INNOVATION IN

SUPPLY CHAIN
AND LOGISTICS
MANAGEMENT
CHAPTER 1: Key Issue in Innovation
Management

COURSE LEARNING OUTCOMES

At the end of the lesson, students should be able to :

1. Explain the importance of innovation in the organizations.
2. Identify the skills to manage innovation at the operational and strategic levels.
3. Describe organizations can be used innovation to improve their processes or to
differentiate their products and services.
4. Integrate the management of market, technological and organizational change to
improve the competitiveness of firms and effectiveness of the organizations.

TOPIC LEARNING OUTCOMES

At the end of the lesson, students should be able to :

1. Define innovation and explain the competitive advantage.
2. Describe the importance of incremental innovation.
3. Integrate innovation as a knowledge-based process.
4. Determine the innovation is not easy….. but it is imperative.
5. Describe the new challenges, same old responses.
 • A process of taking new ideas
through to satisfied customers.
• The conversion of new knowledge

What is into products and services.

• In business – when ideas are
applied by the company in order to

Innovation?
satisfy the needs and expectation
of the customers
• In social – helps create new
methods for alliance creation, joint
venturing, flexible hours and
creation of buyer’s purchasing
POWER

• Innovation can be divided into 2

What is
broad categories
1. Evolutionary Innovation
(continuous or dynamic
evolutionary innovations) –

innovation? brought about by many

incremental advances in
technology or process
2. Revolutionary innovation
(discontinuous innovations) –
disruptive and new

• Innovations differ from invention –

innovation refer to the use of a
better, novel idea or method,

What is
whereas invention refers more to
directly to the creation of the idea
or methods itself

innovation?
• Innovations differ from
improvement – innovation refer to
the notion of doing something
different rather than doing the
same thing better
 Innovation and
Competitive Advantage

• Competitive advantage can come from size, possession of assets, outlooks and
functions of the products of process
• Advantage to organization which they can mobilize knowledge and technological
skills

• Strong correlation between

market performance and new
products.

Innovation and • New products – capture and

retain market shares, increase
profitability

Competitive • Mature/established products –

not simply lowering the prices,

Advantage
instead growth come from
other factor: design,
customization & quality
• Environment-friendly: ever
changing legislation on the
environment friendly products

• Offering better
services, being able to
do what others can not

Innovation and do.

• Example: Citibank was

Competitive the first bank offer

ATM services

Advantage • Example: Toyota

production equivalent
to Honda and Nissan,
led to performance
advantages.
 Strategic Advantage Through Innovations

Mechanism Strategic Advantage

Novelty in products or Offering something no one else can
service offering
Novelty in process Offering it in ways others cannot match; faster, low cost,
more customized
Complexity Offering something which others find it difficult to master
Legal protection of Offering something which others cannot do unless they pay a
intellectual property license or other fee
Robust/platform Offering something which provides the platform on which
design other variations and generations can be built
Transferring across Recombining established elements for different markets
different application
contexts

Strategic Advantage Through Innovation

Mechanism Strategic Advantage
Timing First-mover: being first can be worth significant market share
in new product fields

First-follower: being first means you encounter many

unexpected teething problems, and it makes better sense to
watch someone else make the early mistakes and move fast
into follow-up product
Rewriting the rules Offering something which represents a completely new
product/process concept – a different way of doing things –
makes the old one redundant
Add/extend range of Move basis of competition: e.g. from price of product to price
competitive factor and quality
Others Innovation is all about finding new ways to do things and to
obtain strategic advantage – there will be more room for new
methods

Radical vs Incremental Innovation?

 The Importance of Incremental Innovation

฀ It gives companies an edge in penetrating markets faster and provides a better

connection to developing markets, which can lead to bigger opportunities
฀ Help develop original concepts while giving the innovator a proactive, confident
attitude to take risks and get things done.
฀ When a company has an innovative culture, it'll grow easily, even though the
creative process isn't always simple.

(Theodore Henderson, Forbes, 2017)

Innovation as a
• Innovation – creating new
possibilities through
combining different sets of

Knowledge-
knowledge.
• Knowledge: may already exists
based on experience OR result

based Process form a process of search.

• The process weave these
knowledge take place under
highly uncertain conditions.

Issue for Managing Innovation

 • Zone 1: Steady-state improvement to products or processes and uses
knowledge accumulated around core components.
• Zone 2: Significant change but overall architecture remains the same. New
knowledge needed but within an established and clear framework of sources
and users.
• Zone 3: Discontinuous innovation. The end of state nor the ways in which it can
be achieved are known about. Whole game rule changes. There is scope of new
entrants.
• Zone 4: New combinations emerge possibly around the needs of different group
of users. May use the existing knowledge and recombine it in different ways.

• The history littered

Innovation is with example of

apparently good ideas
which failed…..

not Easy… • Example Case 1: 1952

Ford Edsel case.
• Example Case 2:

• Risky and uncertainty

hampered people to
innovate
• The question is not …but it is Imperative
whether to innovate or not,
but rather how to do so.
• Suggestion: 4 phases
(Crucial)
making up the innovation
process
 1. Scan and search their
environment (internal &
external) to pickup and process
potential innovation signals.

4 Phases
2. Strategically select from this
set of potential triggers for
innovation.

Making Up the 3. Resource the option. Providing

(R&D or technology transfers)
the knowledge resources to

Innovation exploit it.

4. Implement the innovation.

Process
Grow the idea through multiple
stages to the final product
launch.
5. Optional – reflect upon the
previous phases and review
experience of success and
failure.

New  Powerful forces shaping the

competitive environment:

Challenges,
1. Globalization of markets and
technology supply
2. Emergence of technologies

Same Old
enabling a “virtual” mode of
working
3. The growing concern about

Responses?
sustainability
4. The rise of networking as a
business model

“when something is
important enough, you do
it even if the odds are not
in your favor” – Elon
Musk, The greatest mind
in 21st century
 INNOVATION IN SUPPLY
CHAIN AND LOGISTICS
MANAGEMENT
Chapter 2: Types of Innovation

COURSE LEARNING OUTCOMES

At the end of the lesson, students should be able to :
1. Explain the importance of innovation in the organizations.
2. Identify the skills to manage innovation at the operational and strategic levels.
3. Describe organizations can be used innovation to improve their processes or to differentiate
their products and services.
4. Integrate the management of market, technological and organizational change to improve
the competitiveness of firms and effectiveness of the organizations.

TOPIC LEARNING OUTCOMES

At the end of the lesson, students should be able to :
1. Discuss the making sense of innovation.
2. Determine the forms of innovation.
3. List and explain the types of innovation.
4. Describe the value of an innovation typology.
 ◦ Innovation comes in a variety of
shapes and sizes and is used by
different people to mean different
things – making sense of this
subject is not easy task!
Making Sense ◦ Two kinds of categorization are
of Innovation attempted.
◦ First centers on different forms of
innovation.
◦ Second is based on the degree of
novelty associated with the
innovation

Form of Innovation

Products/Services Processes Position Paradigm

◦ Definition: Changes in the things

(products/services) which an
organization offers.
Form of ◦ Most obvious application is
Innovation Consumer Products
(Products/ ◦ Innovation also involved in Industrial
Services) Products
◦ Example: USB flash drive patented
by M-Systems in 2000.
 ◦ Definition: Changes in the context in
which the products/services are
introduced
Form of ◦ Repositioning the perception of an
established product or process in a
Innovation particular user context
(Position) ◦ Example: Johnson & Johnson
change the product positioning not
just for babies but also to adult.

◦ Definition: Changes in the ways in

which things (products/ services) are
created and delivered
Form of ◦ Includes ones that have a dramatic
impact on society as a whole,
innovation abound.
(Process) ◦ Example: Proton uses ‘hot stamping’
method to create body parts which
increase the body strength, safety
features and faster car production.

◦ Definition: Changes in the underlying

mental models which frame what the
organization does.
◦ Major shifts in thinking cause change
Form of in the organization
innovation ◦ It concerns the change in the way
something is done in the
(Paradigm) organization.
◦ Example: During the time of the
expensive mainframe, Bill Gates and
others aimed to provide a home
computer for everyone
 TYPE OF
INNOVATIONS
◦ Incremental
◦ Radical

 The most common type of innovation

 Definition: modification, refinement,
simplification, consolidation, and

Incremental enhancement of existing products,

processes, services and production and
innovation distribution activities.
 Example: iPhone generation throughout its
production.
 RADICAL INNOVATION

 Introducing new products or services that

develop into major new businesses or spawn
new industries, or that cause significant change
in a whole industry and tend to create new
values.
 Focuses on long-term impact and may involve
displacing current products, altering the
relationship between customers and suppliers,
and creating completely new product categories.
 Example: Jet-powered engine aircraft
revolutionized on how airline want to fly the
passenger. Electric car is being developed to
replace internal combustion engine car

The value of an innovation

typology
◦ Categorization, helps to show that innovations are not
homogeneous.
◦ Categorizing innovations in this way can also help to show that the
influence of technology and technological change can vary
considerably.
◦ Distinguishing four different types of innovation can also help to
explain why the responses of firms to the introduction of new
technologies will often vary.
◦ This typology can also help in understanding the evolutionary
process associated with technological change. 

INNOVATION IN SUPPLY
CHAIN AND LOGISTICS Chapter 3: Innovation as a
Management Process
MANAGEMENT
 COURSE LEARNING OUTCOMES
At the end of the lesson, students should be able to :
1. Explain the importance of innovation in the organizations.
2. Identify the skills to manage innovation at the operational and strategic levels.
3. Describe organizations can be used innovation to improve their processes or to
differentiate their products and services.
4. Integrate the management of market, technological and organizational change to
improve the competitiveness of firms and effectiveness of the organizations.

TOPIC LEARNING OUTCOMES

At the end of the lesson, students should be able to :
1. Identify innovation as a core business process.
2. Integrate the evolving models of the process.
3. Describe the consequences of partial understanding of the innovation process.
4. Explain how we can we manage innovation?
5. Identify successful innovation and successful innovators.
6. Describe what do we know about successful innovation management?

