Wednesday 13th Dec 2017 - Logistics Manager

Innovation is a supply chain issue

Ask anyone to describe the innovation process and what they come up with will probably involve a small group of boffins working isolation from the rest of the world. But the world is changing, as Kari Kulojärvi, senior vice president, smart devices supply chain at Nokia, made clear in  his opening presentation at the Extended Supply Chain conference, which kicked off in London today.

Nokia, until recently the most successful mobile phone maker on the planet, has had to restructure its business dramatically to take on the challenge of the iPhone and Android devices.

And as part of that it looked hard at the innovation process, concluding that this cannot be done in isolation – it needs the active participation of the supply chain.

Increasingly Nokia is seeking to collaborate with suppliers to innovate together.  One of Kulojärvi’s goals as senior VP supply chain is now to help bring innovations into Nokia products.

Clearly, this raises a whole series of new issues for supply chain professionals, starting from: “How do I get suppliers to innovate for me and with me?”

Kulojärvi also pointed out that innovation introduces a host of risks – including technological, supply chain and ramp-up risks.

“We cannot use conventional supply chain tools to mitigate these risks,” he said. Holding buffer stocks and having alternative sources of supply simply don’t address the issue when innovation comes from one place.

Other mechanisms are required, he said, notably transparency in the relationship. “You have got to know what the supplier is doing.”

This also raises questions relating to intellectual property, who a company shares with and how much it shares.

Clearly, these are critical questions in an industry such as telecoms where technological innovation can make or break a company. But, questions of innovation is likely to become more widespread in the face of increasing globalisation and product complexity. For more and more industries, innovation is going to be a supply chain issue.