Exploring the impact of innovation implementation on supply chain configuration
Introduction
In the era of digital transformation, supply chains will have to accommodate an expected rapid dissemination of technological innovations (Goldsby and Zinn, 2016; MacCarthy et al., 2016). The recent technological developments can alter the landscape of the supply chain and its configuration; as such, the design of the physical, financial and information flows is expected to be revolutionised (Kearney and WHU, 2015).
Innovation is addressed extensively in the supply chain domain (e.g. Bellamy et al., 2014; Zimmermann et al., 2016); however, further attention is still needed to examine the challenges that span the whole supply chain when firms implement innovation—that is, to investigate the entire supply chain configuration, as well as the relationships among the supply chain members (Arlbjørn et al., 2011; Arlbjørn and Paulraj, 2013). The extant literature indicates that most businesses do not change the configuration of their supply chains when they start to implement innovation practices (Arlbjørn et al., 2011), which signals a misfit between the configuration of supply chains and their environment and strategy (i.e. environment-structure-strategy misfit). A better understanding of the impact of innovation implementation, from a holistic perspective, is therefore needed. By doing so, it will be possible to mitigate any risks that might propagate along the supply chain. Furthermore, such a holistic perspective will provide a more realistic analysis of the tangible impact of innovation implementation, which can lead to better management of innovation along the different phases of the supply chain.
The process innovation dimension is emerging as an interesting research topic due to the increased diffusion of digitalisation and an expected surge in process innovation (e.g. additive manufacturing, Industry 4.0 tools and AGV-managed warehouses) (Kearney and WHU, 2015; GCI and Capgemini, 2016). There is a substantial number of scholarly publications on the interplay between the various aspects of innovation and the supply chain (Lo and Power, 2010; Pero et al., 2010; Stavrulaki and Davis, 2010; Ülkü and Schmidt, 2011; Pashaei and Olhager, 2015); however, these studies mostly address the product dimension (i.e. new product development/launch, product characteristics and design). So far, the process innovation and its implications for the supply chain have been under-researched.
The relationship between innovation implementation and supply chain configuration can be better interpreted by embracing the concepts of contingency theory, which suggest that the peculiarities of a firm’s internal and external contextual environments need to be considered in its design, so as to improve its performance (i.e. to establish environment-structure-strategy fit) (Drazin and Van de Ven, 1985). This paper considers the implementation of process and product innovation practices as contextual factors, whose impact on the configuration and performance is investigated. The present research examines what happens along the supply chain when a firm decides to implement an innovation, through investigating the interplay between innovation practices’ implementation and supply chain configuration—that is, investigating the aspects related to operations, supplier selection, supply and distribution network design, transportation mode, facility globalisation/localisation, sourcing decisions, and collaboration and information sharing (Chandra and Grabis, 2007; Chopra and Meindl, 2007; Farahani et al., 2014; Melnyk et al., 2014).
Section snippets
Definitions of innovation
Innovation is regarded as a “complex and multi-dimensional phenomenon” (Adams, 2003, p. 4), and its literature involves various research disciplines and definitions largely based on the classical definition of Schumpeter (1939)—i.e. that innovation entails developing new products and new forms of organisational structure, opening up new markets, creating new production functions and finding new sources of raw material. Drucker (1985) argues that innovation is the main function of
Research scope
In light of the above theoretical discussion, this paper focuses on the relationship between innovation practices’ implementation and supply chain configuration. Specifically, the idea is that the innovation phases are situated within the generic supply chain phases of plan, source, make, deliver and return. The main elements of the research (i.e. the variables to be addressed in this research) are operationalised as follows.
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Supply chain configuration (structure)
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Localisation/globalisation
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Corporate groups under investigation
The parent companies in groups A and B are leading manufacturers in their industrial sectors. Group A comprises six subsidiaries in the healthcare, childcare and personal care product sectors. Present in 24 countries (15 in Europe, four in Brazil, Russia, India and China (BRIC) countries, and the rest in North and South America), it has around 400 points of sale worldwide. It has recently undergone major changes in its management culture and top management positions, transitioning from a
Discussion
This section reports the impact of innovation implementation (process and product) on supply and distribution network design in Section 5.1, on operations in Section 5.2, on collaboration and coordination in Section 5.3, and on supply chain strategy in Section 5.4. The paper’s theoretical contribution and the managerial implications are synthesised in Section 5.5.
Conclusion
The importance of this study stems from the scarcity of interdisciplinary research. Despite the theoretical and practical need for relevant interdisciplinary studies, supply chain and innovation management remain two important streams of research with little communication. Recent studies (e.g. Lo and Power, 2010; Pero et al., 2010) offer beneficial insights into the alignment between innovation introduction and supply chain design. Yet, to the authors’ knowledge, this paper is one of the
Acknowledgment
This paper is produced as part of EMJD Programme European Doctorate in Industrial Management (EDIM) funded by the European Commission, Erasmus Mundus Action 1.
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