INNOVATION AS A CORE BUSINESS

PROCESS
• Thomas Alva Edison, the most successful innovator realized that innovation is more than simply coming up
with good ideas, it is the process of growing them into practical use.
• If we only understand PART of the innovation process, most likely we behave towards managing it will be
PARTIALLY helpful.
• The underlying process as common to all firms and at its heart the process is as below
 INNOVATION AS A CORE BUSINESS PROCESS
PROCESS DESCRIPTION
Searching Scanning the environment (internal & external), processing relevant signals,
threats and opportunities
Selecting Deciding (based on the strategic view of how the enterprise can best develop)
which of these signal to respond to
Implementing Translating the potential in the trigger idea into something new and launching it
in an internal or external market. This process require multiple attention:
1. Acquiring the knowledge resources to enable the innovation (creating
something new through R & D, market research, new knowledge through
technology transfer, strategic alliance).
2. Executing the project under conditions of uncertainty which require
extensive problem solving
3. Launching the innovation and manage the process of initial adoption.
4. Sustaining adoption and use in the long term or revisiting the original idea
and modifying it – re-innovation.
Learning Learn from progressing through this cycle so that knowledge base can be built,
and the ways of the process is being managed can be improved

 Variations on a Theme
INNOVATIONS  Size matters
AS A CORE  National, Regional, Local Context
BUSINESS
 Network & Systems
PROCESS –
THE ENABLERS  Project-based Organizations
 Do Better/Do Different

VARIATIONS ON A THEME
 Innovations vary widely in scale, nature, degree of novelty and so-on – and so do innovating
organizations.
 Developing new consumer products involve picking up signals about potential needs and new
technological possibilities, develop strategic concepts, come up with options and work those
products into launching to the new market.
 Same goes to installing new technology of process. It involves the same patterns as
developing new consumer products.
 Services – may different since it is less tangible – however the same model applies as above
 Smaller organizations posses a range of advantages – agility, rapid decision-making – but
equally limitations E.g. resource constraints.
 It means that developing effective innovation management will depend on creating
structures and behaviors.
 To be clear, small organizations differ widely – small firms account for 95% or more of the
total world business, e.g hairdressing, high-tech start-up.
 Often, small/medium sized enterprise (SME) failed to feature in surveys of R&D and other
formal indicator of innovation activity – but, they tend to engage in other innovation activity
such as process improvement or customer service.

SIZE MATTERS

NATIONAL, REGIONAL,

LOCAL CONTEXT
The emergence of ‘innovation system’ due to wider context
within which innovation takes place.
 These include government, financial, educational, labour
market, science and technology infrastructure etc –
represents the context which organizations operate their
innovation process.
 It can be local, regional or national – which how they
evolved and operate are varied.

It is increasingly a multiplayer game in which organizations of different shapes

and sizes work together in networks
It may be regional clusters or supply chains or product development or
strategic alliances which bring competitors and customers into a temporary
collaboration
One of the key implications of this multiplayer – the need to shift our way of
thinking from a single enterprise to more systems view
Such a system view needs to include other player – customers and suppliers,
competing firms, collaborators

NETWORKS AND
SYSTEMS
 PROJECT-BASED
ORGANIZATIONS
For many enterprise – a real challenge is moving to project-based
organizations – specific project (build airport or hospital) or
managing the design and build around complex product systems
(flight simulators or jet engine)
This kind of organizations involve a systems which bring multiple
players from different elements into one single ‘cell’.
Usually involving different firms, long timescales and high level
technological risks.

The first term coined is ‘doing what we do but better’ – a ‘steady state’ in which
innovation happened, but within a defined envelope around.
It contrast with ‘do different’ in which the game rule of innovation have shifted –
due to major technological, market or political shifts for example – managing it is
more a process of exploration and co-evolution under conditions of high
uncertainty.
The generic model remain the same. They need to search for trigger signal, make a
strategic choices, implementing it and monitor it.
The only difference is that the ‘do better’ has much more flexibility.

DO BETTER/DO
DIFFERENT
WIDE RANGE OF INFLUENCES -
ORGANIZATION NEED TO CONFIGURE THEIR VERSION OF
INNOVATION PROCESS
CONTEXT MODIFIERS TO THE BASIC PROCESS
Sector Different sectors have different priorities and characteristics (scale-intensive,
science-intensive)
Size Small firms differ in terms of access to resources
National systems of Different countries have more or less supportive – institutions, policies
innovation
Life cycle (of tech, Different stages in life-cycle emphasize different aspect of innovation – new
industry) technology industries vs mature established firms
Degree of novelty ‘More of the same’ improvement innovation requires different approaches to
continuous vs organizations and management to more radical forms.
discontinuous
innovation
Role played by external Some sectors (utilities, telecommunications and some public services) are
agencies such as heavily influenced by external regimes in which shape the rate and direction of
regulators innovative activity.
 EVOLVING MODELS OF THE
PROCESS
 It is a great importance for us to view innovation as a process as we try to understanding shapes
the way in which we try and manage it.
 Early models of innovation saw it as a linear sequence of functional activities.

 There may be ‘push’ (technology push as new opportunities arise as it found its way into market)
and ‘pull’ (when the market signalled something new is needed which drew the problem into the
market)
 A successful innovation require interaction between both. To put into simple analogy, a pair of
scissors, without both blade, it would be difficult to cut.
 Most innovation is messy – false starts, recycling between stages, dead ends, jumps out of
sequence.
 Andrew Van de Ven and colleagues explored the limitations of simple models of the process and
derived some important modifiers

EVOLVING MODELS OF THE

PROCESS
 Andrew Van de Ven modifiers

 Shocks trigger innovations – change happens when people or organizations reach a threshold of
opportunity or dissatisfaction.
 Ideas proliferate – after starting out in a single direction, the process proliferates into multiple,
divergent progressions
 Setbacks frequently arise, plans are over-optimistic, commitments escalate, mistakes accumulate
and vicious cycle developed.
 Restructuring of the innovating unit often occurs through external intervention, personnel changes or
other unexpected events.
 Top management plays a key role in sponsoring – but also in criticizing and shaping – innovation.

 Success criteria shift over time, differ between groups and make innovation a political process

 Innovation involves learning, but many of its outcome are due to other events which occur as the
innovation develops – making learning often ‘superstitious’ in nature.

EVOLVING MODELS OF
THE PROCESS
 Roy Rothwell suggested that our appreciation of the nature of the innovation
process has been evolved, from simple linear to complex interactive models.
 His ‘fifth-generation innovation’ sees innovation as a multi-actor process –
requires high level of integrations

GENERATION KEY FEATURES

First / Second Simple linear models – need pull, technology push
Third Coupling model, recognizing interaction between different elements and
feedback loops between them
Fourth Parallel model, integration within the company, upstream with key suppliers
and downstream with demanding and active customers, emphasis on
linkages and alliance
Fifth Systems integration and extensive networking, flexible and customized
response, continuous innovation
 CONSEQUENCES OF PARTIAL UNDERSTANDING OF
THE INNOVATION PROCESS
Example of partial thinking:
1. Seeing innovation as a linear ‘technology push’ process.
2. Seeing innovation simply in terms of major ‘breakthrough’ – ignoring the
significant potential of incremental innovation.
3. Seeing innovation as a single isolated change rather than as part of a wider
system
4. Seeing innovation as a product or process only, without recognizing the
interrelationship between the two.

Hence, it will create problems…….

PROBLEMS OF PARTIAL VIEWS OF

INNOVATION
If innovation is only seen as…. ….the result can be
Strong R&D capability Technology which fails to meet user needs and may not be
accepted
The province of specialists Lack of involvement of others, and lack of in the R&D laboratory
key knowledge and experience input from other perspectives
Understanding and meeting Lack of technical progression, leading to inability to gain
customers needs competitive edge
Advances along the Producing products or services which market doesn’t want or
technology frontier designing processes which do not meet the needs of the user
The province of large firms Weak small firms with too high a dependence on large customers.

Disruptive innovation as apparently insignificant small players

seize new technical or market opportunities
Only about ‘breakthrough’ Neglect of the potential of incremental innovation. Also an inability
changes to secure and reinforce the gains from radical change because the
incremental performance ratchet is not working well.

PROBLEMS OF PARTIAL VIEWS OF

INNOVATION
If innovation is only seen as… …the result can be
Only about strategically May miss out on lucky ‘accidents’ which open up new possibilities
targeted projects
Only associated with key Failure to utilize the creativity of the remainder of employees, and
individuals to secure their inputs and perspectives to improve innovation
Only internally generated The ‘not invented here’ effect, where good ideas from outside are
resisted or rejected
Only externally generated Innovation becomes simply a matter of filling a shopping list of
needs from outside and there is little internal learning or
development of technological competence
Only concerning single firms Excludes the possibility of various forms of interorganizational
networking to create new products, streamline shared processes
  Certainly no easy recipe on how we
manage the innovation – despite
uncertain and random nature of
innovation process – it is possible to find
success
CAN WE
MANAGE  Routines are what makes one
organization different from another – but
INNOVATION? simply copying other routines will not do.
 Core abilities in managing innovation is
needed

BASIC CONTRIBUTING ROUTINES

ABILITY
Recognizing Searching the environment for technical and
economic issue clues to trigger the change process
Aligning Ensuring a good fit between the overall business
strategy and the proposed change
Acquiring Recognizing the limitations of the company’s own
technology base and being able to connect to external CORE
sources.
Transferring technology from various sources ABILITIES
Generating Having the ability to create some aspects of
technology in-house (R&D, engineering) IN
Choosing Explore and select the most suitable response to the
environmental triggers MANAGING
Executing Managing development projects for new products or
processes from initial idea to final launch
INNOVATIO
Implementing Managing the introduction of change (technical and
otherwise) – in the organization to ensure acceptance
N
and effective use of innovation
Learning Having the ability to evaluate and reflect upon the
innovation process and identify lessons for
improvement in the management routines
Developing Embedding effective routines in place – in structures,
the processes, underlying behaviors. etc.
organization

SUCCESSFUL
INNOVATION
 The components of sustainable innovations:
1. Vision and strategy for innovation
2. Culture and supporting innovation
3. Processes, practices, and systems supporting innovation
4. Top management team leading innovation
5. Cross-functional teams mapping innovation road
6. Empowered employees driving innovation
 SUCCESS  What do successful innovator have?
1. Sensing opportunity

FUL 2. Proper training and education

3. Proactivity and persistence

INNOVAT
4. Prudence (cautiousness)
5. Emotional intelligence

OR (Pere Rosales, Innovative Talent 2018)

WHAT DO WE KNOW ABOUT

SUCCESSFUL INNOVATION
MANAGEMENT?
 2 key points
 Innovation is a process, not a single event, needs to be managed as such
 The influences on the process can be manipulated to affect the outcome – thus can be
managed
 Research highlights the concept of success routines – learned over time and
experience
 Critical point – innovation needs managing in an integrated way – not just manage in
some areas

CROSS FUNCTIONAL TEAMS

LEADING INNOVATION

Culture Methodologies Infrastructure Work Practice

WHAT DO WE KNOW ABOUT
SUCCESSFUL INNOVATION
MANAGEMENT?
 2 fundamentals views on what it takes to manage innovation
1. Innovation in accordance with the corporate venture strategy can be nurtured in special and
highly creative environments; these environments are most easily created in small
companies and corporate spin-outs
2. Any company, however big or cumbersome, can itself become more innovative by changing
its management structures, systems and practices.

