Innovation in Logistics, Part 1: Put the Process in Place

One of our greatest challenges in logistics is the constant pressure to develop and implement new ideas to improve processes and reduce costs.

Management demands that we meet and exceed the “stretch” goals they dole out to us year after year.

As the years go by, those improvements are harder to find!

Typically, management doesn’t give us the proper tools to succeed, but they keep tightening the screws!

Tightening Screws

There has to be a better way!

A study published by the ELA & Arthur D. Little showed that an innovation management system has the “potential for reducing logistics costs between 7% and 14% for all shippers and logistics service providers.”

With savings like that, it is worthwhile to get some form of an innovation and creativity process in place….quickly!

In fact, many companies are slowly recognizing that innovation and creativity can be a real strategic advantage: Fortune 500 companies have been hiring Creativity Consultants recently; the number of business schools offering creativity courses has doubled in the past 5 years and business experts polled in 2011 agreed that creativity is one of the most influential forces driving today’s global economy. **

Although the Six-Sigma wave brought improvements and some discipline to the process, that movement was typically seen as a “top-down” approach and not a program designed to take advantage of the vast knowledge of our front-line employees. And Six-Sigma focused mainly on achieving stable and predictable process results (i.e. reducing process variation) and not so much seeking or fostering new and innovative ways to manage the business and achieve cost savings.

While the glamorous innovations seen lately in the media extoll the future benefits of the Amazon delivery drone and the driverless truck, the real improvements for a company can come from the front line employees…if they are given the right direction and leadership.

In their book “The Idea-Driven Organization: Unlocking the Power in Bottom-Up Ideas”, Alan G. Robinson and Dean M. Schroeder suggest that “front-line ideas offer 4 times the improvement potential of their own (than upper management)…”!

They contend that their experience has shown that there is really an 80/20 rule showing that 80% of improvement ideas are generated by front-line versus management.

Now we know that putting an innovation and creativity process in place is important, but we also have more clarity as to where to start it: with the front-line employees!

Due to the absence of such an innovation methodology within most companies and based on our experiences in leading teams to achieve these “stretch” goals and in facilitating numerous “Cost Savings Workshops”, we have created an innovation and improvement methodology to help you and your team to foster new ideas and reach those goals.

Today, we encourage improvement and innovation at our company using a 4-step process:
LWL024 Innovation in Logistics Process

In the upcoming posts, we will explore each of these 4 steps in greater detail.

Let’s first be clear about what innovation is.

Yes, it can include futuristic ideas such as the drone and driverless truck, but more simply it is “novel or original” and “useful or adaptive”.**

Let’s not think we’re going to find the next “big thing”, let’s just go out and find a new way to do something that is useful, meaning that it improves a process or saves us money!

As you think about this 4-step process, you must have a goal in mind for which each of these steps is working. Are you trying to improve a cumbersome, time-consuming process? Are you focused on cost reductions for a particular shipping lane or from a supplier to a plant?

Whatever the issue, all efforts and energy need to be focused on achieving that goal.

If this isn’t something that your company can implement company-wide, then it is certainly something that you will be able to follow in order to generate more and better ideas within your field.

Let’s keep moving forward!

Sources for this article:
“The Idea-Driven Organization: Unlocking the Power in Bottom-Up Ideas” by Alan G. Robinson and Dean M. Schroeder.
**”Your Creative Brain: Seven Steps to Maximize Imagination, Productivity and Innovation in your Life” by Shelley Carson.

Click the following link for a PRINTER FRIENDLY VERSION of this article: LWL024 Innovation in Logistics Part 1

About Lenny

Many years of experience in a Fortune 1000 companies, especially in the logistics and I.T. areas of manufacturing companies. Through process improvements and the use of many of the tools mentioned here, I have been able to identify and implement savings opportunities worth up to $10 million. I hope that some of these real-life stories, suggestions and tools can help you!
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