A supply chain management which is effective is a vital contributor to the competitiveness of any firm generally and in order for the organization to witness long term success, innovation is a crucial factor. Business innovations regardless of whether they are in process or product form, are seldom accomplished in an organization which is single rather, they are often formed through interactions with other members of the supply chain. Owing to the slowdown in economic and the increasing activities in acquisition and mergers being witnessed, organizations are faced with quite a number of challenges in the processes of procurement and supply chain management (Burton, 1995).
Therefore, managing innovations across supply chains is not an easy task since it is faced with a number of challenges. In trying to comprehend the main challenges faced , understanding of various issues such as; does Service supply chains face different challenges compared to supply chains focused on physical goods, do emerging industries have different priorities compared to mature industries and do buyer supplier power relations have significant impact arise( Milgrom, & Roberts, 1992).
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Main Challenges in managing innovation across supply chains.
Supply chain management has witnessed various changes within the past decades. One of the factors that have changed is that the market in supply chain management has become more complex and competitive. In addition to that, the customers in this field have also become more distinguishing. Consequently, the system has become global due to the changes that have occurred in the international business and economic environment. Furthermore, the management of supply chain has become of great importance since majority of the firms have appreciated the fact that the supply chain is a major factor in creating competitive advantage (Dicken, 2003).
The supply chain has become a major strategy differentiation among different organizations This is because, The satisfaction of the end user consumer has become of great importance in the management of supply chains with the reduction of the total supply chain costs.. The objectives of firms to become more cost competitive has led to the creation of more robust supply chains by organizations (Skinner, 1969).
This means that organizations that will fail to deal with these innovations will eventually collapse considering they are operating in a highly dynamic business environment. The core factors that will lead to the success of these organizations are the development of competitive supply chain management strategies. This, in turn, will provide a basis of change across the supply chain (Forrester, & Soriano-Meier, 2002).
It should be understood that in adapting to changes, changes should not just be for the sake of it. These changes should occur in an innovative and different manner in the processes of the supply chain. The word innovation means new. These means that organizations should create new strategies in their supply chain management strategies. These new strategies that have been adopted should also be better that the earlier strategies which the organization had implemented (Bamford, & Forrester, 2003).
In innovation, there are four areas which have been identified that lead to the success in an organization. Making innovations in the supply chain management integration is the first step to take in the supply chain management. Any organization that has the will to succeed will make innovations in their supply chain management must commence with these steps. In addition to that, the ICT sector has been of great importance in the supply chain management. Various tools which have been generated by the ICT sector have been of great importance to the supply chain management. These tools have been known to be of great importance as they have proved to be time saving and cost effective. If integrated effectively, these tools will assist the organization to meet its set aims and objectives (Hines, 1994).
If organizations focus on implementing and integrating these technologies in a strategic manner, then it is with no doubt that they will hit top notch. This will ensure that the full potential of the organization is achieved. In addition to that, there is also need for the supply chain activities to implement strategies that focus on environmental sustainability. Organizations need to focus on the challenges and their possible solutions that will promote environmental sustainability (Verma & Boyer 2010).
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Therefore, in managing innovation across supply chains the main challenges arise in the sectors of; Innovation in Supply Chain Integration, ICT Supply Chain Innovation, Sustainability Innovation and Innovation in Supply System Management (Williamson, 1998).
Innovation in Supply Chain Integration
The modernized prototype in supply chain management focuses mainly on the concept of integration. Where in this context, integration is concerned primarily with substituting old supply chain configurations, (which were frequently characterized by lofty levels of fragmentations), with innovative approaches (which are characterized by elements in supply chain that are different and they work in a seamless fashion together).The notion in integration can be reflected on at numerous levels. However, the primary ones usually considered are the external (interaction involving diverse entities downstream and upstream in the supply chain) and internal (integration of processes and activities within organizations) (Slack, Brandon-Jones& Johnston 2010).
In focusing supply chain integration, to the wider approach of supply chain management, it is evident that any useful effort which focuses on improving the performance and capability of supply chain should have its focus on innovation in this regard. Therefore, challenges are usually identified by the full comprehension of the dynamics of the business environment and the benefits and drawbacks of present supply chain architectures. In terms of solutions, it is imperative to identify that each supply chain is distinctive and it needs innovation which is suitable to the situation which is being considered (Prahalad, & Hamel, 1990).
This distinctiveness usually relates to people processes and products. Recognizing the suitable form of supply chain, change should focus on in depth issues related to the unique characteristics of an organisation plus the environment which it operates in, more so, in the integration of supply chain. Making out the apt solution necessitates that the course of supply chain planning and analysis is done in a systematic and logical manner with appropriate attention to elements. Plans in integration should be implemented properly particularly in regards to other people and cultural related features of the innovation process (Nelson, 1991).
ICT Supply Chain Innovation
In the past decades, technological innovations have had an effect on supply chain management and logistics. Consequently, the main reason for change in the field is the advancement of communication and information. Researches that have been carried out display the probable role of ICT in invading the entire supply chain. This will not only enable the integration of processes and functions of a sole organization but also to the customers and suppliers with long-term and broad implication for a companys competitive advantage (NAE, 2008).