INNOVATION IN
SUPPLY CHAIN
AND LOGISTICS
MANAGEMENT
Chapter 4: Developing The
Framework For An Innovation
Strategy

COURSE LEARNING OUTCOMES

At the end of the lesson, students should be able to :
1. Explain the importance of innovation in the organizations.
2. Identify the skills to manage innovation at the operational and
strategic levels.
3. Describe organizations can be used innovation to improve their
processes or to differentiate their products and services.
4. Integrate the management of market, technological and
organizational change to improve the competitiveness of firms and
effectiveness of the organizations.
 TOPIC LEARNING OUTCOMES
At the end of the lesson, students should be able to :
1. Identify the ‘Rationalist’ or ‘Incrementalist’ strategies for
innovation?
2. Identify the technology and competitive analysis.
3. Describe the assessment of Porter’s Framework.
4. Explain the dynamic capabilities of firms.

‘Rationalist’ or ‘Incrementalist’ Strategies for

Innovation?

Notions of corporate strategy first emerged in the 1960s.

The two most influential strategy – rationalist and incrementalist.

The debate between ‘rational’ and ‘increment’ strategy is the central

importance to the mobilization of technology and to the purpose of
innovation strategy.

Rationalist Strategy
• Heavily influenced by military experience (in principle)
• Consists of the following steps:
1. Describe, understand and analyze the environment
2. Determine a course of action in the light of the analysis
3. Carry out the decided course of action
• A linear model: Appraise, determine and act
 Rationalist Strategy
• The corporate equivalent is SWOT; analysis of corporate strength and
weakness in the light of external opportunities and threat.
• Intended to help the firm to:
• Be conscious of trends in the competitive environment
• Prepare for a changing future
• Ensure that sufficient attention is focused on the longer term, given the
pressures to concentrate on the day to day
• Ensure coherence in objectives and actions in large, functionally specialized
and geographically dispersed organizations

Rationalist Strategy
• The term ‘military’ can be misleading since the corporate objectives is to
satisfy customers better than competition – not mobilize resources to
destroy enemy.
• Plus, the managers have difficulties in appraising accurately the real
situation for 2 reasons:
1. Their external environment is complex – competitors, customers, regulators etc.;
and so fast changing, including technical, economic, social and political
change.
2. Managers in large firms disagree on their firms’ strength and weakness in part
due to their knowledge of what goes on inside the firm is imperfect.

Incrementalist Strategy
• Explicitly recognize that the firm has only very imperfect knowledge of its
environment, of its own strength and weakness, the likely rates and future
direction change.
• The most efficient procedure to adapts in light of new information and
understanding:
1. Make deliberate steps (or changes) towards stated objective
2. Measure and evaluate the effects of the steps (changes)
3. Adjust (if necessary) the objective and decide on the next step (change)
 Incrementalist Strategy
• This sequence of behavior goes by many name – incrementalism,
trial and error. ‘suck it and see’, muddling through and learning.
When undertaken deliberately and based on strong background
knowledge, it has more respectable veneer such as:
• Symptoms – diagnosis – treatment – diagnosis – adjust treatment – cure
(for medical doctors dealing with patients)
• Design – development – test – adjust design – retest – operate (for
engineers making product and process innovation)

Implication for Management

• The first concern the practice of corporate strategy, which should seen as
a form of corporate learning, from analysis and experience, how to cope
more effectively with complexity and change.
• The implication for the strategy formation process:
Given uncertainty, explore the implications of a range of possible future trends
Ensure broad participation and informal channels of communication
Encourage the use of multiple sources of information, debate and skepticism
Expect change strategies in the light of new (and often unexpected) evidence

Implication for Management

• The second implication – successful management practice is never fully
reproducible.
• Useful learning from the experience and analysis of others necessarily
requires:
1. A critical reading of the evidence underlying any claims to have identified the
factors associated with management success
2. A careful comparison of the context of successful management practice, with
the context of the firm, industry, technology and country in which the practice
might be reused.
Innovation ‘Leadership’ vs ‘Followership’

• Innovation Leadership – where firms aim at being first to market,

based on technological leadership. Requires a strong corporate
commitment to creativity and risk taking, with close linkages both to
major sources of relevant new knowledge, and to the needs and
responses of customers
• Innovation Followership – where firms aim at being late to market,
based on imitating (learning) from the experience of technological
leaders. Requires a strong commitment to competitor analysis and
intelligence, to reverse engineer.

Technology and Competitive Analysis

Technology and
Competitive
Analysis
 TOWS Analysis
• A variant of a SWOT analysis and is an acronym for Threats, Opportunities,
Weaknesses and Strengths.
• A key criticism of a SWOT analysis is that it doesn’t show the relationships
between the different factors and categories.
• A TOWS analysis will look to match internal factors to external factors to
help identify relevant strategic options that an organization could pursue.
• It can help an organisation to see how it can take advantage of
opportunities, reduce threats, overcome weaknesses and exploit any
strengths

TOWS Analysis

The ‘Five Forces’ Driving Industry Competition Porter Framework

THE FIVE FORCES DESCRIPTION

Threat of new entrants New competition can affects an industry almost overnight, as when Kraft
Macaroni & Cheese is threatened from the low end by store brands and from the
high end by brands such as Annie’ Creamy Macaroni and Cheese

Bargaining power of Suppliers When there is little number of supplier compared to buyers. Some companies
can easily switch suppliers, but cannot, such as surfboard makers relying on
Clark Foam, which supplied 90% of the foam cores used to make custom
surfboard
Bargaining power of Buyers When the number of buyers is more than suppliers. Customers who buy a lot of
products or services from an organization have more bargaining power than
those who don’t.

Threats of Substitute An organization can use the internet to switch to other products or services when
Products or Services circumstances threaten their usual channels
Rivalry among Competitors The preceding four forces produce rivalry among competitors as is happening
among makers and sellers of portable electronics
 Generic Market Strategies for Firms
• According to Porter, the firm must choose among four generic
market strategies
Overall Cost Leadership

Product Differentiation

Cost Focus

Differentiation Focus

Assessment of Porter’s Framework

• Porter’s framework shortcoming in its treatment of corporate
technology & organization – underestimate the constraints:

Firm Size influences choice between ‘broad front’ and ‘focused’

technological strategies

Established product base influence the range of technological fields

and industrial fields (which hope to compete in future)

Nature of its products and customers will strongly influence its degree
of choice between quality and cost.

Assessment of Porter’s Framework

• In addition, technological opportunities are always emerging from
advances in knowledge, so that:

Firms and technologies do not fit tidily into preordained and static industrial
structures - particularly in chemical and electrical-electronic industries

Technological advances – increase opportunities for profitable innovation

Firms do not become stuck in the middle as Porter predicted

 Assessment of Porter’s Framework
• There’s a little place in Porter’s framework for the problems of
implementing a strategy:
1. Large and specialized organizations must be capable of learning and
changing in response to new and often unforeseen opportunities and
threats – does not happen automatically but must be consciously
managed.
2. Porter’s framework elements have been contradicted as a result of
organizational and related technological changes.

The Dynamic Capabilities of Firms

• The source of competitive advantage, dynamic capabilities,
emphasizes 2 aspects:
1. Shifting character of the environment
2. Key role of strategic management – adapting, integrating, and re-
configuring internal and external organizational skills, resources and
functional competencies towards a changing environment.

INNOVATION IN
SUPPLY CHAIN
AND LOGISTICS
MANAGEMENT
Chapter 5: National
Systems of Innovation
 COURSE LEARNING OUTCOMES
At the end of the lesson, students should be able to :
1. Explain the importance of innovation in the organizations.
2. Identify the skills to manage innovation at the operational and
strategic levels.
3. Describe organizations can be used innovation to improve their
processes or to differentiate their products and services.
4. Integrate the management of market, technological and
organizational change to improve the competitiveness of firms and
effectiveness of the organizations.

TOPIC LEARNING OUTCOMES

At the end of the lesson, students should be able to :
1. Identify the public nature of innovation.
2. Describe the national innovation system.
3. Explain the governance.
4. Explain the institutions.

The Public Nature of Innovation

Innovation tends to Prime example of There is an The outputs Then it begins to

be portrayed as a innovator- important public become public generate new jobs
private activity entrepreneur: dimension to when a successful and new firms,
conducted by James Dyson innovation innovation is higher income and
individuals. (bagless vacuum because many of diffused through greater prosperity
cleaner) and Ron the inputs and the economy as well as
Hickman (the outputs of increment in tax
Workmate® innovation will revenues.
workbench). gives benefits
towards the public
 The Public Nature of Innovation

These inputs include education and training, knowledge and intellectual property rights. These
assets tend to have ‘public’ properties – Aufah (2003)

Overall performance of an economy depends not on how specific institutions (firms, research
institutes, universities)perform – but how they interact with each other as ‘collective’ systems
elements of knowledge creation and use, and their interplay with social institutions such as values,
norms and legal frameworks – OECD (1997).

Simonetti (2001) – the notion of a collective system recognizes that, although innovation is often
introduced by private individuals and private firms, it is ultimately the product of a system of
institutions that are closely linked together by economic and social relationships.

