU supply chain technology firms received USD 7.8BN of new investment in Q3 2021 alone. Whilst capital markets exuberance and VC industry growth play key roles in this narrative, these capital flows illustrate a clear external centre of gravity for innovation and risk-taking within the supply chain industry. Capital and new talent are tackling KEEP ON KEEPING ON: MAKING PROGRESS IN SUPPLY CHAIN INNOVATIONBy Oliver Finch, Partner, Maersk Growth (CPH: MAERSK-B)
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