Unlocking innovation in the supply chain

Embed Size (px)

Text of Unlocking innovation in the supply chain

  • Supplying Innovation: Unlocking innovative behaviours in the

    supply chain

    Keith Wishart (IBM), Jingchen Hou (CSA)

    Cambridge Service Alliance Webinar Series 9th May, 2016

  • Content

    Theproblem:theinnova1onbo2leneck

    2

    Majorstakeholdersandkeychallenges

    Keysuccessthemes

    Discussionsandconclusions

    Thesolu1on:formanalliancetodeliveroutcomes

    Thebackground:thechangesinindustries

  • The background: the changes in industries

    Weconductedthiscasestudyinanu/lityindustryintheUK,butthefollowingchangesarenotlimitedtooneindustryandcanbeobservedinmanyindustries.

    Customerfocused

    Endcustomersarepaidunprecedenteda?en/onto.

    Outcomeoriented

    Outcomesinsteadofoutputsaredemanded.

    Highcomplexity

    Itisdifficultforonecompanytodeliveronitsown.

    Innova/ondemanding

    Innova/oniscrucialtofulfillstakeholdersdemands.

  • The problem: the innovation bottleneck

    Innova1onislockedwithinfirmsinsteadofinthesupplychain

    Innovation bottleneck

    Tradi1onalcontractsdonotprovideenough

    incen1vesforoutcomes

    Tradi1onalcontractualrela1onshipsimpede

    jointinnova1on

    Internalinnova1onoBenfailstogenerate

    expectedvalue

    Thedeliveredsolu1onsdonotimproveclients

    performances

    Endcustomersdonotobtaintheop1mal

    servicesandoutcomes

  • The solution: form an alliance to deliver outcomes

    TheshiIfromoutputstooutcomes

    Suppliersarerewardedonoutcomesforendcustomersandotherstakeholders.

    Endcustomersareincludedforconsidera1onaskeystakeholders.

    Someresponsibili1esandrelatedrisksaretransferredfromclientstosuppliers.

    Theforma/onofanalliance

    Mul1plesuppliersandtheclientformanalliancetojointlydeliveroutcomes.

    Theallianceisrela1velyindependentofitspartnercompanies.

    Thecleardis1nc1onsbetweensuppliersandtheclientfadeaway.

  • Major stakeholders of the alliance

    Keystakeholders

    Theclient

    Otherpartners

    Endcustomers

    Extendedsuppliers

    Theregulator

  • Key challenges

    Insidethealliance

    Partnershavedifferentbusinessmodels. Limitedexperiencetodeliveroutcomes. Partnershavedifferentpastrela/onships. Partnerscompeteoutsidethealliance.

    Outsidethealliance

    Thewholeindustrywasnotcollabora/veandtrus/nginnature.

    Thewholeindustrywasoutputdriven. Theindustrylacksinforma/ontransparency.

    Collabora/onchallenges

    Outcomemodel

    challenges

  • Key success themes

    Strategicobjec/vesOrganiza/onalculture

    EngendertrustEduca/onalcommunica/ons

    Commercialsolu/on

    TotexfocusRisk&rewardsharingBenefitsrealiza/onIncen/vizesuppliers

    Opera/onaldesign

    Con/nuingeduca/onInforma/onplaTorm

    ProcessdesignMetrics/Measurements

    Collabora/on

    Keysuccessthemes

  • Key success factors collaboration

    Suppress competitive behaviours and foster trust

    Achieve the shift in mind-set through educational comms

    Create a positive organizational culture based on partners cultures

    Define the strategic objectives based on the outcomes to be achieved

    Strategicobjec/ves

    Organiza/onalculture

    Educa/onalcomms

    Engendertrust

  • Key success factors commercial solution

    Facilitate the choice of optimal solutions that deliver outcomes

    Incentivize extended suppliers on outcomes where possible

    Benefits and risks are shared among partners; outcome KPIs are transferred to the alliance

    The boundaries between capital and operational expenditures are eliminated

    Totexfocus

    Risk&rewardsharing

    Incen/vesuppliers

    Benefitsrealiza/on

  • Key success factors operational design

    Design processes for everyday operations

    Measure contributions of partners, track the achievements, etc.

    Design platforms for the sharing of data, knowledge, and capabilities

    Training sessions on customer focus and outcome thinking

    Con/nuingeduca/on

    Informa/onplaTorms

    Metrics&measurements

    Processdesign

  • Discussions and conclusions

    Thethreekeysuccessthemescollabora/on,commercialsolu/onandopera/onaldesignmutuallyreinforceeachother.

    TheshiIfromoutputstooutcomesimpliesincreasedresponsibili/esandrelatedrisksforsuppliers,butalsoflexibilityandopportuni/es.

    Theforma/onofanalliancetodeliveroutcome-basedprojectsprovidesopportuni/estounlockinnova/oninthesupplychainandtoaccumulatecapabili/esfrommul/plepartnerstomeetcustomerdemands,tofulfillregulatorsrequirements,andtogeneratebenefitsforpartners.

    Therearerealchallengesfordeliveringoutcome-basedcontractswith

    analliance.Sothismodelisnotforeveryproject,anddecisionsshouldbemadecarefully.

  • Thewhitepaperiswri?enbyJingchenHou,KeithWishart,JonathanBaker-BrianandClaireVine.Itcanbeaccessedfromh?p://cambridgeservicealliance.eng.cam.ac.uk/news/2016MarchPaper