The Public Nature of

Innovation
• The term ‘system of innovation’ describes the
configuration of institutions and resulting flows of
knowledge. It can operate at the level of nation state,
the region or the industry sector:
1. National innovation systems – country specific
system
2. Regional innovation systems – based on specific
location (Silicon Valley)
3. Sector innovation systems – industry specific
innovation system (pharmaceutical, aerospace)

National Innovation
System (NIS)
• The arrangement where it relates to innovation that used within
a particular nation.
• Function: to achieve sustained economic growth and
competitiveness in the global business environment.
• NIS has been defined as an:
‘interactive system of existing institutions, private and public
firms, university and government agencies, aiming at the
production of science and technology within national borders.
Interaction among these units maybe technical, commercial,
legal, social, educational and financial’ (Noisi et.al, 2006)
• Nation state highly influence innovative performance of nations
and it is also recognized as having links to the characteristics of
particular NIS
MOSTI

In the Seventh Mahathir cabinet, the entire component of the Ministry of Science,
Technology and Innovation (MOSTI), Green Technology and Energy Components
from the Ministry of Energy, Green Technology and Water (KeTTHA) and related
components of Climate Change and Environment from the Ministry of Natural
resources and Environment (NRE) has been restructured and formed the Ministry
of Energy, Science, Technology, Environment & Climate Change (MESTECC)

After the 2020 Malaysian political crisis, MESTECC has been restructured and its
name has been changed to the Ministry of Science, Technology and Innovation
(MOSTI) following the formation of the Muhyiddin cabinet

Currently spear headed

by YB Khairy Ministry objectives:
Jamaluddin.

Promote an understanding,
awareness and appreciation of

MOSTI Science and Technology

Promote research and
development (R&D) in Science &
Technology fields
Conserve and monitor the
environmention
Provide efficient technical and
management support services
 MyIPO
• The Intellectual Property Corporation of
Malaysia (MyIPO) is an agency under
the purview of the Domestic Trade and
Consumer Affairs Ministry (KPDNHEP).
• A statutory body established under the
Intellectual Property Corporation of
Malaysia Act 2002.

MyIPO Objectives

MyIPO

Functions: IP Services provided:

To ensure provisions of the Intellectual Registration of patents, trademarks,
Property (IP) legislation are administered industrial design, copyrights and
and enforced accordingly geographical indications
To provide service in administering, Copyright Voluntary Notification System
collecting and enforcing payment of Advisory services on IP
prescribed fees or any other charges under
the IP legislation IP information and statistical data
To encourage and promote the training and Training programme
the dissemination of IP information Patent agent examination
To promote and organize cooperation Awareness programme
programme at national and international
level
 Governance

The pressure of interactions National innovation system

and linkages in a system raises tend to exhibit 3 types of
the issue of governance – in governance mechanism:
other word how system itself
governed (Simonetti, 2001)
Corporate governance
Political governance
Network governance

Corporate
Governance
• It describes the system of
rules, practices and processes
by which a company is
directed and controlled.
• Essentially involves balancing
the interests of the many
stakeholders in a company –
these includes its
shareholders, management,
customers, suppliers,
financiers, government and
the community
• Two main approaches to
corporate governance:
1. Anglo – Saxon
2. Nippon Rhineland

Corporate Governance
Anglo - Saxon Nippon Rhineland
• Founded in the US and UK • Founded in the Japan and Germany
• Clear separation of ownership of • No sharp division between ownership and
corporate undertakings from their control.
control • The presence of multiple stakeholders in
the management of the firm and they
• Ownership lies in the hand of usually has details knowledge of the firm
stakeholders, many of whom are including its technological competence
institutional innovators while the
company control is left to professional • The stakeholders are better in evaluating
manager and the stakeholders know the long-term commercial potential of R&D
little about the internal operation of the activities
firm
 Political Governance

The role of government in fostering innovation. It centers around 2 functions: The policy and regulating.

The regulatory function covers intellectual property rights (IPR) and environmental protection.

Intellectual Property Rights (IPR) are designed to promote innovation, however without strong IPR, it is
difficult for innovators to appropriate the benefits of their endeavors because of imitation, copying and
counterfeiting.

Environmental protection falls outside of the control of national innovation system, it can influence
innovation to meet environmental standard and can act as a useful spur to innovation.

• Recognizes that increasingly innovation takes

place through firm working together with other
organization.
• Organizations are likely to include many of the
institutions such as university, educational
establishment, research bodies and financial
institutional.
Network
Network relationship will not necessarily be
Governance •
governed by the market mechanism but also can
be on a non-market basis through common
interest and mutual trust reinforced.
• For example of link and relationship between firm
and universities may work together on
government-sponsored research programme and
provides opportunities for knowledge transfer

Institutions

The network of institutions in the public Broad categorization:

and private sectors whose activities and
interaction initiate, import, modify and
diffuse technologies (Freeman, 1987)
Industrial Institutions
Financial Institutions
Science and Technology Institutions
Educational Institutions
 National System of Innovation (Institution)

Industrial Institutions
• Encompass both the broad industry structure that prevails within an
economy and the range of industrial undertaking with which a firm competes
and from which it obtains components and materials.
• Competition – overall level of competitiveness is the likely the key factor
within an economy.
• Monopoly might be beneficial for innovation – monopoly profits could
provide scope for funding high levels of R&D.
• Supply conditions can be important in facilitate innovation – the availability
of high-quality components at appropriate prices can be powerful boost to
innovation

Industrial Institutions – Japan vs USSR in 1970s

*USSR spent more than Japan, however, it had relatively poor record of innovation – a key factor was the
USSR’s poorly developed industrial system

JAPAN RUSSIA
High R&D/GNP (2.5%) Very high R&D/GNP (4%)
Low proportion of Military/Space R&D (<2% of R&D) Very high proportion of Military/Space R&D (>70% of
R&D)
High proportion of R&D at firm level (>60%) Low proportion of R&D at firm level (<10%)
R&D and imported technology integrated into R&D, imported technology and production poorly
production integrated with weak linkages
Strong user-producer and subcontractor linkages weak- or non-existence linkages between marketing,
production and procurement
Strong incentive to innovate at the firm level Largely top-down innovation following government
policy objectives
Intensive experience of competition in international Relatively weak exposure to international competition
markets
Science and Technology Institutions

Public funding of R&D can provide additional Government sponsorship of R&D can take
benefits beyond finding a way around the variety of context. Afuah (2003) identifies 4:
problem of appropriability. Afuah (2003)
identifies 4 benefits:

Training the workforce in skills needed for Public research laboratory

innovation Universities
Simulating private firms to invest in related Firms
innovations
Consortia
Gaining economies of scale in R&D
Reducing the cost of firms entering new
markets

• Innovation requires finance – the capital market

will be the source of funding for innovation
• The categories of financial institutions:
1. Commercial banks – provide in the form of
banking services rather than capital
2. Investment banks – specialize in corporate
Financial finance, particularly equity finance through the
Institutions stock market (e.g. initial public offerings IPOs)
and merges and acquisitions.
3. Venture capitalist – specialist financial
institutions which take an equity stake in firm
in order to provide funding for major
developments such as innnovation

• Human capital is vital to innovation – it provides

knowledge and skills. The institutions that provide
knowledge and skills are:
1. Schools – provides the generic skills required
for innovation – literacy, numerical, skills
associated with learning, problem-solving
skills and creativity
2. Colleges – provide technical and vocational
Educational training to develop a range of work-related
Institutions skills
3. Universities – provide degree-level and
postgraduate courses.
• Malaysia – MyBrain15 was introduced for financing
postgraduate studies (Master Degree and
Philosophy Doctor programme) by Ministry of
Education for the purpose of enhancing research,
development and innovation
 MESTECC Grant for Researcher
• International Collaboration Fund (ICF)
• Provided by the Government for international joint R&D projects between
researchers from Malaysia and other countries.
• Provide a platform for investment in expanding and enhancing research capacity,
and increasing collaborative R&D partnership for competitive R&D projects that
are innovative
• Malaysia Social Innovation Fund (MySI)
• MOSTI initiative to generate income by using existing technology to improve
locality lifestyle
• MOSTI R&D Fund
• Open to businesses and researchers interested in obtaining fund to carry out
projects for economic growth and societal benefit

INNOVATION IN
SUPPLY CHAIN AND
LOGISTICS
MANAGEMENT
Chapter 6: Incentive and Rewards

COURSE LEARNING OUTCOMES

At the end of the lesson, students should be able to :
1. Explain the importance of innovation in the organizations.
2. Identify the skills to manage innovation at the operational and
strategic levels.
3. Describe organizations can be used innovation to improve
their processes or to differentiate their products and services.
4. Integrate the management of market, technological and
organizational change to improve the competitiveness of
firms and effectiveness of the organizations.
 TOPIC LEARNING OUTCOMES
At the end of the lesson, students should be able to :
1. Identify what are innovation incentives?
2. Discuss should we incentive innovation?
3. Identify the types of incentives.
4. Explain the criteria for rewards.

What Are
Innovation
Incentives?
• If you want your employee
to come up with bombastic
ideas, you need to offer
bombastic rewards
• Innovation incentives – a
set of policies intended to
motivate employees to
innovate – enable them to
share the value derived
from the innovation
• An innovation required
both an idea and an
incentives to invest in

Should We Incentivize Innovation?

• On one side, they said:
‘Several companies on the list of most innovative
companies in the world have formal rewards for top
innovators. Rewarding innovative thinking is an
important part of an idea management-based
innovation strategy. Rewards increase motivation to
developing and sharing ideas.’
• However, critics are not dead set against incentives,
rather against rewarding with money:
‘The experimental research that has been done and
suggests that money isn’t everything. People who were
spending a lot of time wondering about their bonuses
were doing very little creative thinking. This is because
people believe that every move, they make is going to
affect their reward.’
 • Great incentives do produce a flood of idea,
but that is not necessarily yield a good
innovative idea. Hence, better off
implement low powered rewards, which
are much cheaper and yield more
manageable stream of ideas.
• McKinsey & Company indicates 3 types of
non-financial incentives:
Should We • Recognition from senior management
• The sense of leadership produced by
Incentivize the formal recognitions of being
innovative
Innovation? • Opportunity to lead new projects and
teams as a reward for innovating
• Sheldon Laube (PricewaterhouseCoopers’
Innovation Writer) write
‘Number one of reward they would value
most was the development opportunities
with 55% of the votes, while with
monetary compensation as number 3
(11% votes).’

Nevertheless, researchers may

find it insulting to be offered
extra money to innovate,
because it’s their job. They may
see prize money as a sign that

Should We management doesn’t trust

their abilities.

Incentivize
Innovation? Monetary rewards poses
another issue when innovation
involves lots of people. It may
be unfair to reward the person
who had the idea and not the
one who develop it or
implemented it.