ICT is seen as one of the major outstanding fields in the supply chain. A considerable number of growing organizations have taken on novel technologies and informative systems which support their operations in supply chain management and logistics, for instance, General Electric, Dell and Wal-Mart. The major benefits accomplished by these organizations relate to ultimately visibility, shortened inventories and time cycle, improved efficacy in distribution channels and minimized effect of the bullwhip (Rumelt, 1997).
Therefore, ICT has an intense effect on the supply chain management since novel technologies facilitate greatly in the information flow, extend power over distant operations and across organizational margins and automate retorts. Consequently the implementation of novel technological innovations and the outcomes associated with precise types of ICT-linked innovations are of vital interest to the diverse categories of organizations which operate in the same supply chain network (Teece, et al. 1997).
Although information technology aptitudes are important for differentiation in logistic service and a device of minimizing costs, plus attend to customers effectively through customization of better services, the implementation of ICT is a major challenge for logistic service providers mainly for the for the medium and small logistic service providers. Owing to deficiency in resources, these organizations display difficulties in the usage and implementation of ICT (Nelson, 1991).
Small logistic service organizations provide a number of implications to supply chain innovation. Proximity to the clients is a significant source of mutual innovation. The amalgamation of technology and service strategy is a vital component in motivating supply chain in small and medium logistic service provider in supply chain innovation for a differentiation advantage to be obtained from the usage of ICT, the centre of medium and small logistic service providers, the technological venture has to be on the usages of ICT slightly than on technology Womack, J. and (Jones, 1996).
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An additional challenge which is usually faced by service providers is in the changing requirements in service production. Equipment utilization, capacity and visibility, minimization of transportation and inventory costs, observation of security in supply chain and control in the environment are progressively being demanded more by customers of logistic services. The implementation of innovations in ICT in these fields might offer solutions to operational (processes and functions) and strategic echelon (capital development, knowledge human and technology) to levels in organization and firm and more so several of the innovations might have environmental effects (Hamilton, & Feenstra, 1998).
A major challenging field in supply chain management is ambiguity. Reducing produce lifecycle and rapid changing buyer demand for services and goods lead to more vague and intricate environment. Applications in ICT might offer answers in managing and explaining ambiguity in supply chain circumstances. It is also applicable to radio frequency identification in the industry of retail. This area is experiencing a paradigm budge in the management of unpreserved goods, which have inadequate shelf life that make it hard for decisions in supply chain thus elevated loss rates are experienced (Hayes, et al 2005).
Radio frequency identification (RFID) might offer pertinent information which can help in identifying the process of deterioration of goods visible and predictable at the prime stages of supply chain. RFID applications can be used by Inventive retailers to minimize expense and risks linked with instability in energy expenses and demand. This innovation has affirmative effects on liability of losses in the supply chain and suggestions for options in buy-back and contracts. (Milgrom, & Roberts, 1992).
Additionally, ambiguity has an effect on inventory management. This is a task which is challenging I supply chain management owing to the complexity in approximating demand, particularly in novel goods. Additionally, erratic demand and dynamic delivery location make it a challenge for stock control (Shi & Gregory, 1998).
This matters regularly consequence in elevator expenses in inventory, insufficient resource allotment and sluggish retort to the client. An innovative answer for improving inventory management must be based on a combination of theory and technology (Zhang, et al. 2008).
Mixing RFID application for assembling data (so as to optimize inventory level in the supply chain) and synthetic neural network for data scrutiny (to predict prospect demand) it is likely to attain economically competent and lean supply chain management (Lamming, & Cox, 1997).
In the previous years, intelligent freight transportation system (IFTS) has been extensively utilized to optimize operations in logistics and transport. It brings up potentialities to overcome numerous challenges in this field by augmenting planning, control and monitoring abilities. However, its strategic latent has not been evaluated past solely operational remunerations. Integrating the major components of IFTS (smart infrastructure, vehicles and products) might offer answers to enhance the usage of these systems which are innovative and offer the base for an evaluation which is more solid on their outcomes in logistics and transport operations (Hines, 1994).
The demand on organizations to advance their sustainability in the environment is gradually increasing. Diverse sources like government agencies at local, regional, national and multi-national levels are tapering environmental laws and initiating novel outlines of green taxation and presenting more reasons for organizations to clear out their operations. Customers have turned out to be more conscious of environmental matters thus accounting for them in their purchasing verdicts (Porter, 2001).
Stakeholders mainly employees and investors also have a strong interest in ensuring their organizations have environmental standards which are elevated. Whereas the objectives of the company is to become greener, it is affecting most business features particularly supply chain management and logistics since their activities are environmental intrusive and geographical extensive (Grant, 2010)
The freight movement is the main emitter of other air toxins and greenhouse gases, Traffic accidents and noise disturbance. A majority of the expenses are peripheral to an organizations balance sheet and they come from the ecosystem and community. Citizens benefit from the logistic services but they make out that the process of delivery is bad for the environment. They do not appreciate the changes that have been made so far (Dicken, 2003).
