Why One-Size-Fits-All Supply Chains Frustrate Innovation

This is an excerpt of the original article. It was written for the March-April 2015 edition of Supply Chain Management Review. The full article is available to current subscribers.

March-April 2015

Anyone who’s ever bought a house knows the realtor’s motto: Location, location,location. It’s the most important factor in determining the value of a property. Based on the press releases that come across my desk these days, supply chain’s motto is: Innovate,innovate, innovate. This issue includes approaches to inventory optimization, contract management with third party logistics providers and contract manufacturers, and the Goldilocks approach to supply management—an innovative concept aimed at keeping your procurement department from running too hot or too cold.

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While it is true that supply chains are key for sustained innovation in a company, it is also true that all innovations are not the same. A given supply chain can work perfectly for developing and launching a given innovative product, and yet—if applied like a cookie-cutter—the very same supply chain can spell disaster for a different innovative endeavor.

To illustrate this pitfall, let’s look at the fictionalized predicament of a company that we will call PixelArtist when it tried to expand into the wearable electronics market. As a first-rate innovator with a legendary supply chain, the success of PixelArtist’s expansion seemed all but guaranteed. But the company stumbled when it tried to apply an established supply chain strategy to the new venture.

Course Correction
Back in the late 1980s, when cathode ray tubes (CRT) were the dominant technology, two Caltech dropouts founded PixelArtist, Silicon Valley’s pioneer of liquid crystal displays (LCD) for computer monitors and televisions screens. After more than a decade of slow growth, the company’s market share skyrocketed at the turn of the century as old CRTs were quickly replaced by LCDs. Most of the flat screen displays sold in North America and Europe today are designed, manufactured, or built around IP from PixelArtist.

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