From Big I to Small i: Scaling Post-Pandemic Supply Chain Innovation
With challenging operating conditions ahead, it’s time to shift the conversation around innovation.
With the onset of the pandemic in 2020, the world shifted into rapid digitalisation mode on a scale we’ve never seen before and are perhaps unlikely to see again.
In addition to the unprecedented demand for digital delivery of products and services, supply chains came under particularly visible stress, courtesy of product shortages and images of empty supermarket shelves on broadcast media.
With necessity being the mother of invention, there was a laser like focus on upgrading systems and the big “I” word – Innovation. However, from the vantage point of four years later, have we completed the pandemic era of rapid and sweeping digital transformation? And if so, what’s next?
Innovation in a time of economic challenge
We have previously explored the emerging concept of the digital CFO and how the role of finance leaders is shifting from being more backward-looking (reporting on the past and setting budgets based on past performance) to being forward-looking (leading the organisation’s strategic agenda, supported by the right digital tools, data and processes). Essentially, this is a shift from transactional to strategic behaviour in the finance function. However, the lesson applies more broadly to all senior leaders involved in setting the forward direction.
Right across the board, organisations are facing the challenge of decreased purchasing power due to the highest level of inflation we’ve experienced in many years. Global growth is expected to slow to 2.9% in 2024, according to the International Monetary Fund. While this is an unavoidable side-effect of the pandemic, war-disrupted energy and food markets and unprecedented monetary tightening to address inflation, the pressure is on to do more with less (or to put it another way, make the most of what you’ve already got).
At first glance, the tightening economic environment does not seem compatible with the ambitious innovation and transformation programs we witnessed during the early years of the pandemic. But that does not mean innovation needs to be put to one side until conditions improve. Instead, we think it’s time for finance and supply chain leaders alike to shift the conversation about how the organisation thinks about innovation (perhaps with a small “i”, to distinguish it from what has come before).
Of course, this is not a new concept. We’ve been talking about incremental innovation (with a small i) and continuous improvement for years – that is, making modest incremental improvements to how we do things, or delivering smaller wins.
What is worth exploring is how it applies to organisations in 2024, as we move on from four years of unprecedented change and disruption.
Three considerations for post-pandemic innovation
Get back to basics. While supply chain strategy should always be closely aligned with organisational strategy, and meeting financial drivers, it’s paramount when purchasing power is limited. At this time, it’s worth revisiting the essential questions:
For example, finance’s priority may be improving working capital by reducing inventory, but supply chain needs to increase stock to meet sales and promotional targets. Meanwhile, the sale department wants instantaneous customer order fulfillment, however supply chain has a KPI to keep transport costs to a minimum.
Revisit your pandemic-era investments. If you invested heavily in technology or transformation programs from 2020 onwards, now is the time to revisit them with a post-implementation review.
Why? To make sure you’re achieving all the benefits that you anticipated in the original business case – and perhaps even identify some brand new applications and benefits, or the ability to position something that’s already been done in a new way.
During this process it may be worth conducting benchmarking and other diagnostic exercises, to see how you’re performing against the market and your peers or competitors. There may be some simple steps you can take to move yourself forward, which don’t require heavy investment, such as process changes or changed service offerings. We’ll take a look at some of these in a future article.
Match your partnerships to the scale of innovation. When you’re delivering incremental improvements, the devil is in the detail. Some partners deliver large, transformative change programs really well; but aren’t set up to manage small step-changes – and vice versa. Some can manage both. Always do your homework and source peer referrals for programs of similar size, scale and complexity.
Incremental change can yield consistent wins
Incremental change doesn’t always have the newsworthiness that a large-scale innovation or transformation might, but that to doesn’t mean it’s not powerful change. Small i innovation making modest incremental gains can transform a business by delivering sustainable but consistent wins.
If you’re a finance or supply chain leader who wants to drive continuous, forward-looking innovation despite the tightening economic conditions, it’s possible to do while de-risking your project and focusing on getting the basics right.
We are enablers of change and transformation in Financial Planning and analytics, Information Management, Supply Chain management, Management Consulting, Project Management, and Managed Application Services. Reach out here to have a discussion today or call 1300 841 048.