These upgrading in the environment is from a variety of innovations which are operational and technical. One of the challenges in this area is the effectual ways of escalating the environmental maintenance of road freight transport. If authorized restrictions on truck dimensions and weight are Tranquil they would allow organizations to merge freight in a less number of deliveries. The proficiency of organizations which allow the usage of heavier and longer vehicles reveal that they present a combination of environmental, safety and economic benefits (Foss, 1997).
In Europe, Suggestions to extend the usage of longer and heavier vehicles, has been met with a lot of oppositions from environmental groups and railway interests. This shows how the diffusion of a main innovation in transport is hindered by political lobbying and government laws. The public sectors role additionally features in reviewing the prospective of urban consolidation centres to rationalize the budging of freight in urban centres. Though the first urban consolidation centres came out in 1970, since then they have been the focus of many viability studies. Its only recently that their operational and commercial feasibility has been established in construction and retail areas (Fisher, 1997).
An additional analyzed challenge, centres on the return budge of waste products from urban centres. A variety of repeal innovations in logistics that can advance the effectiveness and lessen the impacts of environment on the return surge of waste for disposal, recycling have been evaluated. If these measures are implemented successfully, it can make reusing more attractive commercially and increase its yielding and uptake thus benefiting the environment (Hill & Hill 2011).
The projected answers are based on diverse equipment, regulatory and operational innovations which range in the integration of streams which carry household and commercial wastes to the introduction of technology which is smart bin (Christopher, 2000).
A large percentage of logistics expenses are now outsourced. Logistic service providers can control directly much of the handling, storage plus movement of goods, across supply chains. A number of service providers identify that innovations in the environment can be a competitive factor however reviews display that a number are disenchanted by their customers lack of concern in the environmental schemes. Logistic service providers ought to be given incentives which are stronger so as to increase portfolios in the green services and collaborations which are closer between customers and logistic service providers on recommended environmental programs (Fisher, 1997).
Innovation in Supply System Management
At international and national level, Massive changes have been observed in client-supplier relationships. These transformations are on a variety of relationship features. A number of them include: the item of business between supplier and clients, for instance, complex systems, components and parts; the functions of the organization entailed in the relationship supply, for instance, marketing, design, production and planning; the suppliers aptitude necessitated by the client, for instance, managerial, logistics and technical; the level of collaboration and trust which maintains the relationship (Allwright, & Oliver, 1993).
There are four major identified phases of client -supplier relationships. They include; traditional supply (1960s - 1970s); supply system development (1980s); strategic alliance (1990s) and globalization (2000 and beyond).
As seen in the evolutional changes client-supplier relationships have undergone radical procedures of innovation and new challenges focused on the hunt for effectiveness and efficiency. There are a number of challenges which face innovation in supply system management. However the main ones include, executing of discontinuous innovation in supply chain relationships, the answer to this problem is that it is essential to focus beyond the personal psychological barriers and company related issues. An analysis that is multileveled is required so as to appreciate fully the intricacy of the occurrence of discontinuous innovation executions in supply chain relationships (Cox, 2001)
Another challenge focuses on the possible use of formal models in supply evaluation of strategic management of the entire supply system. There are a number of valid reasons why formalized models should be used compared to qualitative approaches. These issues relate managerial, motivation, transparency and learning. In this manner the client been made possible to run the entire supply chain plus regularly realign the objectives of the supplier with his or her own targets (Ford, et al. 2003)
An additional challenge entails the notion of ideal client status as a way of formulating supply side induced benefits in supplier markets which are highly competitive. This displays the significance of being an ideal client mainly in a novel context of a product development. The notion here is that executing an idea clients policy in purchasing firms might perk up circumstances of innovating with suppliers (Emerson, 1962).
Another challenge involves the humanity side of the supply chain and its function in risks associated with supply chain management. From a perspective which is behavioural, approaches which are innovative and include behavioural studying in supply chain management and design can considerably put in reduction of risks in supply chain by accounting for personal biases and attitudes of the verdict maker (Porter, 1980).
The final challenge relates to management of risks as an approach which is strategic in advancing outsourcing in logistics. This implies that risk management can be an innovative devise which will facilitate the triumph of logistics outsourcing by safe guarding potential relationships and performances between partners in the supply chain (Sanderson, 2009).
In conclusion, it is quite evident that many organizations face a number of Challenges in managing innovation across supply chains. Service supply chains face different challenges compared to supply chains focused on physical goods, emerging industries have different priorities compared to mature industries and buyer supplier power relations have significant impact. The main challenges which face the management of innovation across chain supplies are divided in to four fields of innovation. They include Innovation in Supply Chain Integration, Innovation in Supply System Management, Sustainability Innovation and ICT Supply Chain Innovation. If these main challenges in innovation are dealt with effectively then organizations will be able to manage their innovations across supply chains effectively.