Where does innovation come from?

The growing talk of innovation within the supply chain over the last few years has had a positive effect on the logistics industry. Not only has it led logistics providers to begin embracing technology and new business models with the same relish as other more forward-thinking industries, it’s also changed the perspective of many supply chain leaders.

It’s not hard to see why innovation is such a hot topic, either. Step down from the strategic level and innovations can be seen to variously improve efficiency, reduce risk, drive cost effectiveness, enhance profitability and position logistics providers to tackle today’s challenges whilst looking ahead to tomorrow’s. Indeed, the potential rewards to be found from innovating in logistics and supply chains has seen many from outside the industry seeking to enter and claim their share of the spoils, including Google which was recently awarded a patent for an ‘autonomous delivery platform’ (essentially a self-driving truck with parcel lockers on the back), for example.  

And where Google goes, others in Silicon Valley are sure to follow. Funding for transportation-focussed start-ups doubled from $7bn in 2014 to $14bn in 2015, according to Volvo Group Venture Capital. Logistics start-ups have emerged promising to disrupt, unbundle and revolutionise the industry with services ranging from marketplaces to Big Data platforms to on-demand shipping. The opportunity to solve problems and overcome challenges with solutions built to scale rapidly has become a well-funded and rapidly growing source of innovation in many industries. Maybe now it’s logistics’ turn.  

But innovation doesn’t have to be VC backed to have a profound effect on an industry. Nor is there any reason why the innovations which start out in developed nations will eventually make their way to emerging markets. For years, necessity has driven innovation, and as the sophistication of emerging economies grow and their logistics need evolve, there is no logical argument to say it won’t be players in these markets which set the example of how to adapt and thrive, and show those in developed markets the type of innovative thinking and operational nous needed to succeed. This has happened in other industries, including mobile banking and financial services, where Kenya has become a well-known leader in mobile money technology, and in post-war Mogadishu, Somalia, where mobile cash transfer services have sprung up as a safer and more efficient alternative to paper currency.  

Innovation is and will remain driven by the need to improve and the necessity to overcome, and its origins can be anywhere. Simply exporting successful systems from place to place won’t work. Innovation needs to be appropriate to context if it is to overcome the problem it’s there to solve, and developing a deep and nuanced understanding of the challenges their clients are facing is one of the key barriers logistics providers must overcome if they are to offer genuine value.

As rapid development has taken place and new challenges have presented themselves, emerging markets have become hubs of innovation with lessons to teach and solutions to offer. These will be discussed at Ti’s Future of Logistics in London, UK, on June 7th and 8th. To find out more and register your interest, please click here.

Source: Transport Intelligence, 4th May 2016

Author: Nick Bailey