Supply chain processes innovative products

Part of the art in dehning activities for activity-based costing and other applications is to balance the potential for improvement with the materiality of the activity. For example, if this is a new supply chain, then partners might want to focus on the activities most likely to put the venture at risk. This can involve a technology innovation in supply chain processes or products, or assumptions about market penetration and the channels needed to maximize sales. 

In our view, an important decision in this process is whether the product is functional or innovative. Functional products require different supply chains than innovative products. Section 5.1.3 discussed the difference between the two. If the product is innovative, the planning approach needs to estimate the market mediation costs. These are the costs that arise from mismatches between supply and demand. For example, shortages cause loss of contribution from sales — one type of market mediation cost. Overstocking can lead to product markdowns — another such cost. 

AMR argues that one of the successful factors of the AMR TOP 25 Supply Chain companies is excellence in innovation. Being quick to market with profitable products that are in high demand is a core competence of a DDSN strategy. For DDSN leaders, innovation excellence is a key to success, and it is infused into all supply chain processes. AMR research shows that 75% of new products fail, and 42% of companies lack a common set of internal standards for managing New Product Development and Introduction process. 

The model in Figure 3.1 shows innovation as the engine of change, affecting both products and the processes needed to produce them. An innovation in product technology, such as nanotechnology or improvements in diesel engines for automobiles, will act on current supply chains for related products and services. 

Most managers may also assume that every product innovation must fit existing supply chain processes. Inertia, existing hard-to-change information systems, the required behavior change, and functional barriers make it difficult to alter those processes. Everyone is used to how things work now plus expensive investments in systems, staff, and facilities may be needed to make needed changes for the new product. 

The economic framework conditions for hazardous substance substitution have thus also changed considerably in the course of the past twenty years. Many commodities are produced today in globally organised supply chains the origin, quality and application conditions of process chemicals and product components is complex. Developing appropriate management systems for product quality and product safety requires considerable organisational innovation by the companies involved. 

The reuse of products in secondary markets also entails some challenges for manufactorers, retailers, and even researchers. The availability of used products with lower prices in the market that compete directly with new products, the pricing of those new products, and frequency to upgrade ver-simis of a product are some of the topics that are the subject of concern for manufacturers. When e-commerce is the only source of contact with the customers, the customer service is totally dependent on the supply chain logistics. Thus, the continued process improvement, development of innovative software applications, and cost reductions become critical to compete in the current aggressive internet markets. Issues such as the impact of secondary markets in the supply chain, the impact on the strategy of original manufacturers, and retailers are topics of research interest. 

It is significant to note that each of these three companies pioneered both product and process innovation over the course of the history of supply chain management. They spawned new business models. For Apple to be successful, it required the definition of ilUnes. Dell defined a make-to-order online business model. P G s work on customer-driven supply chains drove market share. 

The company has championed process innovation. In 2003, P G introduced the term customer-driven supply chain to the market. It also pioneered top-to-top meetings with retailers, championed barcode product adoption, and automated store checkout in the late 1980s. In 2002, it built one of the first demand signal repositories to use channel data to sense demand. 

The quantitative assessment of the inherent safety performance in altemative hydrogen distribution chains was performed. An innovative method, based on the evaluation of a set of KPIs, was used in the analysis. The method evaluates the severity of potential accidents and the recorded safety scores of process equipment. The method is made suitable for the analysis of production and supply chains, including the assessment of transport units and vehicles. Three main issues emerged from the analysis of the reference hydrogen chain i) the importance of reducing the severity of... 

After determining the nature of the product demand (e.g., functional and iimovative products) and the supply chain priorities (e.g., responsive or efficient), managers can employ a matrix to formulate the ideal supply chain strategy. Fisher proposes to plot the nature of the demand for each of the product families and its supply chain priorities, as illustrated in Fig. 4.31, in order to allow identify whether the process used for supplying products is well matched to the product type, which means, an efficient process for functional products and a responsive process for innovative products. 

Supply chain strategy is defined aligning product categories and supply chain functions as follow Physical (efficient process) for functional products and Market (responsiveness) for innovative products. 

Table 3.1 presents a working definition of each driver. Figure 3.1 models the connections among them. Innovation, in Figure 3.1, pushes the whole process forward, so we place it first in our sequence. Innovation is external to the supply chain system. It pushes supply chain participants to continuously improve their chains. The three drivers — Extended Product Design, Globalization, and Flexibility Imperative — shape the direction, scope, and form of products and services and the supply chains needed to deliver them. 

Another driver arises from process innovation. Even without new products or markets, few can stand still in the face of competition. This is a powerful driver for improving supply chains. As process innovations improve cost and service, products become more affordable, increasing the ability of potential customers to buy. 

Figure 3.1 illustrates how product or process innovations feed the next SCM driver, extended product design. We introduced the idea behind extended products in Chapter 1. Our supply chain definition, also in Chapter 1, describes the supply chain as physical, information, financial, and knowledge flows for moving products and services from suppliers to end-users. This includes a lot of services, which accompany their base, or physical, products. 

In an ideal world, supply chain managers methodically monitor the product and process innovations coming their way. They then design a supply chain to incorporate each innovation. Or, in a slightly less ideal situation, the managers slot each innovation into the best-fit supply chain already in place in the company. 

Discovery-driven planning will be particularly useful in avoiding mismatches between customer demand and supply chain design. For any one company, a new product or delivery process can fundamentally alter the economics of present supply chains. It might have the effect of rendering them useless for the innovation. It would be an error to assume a new product should ride to market on the back of a legacy supply chain that will not work. Discovery-driven planning is a way to avoid the trap. 

Gate 2. Second screen Forecast product margins Decide whether innovative or functional product List requirements for a new supply chain if it is needed Identify supply chain partners to be involved in development process... 

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