Types of Incentive

Generally, there are 2 types of Financial incentives

incentives: Intangible incentives

Money A portion of sales

Financial incentives: Company shares Payment in kind

Public recognition Time

Intangible incentives: Access to restricted circle Research
Resources
 Financial
Incentives
• Money: usually paid in the form of:
• Monthly pay
• A raise in salary
• Special monthly bonuses
• Success bonuses
• Company shares
• Rewards come from company stock.
• An incentive offered to employees
that want to invest their money into
the company stock by purchasing
stock with pre-tax money.

• A portion of sales
• A different and original way to
reward innovation is giving
employees a portion of sales, both
for certain products and
development and for savings
derived from implementing
Financial improvements

Incentives • Payment in Kind

• Avoiding linking incentives directly
to sum of money.
• The most common system:
seniority increases, healthcare
payments, life insurance
underwritten by the company.

Intangibles Incentives
• Public recognition
 Letting people know who was behind
what, making it public knowledge that
certain individuals were the ones who
made an innovation happen.
 Usually comes in 3 form: Paper
(newsletter), Digital (Intranet) and In
Person (meeting or special events).
• Access to restricted circle
 The invitation to exclusive groups,
events or spaces
• Time
 Reward people who give innovative
ideas with more time to think
• Research Resources
o Offer economic incentives to innovate in
the form of resources for research
 Criteria for
Rewards
• Two principal reasons for caution:
1. Rewards can be
counterproductive. It occurs when
linking incentives to a particular
metric as the result can be
disastrous.
2. Some innovation metrics can
yield poor result due to not only to
those responsible for innovation,
but also to other department.
• In addition to quantitative and objective
criteria like metrics, we should also
introduce subjective criteria evaluations
(peers and/or managers evaluate
innovators) to rewards innovations

The criteria are:

 Performance
 Based on the level of job performance
ability of an individual. The one who can
perform the job well can get high reward
 Effort
 The effort contributed by an individual
towards organizational objectives.
Through this criterion one can exert the
input of individual for organizational
activities
 Skills Held
 Individuals having special skills are
rewarded.  Under it, regardless of
whether the skills are used, these
individuals who possess the highest
talents are rewarded
 Job Difficulty
  The complexities of the job are
considered as the basis of rewarding
employees. It assumes that the complex
and difficult jobs require higher attention
and concentration at work

INNOVATION IN SUPPLY CHAIN

AND LOGISTICS MANAGEMENT
Chapter 7: Innovation In Supply Chain Information Technology
 COURSE LEARNING OUTCOMES
At the end of the lesson, students should be able to :
1. Explain the importance of innovation in the organizations.
2. Identify the skills to manage innovation at the operational and strategic
levels.
3. Describe organizations can be used innovation to improve their processes
or to differentiate their products and services.
4. Integrate the management of market, technological and organizational
change to improve the competitiveness of firms and effectiveness of the
organizations.

TOPIC LEARNING OUTCOMES

At the end of the lesson, students should be able to :
1. Discuss the major technological trajectories.
2. Identify and developing firm-specific competencies.
3. Discuss the revolution of IT in logistics: Transport Management System
(TMS).
4. Discuss the Warehouse Management System (WMS) and Order
Management System (OMS).
5. Identify and explain the technology and corporate strategy.
6. Discuss the future of IT in the supply chain management – SAP.

MAJOR TECHNOLOGICAL
TRAJECTORIES
• Focus on firms and broad technological
trajectories due to difference between firms and
industrial sectors in their underlying
technologies (e.g. making car is not the same as
making therapeutic drugs)
•Dealing with more than one technology, with
each of the technology has their own historical
pattern of development, skill requirement and
strategic implications.
•It is a major challenge to develop a framework,
for integrating changing technology into
strategic analysis
•It has been strongly influenced by the analyse of
the emergence of the major new technologies
over the past 150 years by Chris Freeman and
his colleague, and by David Mowery and Nathan
 SIMILAR AND PERSISTENT DIFFERENCES
AMONGST INDUSTRIAL SECTORS IN THE SOURCES
AND DIRECTIONS OF TECHNOLOGICAL CHANGE
ITEM DESCRIPTIONS
Size of Innovating Typically big in chemicals, road vehicles, materials processing,
Firms aircraft and electronic products; and small in machinery, instruments
and software
Type of product made Typically price sensitive in bulk materials and consumer products;
and performance sensitive in ethical drugs and machinery
Objectives of Typically product innovation in ethical drugs and machinery; process
innovation innovation in steel; both in automobiles
Sources of innovation Suppliers of equipment and other production inputs in agriculture
and traditional manufacture (like textiles); customers in instrument,
machinery and software; in-house technological activities in
chemical, electronics, transport, machinery, instruments and
software; basic research in ethical drugs
Locus of own R&D laboratories in chemicals and electronics; production
innovation engineering departments in automobiles and bulk materials; design
offices in machine building; systems departments in service (e.g.

In such diversity, there are 2 opposite danger:

1. Generalize about the nature, source, directions, and

FIVE strategic implications of innovation on the basis of

experience in one firm or in one sector – there is a

MAJOR
strong possibility that many of the conclusions will be
misleading or plain wrong.

TECHNOLO
2. Saying that all firms and sectors are different, and that
no generalizations can be made.

GICAL There can be no cumulative development of

useful knowledge
TRAJECTOR To avoid these danger, there is five distinguished
IES major technological trajectories, each with its
distinctive nature and sources of innovation, and
with its distinctive implications for technology
strategy and innovation management

FIVE MAJOR TECHNOLOGICAL

TRAJECTORIES SUPPLIER- SCALE- SCIENCE- INFORMATION SPECIALIZED
DOMINATED INTENSIVE BASED - INTENSIVE SUPPLIERS
Typical core Agriculture Bulk materials Electronics Finance Machinery
products services

Traditional Consumer Chemicals Retailing Instruments

manufacture durables
Automobiles Publishing Software
Civil Travel
engineering
Main sources Suppliers Production R&D Software and Design
of technology engineering systems
department
Production Production Basic research Suppliers Advanced
learning learning users
Suppliers
Design offices
 SUPPLIER- SCALE- SCIENCE – INFORMATION- SPECIALIZED
DOMINATED INTENSIVE BASED INTENSIVE SUPPLIERS
Main Tasks of Innovation Strategy
Positions Based on non- Cost-effective Develop New products Monitor and
technological and safe technically and services respond to user
advantages complex related needs
products and products
processes
Paths Use of IT in Incremental Exploit basic Design and Matching
finance and integration of science (e.g. operation of changing
distribution new knowledge molecular complex technologies to
(e.g. virtual biology) information user needs
prototypes, new processing
materials, systems
business to
business)
Processes Flexible Diffusion of Obtain To match IT- Strong links
response to best practice in complementary based with lead users
user design, assets. opportunities
production and Redefine with user needs
distribution divisional
boundaries

Knowledge of these major technological

MAJOR trajectories can improve analysis of particular
companies’ technological strategies, by helping
TECHNOLO answer the following questions:

GICAL 1. Where do the company’s technologies come from?

TRAJECTOR 2. How do they contribute to competitive advantage?

IES
3. What are the major tasks of innovation strategy?
4. Where are the likely opportunities and threats, and how
can they be dealt with?

The ability of firms to track and exploit the

DEVELOPI technological trajectories depends on their

specific technological and organizational

NG FIRM-
competencies, and on the difficulties that
competitors have in imitating them.

SPECIFIC
COMPETE
The notion of firm-specific competencies has
become increasingly influential amongst
economist, trying to explain why firms are
NCIES different, and how they change over time, and
also amongst business practitioners and
consultants, trying to identify the causes of
competitive success.
 Developed by Gary Hamel and C.K. Prahalad.

HAMEL Their basic ideas can be summarized:

1. The sustainable competitive advantage of firms resides

AND
not in their products but in their core competencies
2. Core competencies feed into more than one core

PRAHALA
product, which in turn feed into more than one business
unit

D ON
3. The importance of associated organizational
competencies is also recognized

COMPETE
4. Core competencies require focus
5. The notion of core competencies suggests that large
and multidivisional firms should be viewed not only as a
NCIES collection of strategic business units (SBU), but also as
bundles of competencies that do not necessarily fir tidily
in one business unit. Two views of corporate structure
are shown on table next

TWO VIEWS OF CORPORATE

STRUCTURE: HAMEL & PRAHALAD
STRATEGIC BUSINESS UNIT CORE COMPETENCIES
Basis for competition Competitiveness of today’s Inter-firm competition to build
products competencies
Corporate structure Portfolio of businesses in Portfolio of competencies,
related product markets core products and business
Status of business unit Autonomy: SBU ‘owns’ all SBU is a potential reservoir of
resources other than cash core competencies
Resource allocation SBUs are unit of analysis. SBUs and competencies are
Capital allocated to SBUs unit of analysis. Top
management allocates
capital and talent
Value added of top Optimizing returns through Enunciating strategic
management trade-offs among SBUs architecture, and building
future competencies

ASSESSMENT OF THE CORE COMPETENCIES

APPROACH
Multi-technology firms? – recommendations that firms should concentrate
resources on a few fundamentals
STRATEGIC FUNCTIONS DEFINITION TYPICAL EXAMPLE
Core or critical functions Central to corporate competitiveness. Technologies for product design
Distinctive and difficult to imitate and development. Key elements
pf process technologies
Background or enabling Broadly available to all competitors, but Production machinery,
essential for efficient design, instruments, materials,
manufacture and delivery of corporate components (software)
products
Emerging or key Rapidly developing fields of knowledge Materials, biotechnology, ICT -
presenting potential opportunities or software
threats, when combined with existing
core and background technologies
 DEVELOPING AND SUSTAINING
COMPETENCIES
How can management identify and develop
them?
1. Definition and measurement
• Possible measure – level of functional
performance in a generic product,
component or subsystem, for example
performance in the design, development,
manufacture and performance of compact,
high-performance combustion engine.
2. Top management and “strategic architecture’
for the future
• Successful development and exploitation of
core-competencies does not depend on
management’s ability to forecast accurately
long-term technological and product
development.
• Instead gradually through an incremental

