As bewildering as it may seem, Intel Corporation was publicly awarded for fundamentally the same reason the great Italian astronomer Galileo Galilei was imprisoned for. Innovation. While Galileo’s innovation was his intelligent observations supporting heliocentrism as opposed to the erstwhile popular belief in geocentrism, Intel’s innovation is its development of artificial intelligence and cognitive computing tools improving sourcing decisions. The former was tried by the Roman Inquisition in 1615 for heresy and the latter was conferred upon the prestigious Supply Chain Innovation Award (SCIA) in 2018 by the Council of Supply Chain Management Professionals (CSCMP) in the USA. Innovation as a phenomenon has phenomenally changed over the past centuries as far as public opinion, institutional perspective and administrative acceptability is concerned.
Innovation is about newness towards efficiency gains. A new way of thinking and acting to get more from less. Either incrementally sustaining or irreversibly disrupting. And this newness cascades across correlated events or processes affecting each other. From commuting to communicating, from borrowing to buying, from sourcing to spending, from accumulating to accounting and even from managing to manipulating, there are numerous ways in which individuals and organizations keep trying and adopting new ways to save time and cost, and increase returns. Innovation in business is about a new idea, method, process, model, theory or perspective which can be incorporated into or expressed in the form of a product or service valuable to its consumers. It could be a new method of manufacturing, accounting or distributing a product as of consuming, delivering or billing a service. Little surprise that supply chain management which spans almost the entire range of business processes from investment to profitability, is often the focus area for innovation in organizations.
A large number of organizations tend to limit supply chain innovation to technology adoption of AI (Artificial Intelligence), Blockchain, RPA (Robotics Process Automation), Big Data Analytics, ERP (Enterprise Resource Planning) software and similar tools. For small and medium organizations or MSME (Micro, Small and Medium Enterprises), technology adoption is expensive. The cost of evaluating, purchasing and implementing technology could be way beyond the financial capability of small and medium organizations. The long payback periods in their struggle for survival in intensive global competition may not justify the massive investments in the first place. And this perspective limits the opportunities of Innovation for large organizations too who have the capability to invest in technology, no matter the high cost. Additionally, complex technology brings in implementation and integration challenges. Overcoming those challenges requires time, cost and skills, all of which can take a toll on both productivity and profitability.
Innovation in accounting is developing new methods to weed out the problems in conventional double entry accounting of inventory asset increases as debits, or in asset valuation by market price, cost and time of purchase or replacement and depreciation, or in invoice auditing or even in taxation. All these processes which depend on the accounting method used, have a direct impact on the price of the product or service sold and the profitability reported by the balance sheets of companies. Any inherent limitations or lacunae in any of the methods lead to disturbances in not only that particular organization but the entire supply chain.
Innovation thus needs to be viewed in a wider and rather appropriate perspective as a phenomenon which reviews the existing processes or business models for improvements increasing efficiency and profitability. Most supply chain leaders seem to identify themselves with this perspective, but often miss out on converting them into opportunities for investment and growth. Among the various reasons, lack of collaboration and analysis stand out. Expert consultants are adept at tackling both these problems.
Organizations, large and small, listed as top business innovators, including prize-winning Intel, have been able to make it to the list, thanks to their decision to engage expert consultants. Innovation value chain can be said to begin with that decision.