Key Takeaways
- The supply chain is more than just a process to get products into customer hands; it has emerged as an important force in product innovation.
- The growth of DTC brands, many of which offer custom solutions and superior customer service, has been a key driver of innovation.
- These brands have created a more discerning breed of consumer.
- Rapid prototyping and product testing is another way in which an efficient supply chain drives product innovation.
- Consumer demand for more sustainable and ethically sourced products, as well as lighter and more sustainable packaging, has also driven innovation.
How the Supply Chain Drives Product Innovation
The supply chain, once taken for granted as the component of business operations solely focused on getting products from the manufacturing floor into customer hands, has emerged as a strategic force that plays a critical role in driving product innovation. As technology advances and consumers become increasingly more demanding, enterprises are reimagining their supply chains to foster new levels of creativity and efficiency. This transformation is more than just a reaction to ongoing market pressures; it is a proactive approach to shaping the future of product development and evolution.
The Growth of Direct-to-Consumer Brands
While there will always be an important role for retailers to play in the distribution of certain goods, in recent years the direct-to-consumer (DTC) landscape has evolved dramatically, with brands like Allbirds, Warby Parker, Casper, Ruggable, and Dollar Shave Club creating their own e-commerce sites and in many cases offering bespoke products that are customized to each consumer’s preferences, a model that can’t be easily replicated through the retail experience. By avoiding the overhead costs of brick-and-mortar stores and selling to retailers at wholesale prices, these brands were able to make larger investments in research and development as well as enhanced customer service, which enabled them to quickly cultivate a loyal customer following. The explosion of social media further created affordable advertising channels through which DTC brands could expand their customer base. Of course, customization takes time, and today’s e-commerce shopper expects rapid fulfillment, so DTC sellers have been forced to streamline and optimize their supply chain operations to enable more efficient deliveries and timely, transparent status updates.
Though many of these products are now available at traditional retailers, these brands sufficiently disrupted the market to create a new and more discerning breed of consumer, one that expects higher quality products and a greater array of available choices. A recent ratings guide for pillows by Good Housekeeping, for example, was based on a review of more than 175 options.
The Power of Rapid Prototyping
Time is of the essence in today’s highly competitive, fast-paced market, when every year brings a new generation of smartphone (to cite just one example) with slightly faster processing speeds and slightly better cameras than the last one. If companies do not innovate in response to consumer demand, their competitors will — and the advent of AI is only accelerating this process.
In some cases, the ability to rapidly prototype and test new products is the key to success, and a well-designed supply chain help makes this happen. By leveraging technologies like additive manufacturing, also known as 3D printing, enterprises can create prototypes and small production runs at a faction of the time and cost of traditional manufacturing. This enables new product concepts to be tested more quickly and effectively, and flexible supply chains also allow for rapid scaling of production to meet surging demand.
The Importance of Sustainable Supply Chains
Sustainability is no passing fad; consumers have made this a vital priority for companies, and the quest for a smaller carbon footprint has become an important driver of product innovation. Consumers demand products that are environmentally friendly, socially responsible, and ethically and sustainably sourced. By tracking the origin of raw materials and measuring the emissions generated by each phase of the manufacturing process and overall supply chain, companies are continually discovering ways to reduce their environmental impact and create more sustainable supply chains. Packaging has become lighter; more recyclable and biodegradable materials are being used; trucks are consuming less fuel and releasing less emissions with every mile on the road.
Not only does this enhance brand reputations and attract eco-conscious consumers, but it’s also better for the planet – and it’s yet another example of how the supply chain has become a key innovation driver.
The Digital Supply Chain Revolution
The digital revolution, meanwhile, has reshaped the supply chain landscape. Technologies like the Internet of Things (IoT) and blockchain have enabled unprecedented levels of visibility over supply chain operations. IoT-enabled sensors in warehouses and retail settings can monitor inventory levels in real time, triggering automated replenishment orders as stocks run low. This not only prevents stockouts but also provides vital insights into which products are in high demand, which in turn drives innovation as companies identify how to improve these products and manufacture them more efficiently and inexpensively. The digital revolution has empowered businesses with a wealth of information needed to make educated decisions and drive further innovation.
Collaborative Supply Chains
Manufacturers cannot operate in isolation — they must remain mindful of the demands not only of consumers, but of the power wielded by major retailers. There are numerous stakeholders across the supply chain, and they all play a part in driving innovation. For example, in 2019 Walmart established a goal that by 2025, 100 percent of its private-brand packaging would be recyclable, reusable, or compostable. This ambitious goal impacted more than 30,000 products sold at its stores and on its website, and Walmart also encouraged its national brand suppliers to make similar commitments through its Project Gigaton platform. Such collaborations, driven in part by a need to improve sustainability and meet ESG goals, further drive product innovation as enterprises adapt products to use more sustainable materials and conform with evolving packaging requirements.
This evolution is nothing new at iGPS; since our inception, the company has been distributing recyclable plastic pallets that are lighter than wood and contribute to less greenhouse gas emissions during shipping. iGPS pallets are also more durable and don’t absorb moisture, which makes them easier to clean and sanitize and also more automation-friendly. They are the ideal solution for companies striving to optimize their supply chain and drive further investments in sustainable packaging and continuous product innovation.
Frequently Asked Questions
How is the supply chain contributing to product innovation?
Supply chain innovation drives product innovation by enabling faster prototyping, shorter time-to-market, and greater flexibility in product design and manufacturing. It also allows for more efficient use of resources, reducing costs and environmental impact, which can lead to more sustainable and innovative products.
What types of supply chains make more innovative products?
Supply chains that foster collaboration and knowledge sharing between suppliers, manufacturers, and retailers are most likely to create innovative products. This collaborative approach enables the sharing of ideas, insights, and best practices, leading to the development of new and improved products. Additionally, supply chains that are agile and responsive to market changes can quickly adapt to new trends and consumer demands, driving innovation.
Why should supply chains be involved in product design?
Supply chains play a crucial role in product design by providing valuable insights into manufacturing feasibility, cost-effectiveness, and potential supply chain disruptions. By involving supply chain experts early in the design process, companies can ensure that products are not only innovative but also practical and commercially viable. This collaboration can lead to more efficient and sustainable products, ultimately benefiting both the company and its customers.
Manufacturers at the cutting edge of supply chain innovation choose iGPS pallets for all their shipping needs. iGPS pallets are lighter, more automation-friendly, and contribute to improved sustainability. For more information, contact us at 1-800-884-0225, email a specialist at switch@igps.net, or visit our contact page.