REVOLUTION OF IT IN LOGISTICS: TRANSPORT

MANAGEMENT SYSTEM (TMS), WAREHOUSE
MANAGEMENT SYSTEM (WMS) & ORDER
MANAGEMENT SYSTEM (OMS)
REVOLUTION DEFINE FUNCTION
Transport Management A key part of system managing supply Takes the location of customers,
System (TMS) chain that focus on the inbound and shipment size, desired delivery
outbound transportation of a firm times, information on the
transportation infrastructure and
vehicle capacity as inputs
Warehouse A key part of the supply chain and Direct and optimize stock
Management System primarily aims to control the movement putaway based on real-time
(WMS) and storage of materials within a information about the status of
warehouse and process the associated bin utilization
transactions, including shipping, receiving,
put away and picking
Order Management A computer software system used in a To check product availability
System (OMS) number of industries for order entry and either from inventories and
processing. Manage the initial contacts production plant schedule
with the customer at the time of product
inquiries and order placement

TMS WMS OMS

• Mode selection • Receiving • Stock availability
• Freight consolidation • Put away • Crediting checking
• Routing & scheduling • Inventory management • Invoicing
shipments • Order processing & retrieving • Product allocation to
• Claims processing • Shipments preparation customers
• Tracking shipments
• Freight bill payment & auditing

TMS, WMS AND OMS ACTIVITIES

BENEFITS OF TMS, WMS AND OMS
• Improve fleet utilization

TMS
• Increase the efficiency in loading
• Increase effectiveness in operation
• Minimize cost of transportation
• Synchronization between packing and routing

• Can be monitored effectively

WMS
• Make daily operation much easier
• Easy to control the movement and product storage
• Synchronization the operation
• Can tracks the data from the products during the production process

OMS
• Communicate with the customers at the time of product inquiries
• Able to avoid from stock-out situation
• Check customer’s status and verify credit outstanding

oCorporate strategy will define objectives for

technology defines opportunities and constraints
for corporate strategy
TECHNOL oHow technology contribution to corporate

OGY AND
strategy? – R&D
oFunctions of Technical Director:
CORPORA 1. To provide a technical awareness within the company
and a ‘window’ on the external world of technology

TE 2. To ensure the appropriate level of technology for

maintain or regenerating the company’s existing

STRATEGY business
3. To provide a technical input into reviews of new
business opportunities
4. To determine the overall technical strategy consistent
with corporate requirements

TECHNOLOGY AND CORPORATE

STRATEGY
 TECHNOLOGY AND CORPORATE
STRATEGY
STRATEGIC FUNCTIONS OF EMPHASIS IN FIRM TYPE EXAMPLES MISMATCH
STYLE HQ HQ
Financial control Financial Administrative: Low tech: low Conglomerates, GEC (UK), ITT
monitoring and Tight control capital intensity like Hanson (USA)
control of and quick profits *computer &
divisions components org
Strategic Heavy influence Entrepreneurial: High tech: Drugs, oil and IBM (1980s)
planning in division’s decides new lumpy projects, automobile ICT
strategic plans business and focused firms
costly projects markets
Strategic control Strategic plans Entrepreneurial: High tech: 3M, consumer Digitalization
devolved to but leaves pervasive electronics firms consumer
divisional HQ choices to technology, electronics firms
divisions varied markets

SAP
an enterprise resource planning
software developed by the
German company SAP SE.
SAP ERP incorporates the key
business functions of an
organization
SAP refers an acronyms to
Systems, Application and
Products

SAP
oIntegrating Business Components
oAs the key advantage as they choose SAP as their enterprise application
system
oOther companies used best-of-breed approach – developed complex
interfaces to integrate the separate software packages.
oSupporting and maintaining just one system proved to yield a significant
cost saving for companies

oSAP for Small and Medium Sized Business

oSmaller companies from different industry believed SAP was the product
that could give them competitive advantage.
oMany of these companies required just the core SAP – usually comprise of
finance, production planning, sales and distribution and material
INNOVATION IN SUPPLY CHAIN
AND LOGISTICS MANAGEMENT

Chapter 8: Innovation In Supply Chain

System Equipment

COURSE LEARNING OUTCOMES

At the end of the lesson, students should be able to :

1. Explain the importance of innovation in the organizations.
2. Identify the skills to manage innovation at the operational and
strategic levels.
3. Describe organizations can be used innovation to improve their
processes or to differentiate their products and services.
4. Integrate the management of market, technological and
organizational change to improve the competitiveness of firms and
effectiveness of the organizations.

TOPIC LEARNING OUTCOMES

At the end of the lesson, students should be able to :

1. Discuss the innovative technologies.
2. Discuss the telecommunication via satellite.
3. Discuss the Global Positioning System (GPS).
4. Discuss the Radio Frequency Identification (RFID).
5. Explain the adaptive supply chain networks.
6. Explain the pervasive automation.
7. Discuss the impacts of innovative telecommunication technologies.
 • New Logistics Technologies based on
informatics are developing rapidly for the
last decade:
• Service of customers
• Marketing channel
• Information correction
INNOVATIVE • Financial operations
TECHNOLOGIES
• Strategic alliances
• Electronic procurement
• Internal and external communications
• Human resource and personnel
management
• Computerization of trade personnel work

INNOVATIVE TECHNOLOGIES

• Bar coding
• Commonly used automatic identification technology
• Consistency – important factor in efficiency and effectiveness
• Electronic Data Interchange (EDI)
• Business-to-business, computer-to-computer exchange of business data in a
structured, machine-processable format

Extensible Markup Language (XML)

• Method of packing information for movement in the

internet
• May replace EDI in the future
Data Management

• Handheld input devices and optical scanning – popular

in data management
• CD-ROMs, USB drive are example of data management
INNOVATIVE tool

TECHNOLOGIES Imaging

• Both fax and photographic processes are being used to

image documents

Artificial Intelligence/Expert Systems

• Attempts to transfer human intelligence to a machine

• Expert systems replicate ‘best practices’ of humans to a
computer-based systems
 Use radio frequency to
transmit computer
outputs, possibly from
RF Technology an expert system to
human operated
devices, e.g. forklift

Use systems such as

Onboard Computer and GPS to track and
communicate with
Satellite Tracking mobile and/or remote
vehicles
INNOVATIVE
TECHNOLOGIES
Logistics Information system keep a prime position
in Logistics Information Technologies

Logistics Information Systems is an interacting

structure of people, equipment and procedures –
together make relevant information available for
planning, implementation and control

• Communicate effectively with customers

• Deliver high standards of customer service
• Allowing employees to collaborate easily from
whatever they are located
• Allowing employees to work efficiently
INNOVATIVE
TECHNOLOGIES – • High productivity
IMPACTS OF IT • Increase the quality service
• Easy to communicate
• Meet customer needs and demands
• Flexible ad efficient
• Able to acquire accurate data

TELECOMMUNICATION VIA
SATELLITE

How do satellites work?

• 2 stations on Earth want to
communicate through radio
broadcast but too far away to utilize
conventional method.
• The 2 stations can used satellite as a
relay station for their communication
• One Earth station sends
transmission to the satellite. It is
called Uplink.
• The satellite’s transponder converts
the signal and sends it down to the
second Earth station. It is called
Downlink
 The advantage of satellite communication over
terrestrial communication
 The coverage area of a satellite greatly exceeds
that of a terrestrial system
 Transmission cost of a satellite is independent of
the distance from the center of the coverage area
 Satellite to satellite communication is very
precise
 Higher bandwidth are available for use

The disadvantage of satellite communication

Launching satellite into orbit is very costly
TELECOMMUNICATION VIA Satellite bandwidth gradually being used up
SATELLITE
There is a larger propagation delay in satellite
communication than in terrestrial communication

TELECOMMUNICATION VIA SATELLITE

5 ways the satellite will help the logistics operation and example

Reduce Risk

Improve
Fleet
Safety and
Monitoring
Security

Optimize
Fleet
All-Satellite
Operations
GPS Tracking
with Real-
Time

GLOBAL
POSITIONING
SYSTEM (GPS)

• A space-based satellite
navigation system, that
provides location and time
information in all weather
conditions, anywhere on or
near the Earth where there is
an unobstructed line of sights
to four or more GPS satellites.
The system provides critical
capabilities to military, civil
and commercial users around
the world
 GLOBAL POSITIONING SYSTEM
(GPS)

• User segments:
1. Military
2. Search and rescue
3. Disaster relief
4. Surveying
5. Marine, aeronautical and terrestrial navigation
6. Remote controlled vehicle and robot guidance
7. Satellite positioning and tracking
8. Shipping
9. Geographic Information System (GIS)
10. Recreation

• The importance/functions
• Position and coordinates
• The distance and direction between any two
waypoints, or a position and a waypoint GLOBAL
POSITIONING
• Travel progress reports
SYSTEM (GPS)
• Accurate time measurement

RADIO FREQUENCY
IDENTIFICATION (RFID)

• The wireless non-contact use of radio-frequency

electromagnetic fields to transfer data, for the
purpose of automatically identifying and
tracking tags attached to objects. The tags
contained electronically stored information and
data.
 In order to improve productivity and control,
warehouse are seriously considering the use
of radio frequency identification (RFID) tags
far daily operation.

This technology increase efficiency of

warehouse management – RF tags broadcast
a signal with information about the product
they attached to and about the product
location.
RFID RFID technology provides interesting option to
complement data collection and product
identification in the SCM and warehouse
operation.

Main purpose to use RFID in warehouse –

increase warehouse efficiency by reducing
labor and logistics costs

• The technology in warehouse can help establish a

simple paperless, on-line communication between
operation and the staff’s computer
• A wireless warehouse – linking warehouse workers to
the back-end warehouse management application
server where warehouse activities are being recorded
via wireless handheld devices, scanning bar codes or
RFID RF tags attached to the pallets.
• It helps to identify where to pick, put away, count or
move products within the plant. It translates to a better
control over the movement and storage of materials by
maximizing the efficiency of the receipt and shipment
of goods, optimizing space utilization and knowing at
all times exactly where goods at, allowing the
employees to improve and maintain high customer
service levels.

RFID

5 benefits of RFID in retail supply chain

 Decrease in lost stock
 Faster locating stock
 Lower labour requirement
 Reduction of stock depletion
 Low safety stock level
 ADAPTIVE
SUPPLY CHAIN
NETWORKS

• Integration of all supply chain

and other support systems and
processes both within a
company and across trading
partners that allows visibility
and flexibility.
• Purpose to ability to respond to
changes in real time, allowing
the network to prevent and
minimize supply chain problems.
• Collaborate in synchronize the
information

SUPPLY CHAIN FUNCTION

ADAPTIVE PARTNER

SUPPLY CHAIN Supplier Any entity (person or organization) that

provides supplies – raw materials, services,
NETWORKS equipment, labor or energy – to other entity.
Suppliers in turn have their own supplier
Manufacturer Any organization that produces the products
Elements and function of Distributor Any entity (person or organization) that helps
supply chain partner another entity sell its goods and services to
customers. In some industries there’s little
competition and the distributor has a lot of
power over the price of the product. The
Internet has allowed some manufacturer to
cut out the middleman and sell directly to the
customers

Retailer Any entity (person or organization) that resells

the products
Customer The one who pay to use an organization’s
goods or services
 • The process of planning, implementing and
controlling the cost efficient, effective flow of
materials, in-process inventory finished goods, and
related information from the point of consumption to
the point of origin for the purpose of recapturing value
or proper disposal.
• The concept – move the goods from their final
destination to another point, for the purpose of
capturing value otherwise unavailable or for the
proper disposal of the products.
REVERSE LOGISTICS • Activities in reverse logistics includes:
 Processing returned merchandise for reasons such
as damage, seasonal, restock, salvage, recall or
excess inventory
 Recycling packaging materials and re-using
containers
 Reconditioning, remanufacturing and refurbishing
products
 Obsolete item disposition
 DISPOSITION OF RETURNS

Return to Repair /
Refurbish
supplier repackage

Sell to
Sell with
Sell as new secondary
discount
market

Donate to
Recycle
charity

PERVASIVE AUTOMATION

Realization of products connectivity where internet – Convergence a valuable technologies RFID’s, wireless
enabled microprocessors provide digital intelligence communication do not require human interaction and
and connectivity almost commercial and industrial support supply chain innovation
products.

• “ICT plays a vital role in advancing economic

growth and reducing poverty. A survey of firms
carried out in 56 developing countries finds
that firms that use ICT grow faster, invest more,
and are more productive and profitable than
those that do not.”
• “Information and communications
technologies (ICT) have had uneven
deployment both between nations and within
nations. These differences in the use of ICT
and the Internet are part of the ‘digital divide’.”
• “In the last forty years, adoption and
implementation in the public sector has been
IMPACTS OF INNOVATIVE slower than the private sector in most of the
TELECOMMUNICATION Asia Pacific countries. The private sector has
TECHNOLOGIES been encouraged to use ICT in many types of
business functions such as information
management, payroll, and accounting since the
1960s.” [Ong 2001]
• Information and communications technology
(ICT) involves innovations in microelectronics,
computing (hardware and software),
telecommunications and opto-electronics
—microprocessors, semiconductors, fiber
optics.
• These innovations enable the processing and
storage of enormous amounts of information,
along with rapid distribution of information
through communication networks.
 IMPACTS OF INNOVATIVE
TELECOMMUNICATION TECHNOLOGIES

The role of ICT

• It is accepted that telecommunication is a basic infrastructure necessary for
economic and social development of a country.
• This is even becoming stronger than ever as information related economic
activities are growing.
• Information and communications technology may be described as the support of
the central nervous system of complex societies, transmitting and processing
information and commands among the various parts of such societies.
• Internet plays a fundamental function in ICT role

• Information and communications technology

carries on high promise both in human and
economic terms.
• Benefits could be obtained in:
• Education
• Job training
• Health care
• Food security
IMPACTS OF INNOVATIVE
TELECOMMUNICATION • Environment management
TECHNOLOGIES
• Government efficiency
And specifically in Science and Technology:
• Speed up dissemination of scientific results
world-wide through scientific knowledge
sharing and exchange
• Allows to set up of Virtual Labs for
communications and remote instrument
control

TODAY’S EXERCISE !

• List and explain the advantage and

disadvantages of GPS implementation in
transport service
 INNOVATION IN SUPPLY CHAIN AND LOGISTICS
MANAGEMENT
Chapter 9: Innovation In Supply Chain Process

COURSE LEARNING OUTCOMES

At the end of the lesson, students should be able to :

1. Explain the importance of innovation in the organizations.
2. Identify the skills to manage innovation at the operational and strategic levels.
3. Describe organizations can be used innovation to improve their processes or to
differentiate their products and services.
4. Integrate the management of market, technological and organizational change to
improve the competitiveness of firms and effectiveness of the organizations.

TOPIC LEARNING OUTCOMES

At the end of the lesson, students should be able to :

1. Explain the technology – based strategies.
2. Explain the relationship – based strategies.
3. Discuss the online certification of approval.
4. Identify the online application.
5. Discuss the global strategies.
6. Discuss and integrate the supply chain transformation.
 STRATEGY INNOVATION
Strategy Innovation is about challenging existing industry methods of creating customer
value in order to meet newly emerging customer needs, add additional value, and create
new markets and new customer groups for the sponsoring company

WHY STRATEGY INNOVATION

To survive in today’s tidal wave of global economic, technological, and social change,
understanding how powerful forces are aggregating once-distinct product and geographic
market, enhancing market-clearing efficiency, and increasing specialization in the supply
chain

A high-level statement of the means by

which your organization will achieve its
vision.

A core component of your dynamic

strategy. STRATEGIC
INTENT
Strategic intent cannot be planned all in
advance. It must evolve on the basis of
experience during its implementation

STRATEGIC ALIGNMENT
• The process of linking innovation strategy with corporate vision, goals, objectives and
strategy

STRATEGIC ALIGNMENT

• The cost and time required to create a new product or service are so large that lack of a
perfectly aligned and executed innovation strategy can be extremely wasteful.
• Strategic alignment creates a directional beacon that defines which domains to explore
and which ones to avoid
 7 DIMENSIONS
OF STRATEGIC
ALIGNMENT

7 DIMENSIONS OF STRATEGIC ALIGNMENT

A Managed Innovation Process lies at the core of the approach. By facilitating between the interplay between external perspectives
and an organization’s internal capabilities/practices – and by looking beyond the obvious – It is possible to inspire the corporate
imagination to explore a diverse array of new possibilities
The process is designed and managed to create Strategic Alignment – the enthusiastic internal support among key stakeholders
required to galvanized an organization around shared visions, goals and actions
Industry Foresight provides a ‘top-down’ perspective, that seeks to understand the complex forces driving change, including emerging
and converging trends, new technologies, competitive dynamics, potential dislocations and alternative scenarios

Consumer/Customer Insight provides a ‘bottom-up’ perspective, a deep understanding of both articulated (explicitly stated) and
unarticulated (latent or unrecognized) need of existing and potential consumers/customers
Core Technologies and Competencies is the set of internal capabilities, organizational competencies and assets that could potentially
be leveraged to deliver value to customers, including technologies, intellectual property, brand equity and strategic relationships

A company’s Organizational Readiness may drive or inhibits its ability to act upon and implement new ideas and strategies, and to
successfully manage operational, political, cultural and financial demands that will follow
Lastly, success will be enabled or limited by an organization’s capacity for effective Disciplined Implementation.

INNOVATION SUPPLY CHAIN STRATEGIES

5 important strategies are:

Differentiation strategies Concerns on the way the company differentiate what they are offering to
the customer from those of competing organization
Time based strategies Time is money, therefore the choices of transportation mode will provide
a positive effect in term of inventory and warehousing cost
Reducing cycle time Reductions in cycle time are based on 3 factors: process, information and
decision making
Time reduction logistics Utilization of information technologies for product tracking and tracing,
initiative optical scanning, bar coding, stock location and so on
Financial strategies The pursuit of operational efficiency, by placing a priority on cost control,
performance effectiveness and efficiency, and viable measurement
strategies, companies are able to improve financial performance
 • Inventory productivity – Just In Time (JIT), Vendor
Management Inventory (VMI), Continuous
Replenishment (CRP).
• Facility Utilization – supplier locations, plants,
warehouses, distribution centers or customers
locations, the objective is the same – to see that
INNOVATION these facilities are utilized to an extent that will
SUPPLY CHAIN produce close to optimal efficiency

STRATEGIES • Equipment utilization strategies

• Outsourcing – an interesting aspect of 3PL use is
that, while customers may use a 3PL to help reduce
commitment to its assets, the 3PL may focus on
managing the availability of logistics services and
hopefully procure the best available asset based
service from selected contractors

Technology-based strategies – trend towards

realization of future logistics and supply
chains goals that will depend significantly on
the further development and utilization of
information technologies

INNOVATION Relationship-based strategies – focuses on

collaboration, a concept that has great
SUPPLY CHAIN potential value, but which has proven to be
very elusive in terms of successful
STRATEGIES implementation

Collaboration – collaboration occurs when

companies work together for mutual benefit

ELEMENTS OF SUCCESSFUL COLLABORATION

 ELEMENTS OF SUCCESSFUL COLLABORATION

ELEMENTS OF SUCCESSFUL COLLABORATION

• Depend significantly on the further development and

utilization of information technology – which said it glued
all the supply chain together.
• IT provides a virtually platform for enhancing transparency,
eliminating information delays and distortion and reducing
transaction costs.

TECHNOLOGY- • Fact that IT has influenced in supply chain process:

• Just-in-time inventory management system (JIT) is
BASED great way to free up cash and increase working
STRATEGIES capital by letting inventory run down
• Enterprise Resource Planning (ERP) provides
integrated view of core business process (real time) –
track business resources cash, raw materials,
production capacity and business commitment status.
ERP facilitates information flow between all business
function and manages connections to outside
stakeholders
 • Johnson and Wang (2012) define e-business as “the marriage
between the Internet and supply chain integration”. Hence, e-
business can be divided into 3 categories:
1. E-Commerce enables a network supply chain partner to
identify and quickly respond to changing customer demand
TECHNOLOGY – captured all over the Internet
BASED STRATEGIES 2. E-Procurement enables companies to use Internet for
procuring directly or indirectly material as well as for handling
value-added services
3. E-Collaboration facilitates coordination of various decision
and activities beyond transaction among the supply chain
partners over the Internet

TECHNOLOGY – BASED STRATEGIES

• Creating an adequate information infrastructure to interface the member of supply

chain has been challenging.
• The requirement for IT :
 It must able to accommodate members with varying degree of IT sophistication
 It must provide a wide range of functionality ranging from simple data transmission to access
to remote application
 It must able to accommodate a constantly changing pool of suppliers and customers within
varying stages of relationship

• IT continue to have significant impact on supply chain strategies:

New technology changes the way business manage their
supply chain – helping companies to improve the
transparency in their distribution network – giving
organizations additional control over their freight
management strategies
TECHNOLOGY – Technology is giving business the ability to boost
BASED STRATEGIES communication and coordination of purchases – by
centralizing inventory through a digital warehouse
management system, firms are able to improve market
analysis, identify trends and adjust order fulfilment strategy.
Benefits from its supply chain efficiency result in time
savings, more cost-effective inventory management and
improved product forecasting
 RELATIONSHIP – BASED STRATEGIES

Focuses on Collaboration - trusting relationship among partners in the supply chain

where each party has confidence in other member’s capabilities and action

More sophisticated relationship-based approaches are required to meet utility cost

reduction targets.

• Strategic alliance
 A process where participants willingly modify basic
business practices to reduce duplication and waste
while facilitating improved performance.
 Instead of encouraging companies to hold their
information close, trust-building processes promote
the sharing of all forms of information possible that
RELATIONSHIP – will allow supply chain members to make better and
BASED aligned decisions.
STRATEGIES  A typical supplier-customer alliance involves a single
supplier and a single customer.
 Can develop between two horizontal suppliers, e.g.
Microsoft and Dell
 A vertical supplier – supplier alliance may involve
multiple parties, such as transportation providers who
must coordinate their efforts for multimodal
shipments.

Partnership – a legal arrangement where two or more

people won a business together

Joint venture – a business undertaking by two or more

RELATIONSHIP – people engaged in a single defined project

BASED
STRATEGIES Merger & Acquisition Trends – larger, national/global
presences of utilities require more strategic supplier
relationships to support growth and cost synergy targets

Expansion of Supplier Value-Added Services – suppliers

continue to expand their value-added services offering,
increasing the value of strategic supplier relationships.
 RELATIONSHIP – BASED STRATEGIES

ADVANTAGE DISADVANTAGE
Most innovative way to develop processes that Can result in a loss of flexibility for the organization to
reduce costs opportunities and expertise for each take quick action in another area that may be in the
participating organization and add value for the organization’s better interests than the area they are
partners pursuing with a given partner
Long-term supply chain relationships create an Can become ineffective if one partner doesn’t
environment for developing innovative solutions to perform at the expected level or fulfill its obligations
problems and challenges to the agreement
Can capitalize on the individual strengths of each Usually limited in scope to the objectives of the
participating organization alliance or partnerships
Involves shared responsibility for the development Can consume more human and financial resources
and execution of a particular program or service than were anticipated
Limits a participating organization’s liability to the Can require a significant time investment to develop
scope of project involved an effective alliance or partnership

6 STEPS TO SUCCESSFUL SUPPLY CHAIN PROCESS

COLLABORATION:
 Collaborate in areas where you have a solid footing – potential collaborators should
also be sure they have the right supporting infrastructure in place in advance of any
collaborative effort.
 Turn win-lose situations into win-win opportunities with the right benefit-sharing model
– smart companies can make them work by agreeing on more sophisticated benefit-
sharing models
 Select partners based on capability, strategic goals, and value potential – both partners
have sufficiently common strategic interests to support the collaboration

6 STEPS TO SUCCESSFUL SUPPLY CHAIN PROCESS

COLLABORATION:
 Invest in the right infrastructure and people – appropriate infrastructure for a
successful collaboration begins at the top of the organization, with a steering
committee of senior leaders.
 Establish a robust, joint performance-management system – both participants should
use the same performance-management system
 Collaborate for the long term
 • Technology advances in communication and IT has changed the
face and the speed of business and supply chain process

• Nowadays, there are online application where we can get

ONLINE approval from authorize personnel.
CERTIFICATION OF • Example:
APPROVAL 1. North Port System – Application online to get approval to
unload or transship the containers from vessel to port area
2. HRMIS – Application for leave application

• Deciding on an online application system makes supply chain

process become much easier and convenient
• Organization doesn’t need to worry about filling error-free hardcopy
forms
• An online application process allows a company to provide a more
structured format for applicants and most online application
services also provides the opportunity to review content at any point
during the application process – easier to spot any errors
ONLINE • Example of Online Application in Supply Chain
APPLICATION 1. Electronic Port Pass System – enable private company to
access all port roadways, terminals and facilities
2. Pelkon III – an online application used by the Penang port
operator to interact with vessel and shipping agent
3. System Application Product (SAP)- provide customers with the
ability to interact with a common corporate database for a
comprehensive range of applications
4. Northport E-Billing System – for bill payment for using North
Port facilities

• Global supply chain management is directly linked to the rise

of globalization. Therefore it is important to evolving new
technologies in supply chain process
• Many company use of incentives to create business drivers

GLOBAL for suppliers to provide R&D support for cost savings or

driving new revenue avenues.
STRATEGIES • Some strategies that can implement
• Technology sharing collaboration – access to
technology and new markets
• Global location of R&D facilities – close to production
and close to expertise
 • International distribution systems
• Manufacturing domestically, distribution (oversea)

• International supplier
• Raw material and component (foreign supplier), final assembly/
manufacturing (domestic)

• Offshore manufacturing
GLOBAL • Product is sourced and manufactured in a single foreign
STRATEGIES location
• Shipped back to domestic warehouse for sale and distribution

• Fully integrated global supply chain

• Products are supplied, manufactured and distributed from
factories located throughout the world
• In a truly global supply chain, it may appear that the supply
chain was designed w/o regard to national boundaries

The key success – transforming supply chains

into integrated value systems

Technology has crept into SCM step by step,

SUPPLY CHAIN beginning with electronic invoicing,
computerized shipping and tracking and
TRANSFORMATION automated notifications that were advanced by
companies, e.g. FedEx

When the information is shared in real-time, it

allows teams to adapt and change to suit the
situation, helping to keep manufacturing lines
on time and track

• Historically, a firm was not likely to make either its supplier

or customer a partner. In many industries each firm played
one supplier against another, demanding and getting
lower prices.
• The post World War II supply chain was a set of linear,
individualized processes that linked manufacturers,
warehouses, wholesalers, retailers and consumers
SUPPLY CHAIN together in the form of a human/paper chain.
TRANSFORMATION • Beginning in the 1960s and 1970s, firms started to view
themselves as closely linked functions whose joint
purpose was to serve their customers. This internal
integration was often referred to as material logistics
management or materials management.
• During this period, SCM innovations such as material
requirement planning (MRP) were developed. Those firms
that successfully integrated these functions did improve
their performance.
INNOVATION IN
SUPPLY CHAINS
AND LOGISTICS
MANAGEMENT
Chapter 10: Building the Innovative
Organization

COURSE LEARNING OUTCOMES

At the end of the lesson, students should be able to :

1. Explain the importance of innovation in the organizations.
2. Identify the skills to manage innovation at the operational and strategic levels.
3. Describe organizations can be used innovation to improve their processes or to
differentiate their products and services.
4. Integrate the management of market, technological and organizational change to
improve the competitiveness of firms and effectiveness of the organizations.

TOPIC LEARNING OUTCOMES

At the end of the lesson, students should be able to :

1. Identify the shared vision, leadership and the will to innovate.
2. Discuss the appropriate organization structure.
3. Discuss the stretching training and development.
4. Discuss the high involvement in innovation.
5. Discuss the effective team working.
6. Discuss staffing the logistics organization.
 COMPONENT KEY FEATURES

Shared vision, leadership and the will to innovate • Clearly articulated and shared sense of purpose
• Stretching strategic intent
• ‘Top management commitment’

Appropriate structure • Organization design which enables creativity,

learning and interaction. Not always a loose ‘skunk
works’ model; key issue is finding appropriate
balance between ‘organic and mechanistics’ options
for particular contingencies

Key individuals • Promoters, champions, gatekeepers and other roles

which energize or facilitate innovation

Effective team working • Appropriate use of teams (at local, cross-functional

and inter-organizational) to solve problems
• Requires investment in team selection and building

Components of Innovative Organization

Components of Innovative Organization (continued)

COMPONENTS KEY FEATURES

High-involvement • Participation in organization-wide
innovation continuous improvement activity
Creative climate • Positive approach to creative ideas,
supported by relevant motivation
systems
External focus • Internal and external customer
orientation
• Extensive networking

Corporate Innovation System

 Elements of Innovation System

Creating an Innovation Culture

Strategies For Building A

Growth Culture
 Emphasize the future, not the past
 Emphasize the possibility, not the constraints
 Reach customers outside through the
employees inside
 Encourage risk taking and discourage political
protecting
 Reward collective, not individual, successes,
but maintain clear individual accountabilities
and keep heroes visible
 Look for alternatives before seeking closure
 Ensure a high level of personal freedom and
trust
 Encourage debate before consensus
 Inspiring People

As employer, do you want to encourage extraordinary performance from your people?

Do you want them to do great things?

• If yes, then you must create an inspiring corporate culture that inspires, empowers
and energizes them
• People do what they have to do for a manager, they do their best for an inspirational
leader.

Roles Of An Inspirational Leader

How to lead Creative People?

 Effective Team Working

฀ Groups have more to offer than individuals in terms of both fluency of idea
generation and in flexibility of solutions developed
฀ Cross-functional team:
฀ Bring together the different knowledge sets needed for tasks like product
development/process improvement;
฀ Deep-rooted differences in perspective can be resolved.

• Clearly define tasks and objectives;

• Effective team leadership;
Key Elements • Good balance of team roles that match with individual
Effective Team behavioural styles;
• Effective conflict resolutions within the group;
Working • Continuing connection with external organization.

Importance Work As A Team In Innovation

1. Teams are a natural vehicle for employees to share

ideas and implement improvements.
2. Teams are well suited to the high levels of
communication and contact, response, adaptation, and
coordination and sequencing in work environments
where continuous process improvement programs are
in place.
3. It will help to solve a problem and increase
productivity.
4. Teams will help to meet the goals and objectives.
Importance Work As A Team In
Innovation (continued)
฀ Teamwork motivates unity in workplace
฀ Teamwork offers differing perspectives and
feedback
฀ Teamwork provides great learning
opportunities

1. Forming
• They are put together
2. Storming
• Resolving internal differences & conflicts around
leadership, objective, etc.

4 Stages Of 3. Norming (adjust)

Team • Commitment to shares values and norms
Development governing the way the team will work;
4. Performing
• Move on to effective performance of their task.