IN DEFENSE OF DISRUPTION

For several years, and particularly recently, we have been hearing or reading about “disruptive technology” or “disruptive innovation” in the supply chain. To many, the word disruption suggests some negative event. I can recall several notes from elementary school teachers informing my parents I was disruptive in class. It was not interpreted as a positive attribute. The dictionary in fact, defines disruption as causing disorder or turmoil.

So what is disruptive technology? Like many modern business terms, it is a product of the Harvard Business School. In his 1997 book, The Innovator’s Dilemma, HBS professor Clayton M. Christensen coined the term disruptive technology. He separated new technology into two groups, sustaining and disruptive. Sustaining technology consists of improvements in existing technology while disruptive developments are brand new, often still unproved innovations. Some of the past examples cited by Christensen were such things as E-Mail, cell phones, and the personal computer. All were major disruptions to some other industry, (Think typewriters, the post office, and land lines.)

McKinsey & Company identified twelve emerging disruptive technologies that have the potential to “transform life, business, and the global economy”. These ranged from advanced robotics to renewable energy. Within this context, while these disruptive developments may cause pain in certain industries, they can be generally viewed as positive and even life-changing. Keep in mind, they may not affect any existing industry but rather, may create a brand new one.

What are the major disruptive technologies in the supply chain? On January 27, Stifel Capital Markets hosted a conference call featuring Steve Sashihara, CEO of Princeton Consultants, who discussed a recent Princeton study about those underway in transportation and logistics.

Drones. Already being used in several industries, they have a future in supply chain deliveries if weight capability and energy consumption can be improved.
Self-Driving/Autonomous Trucks. With all the issues surrounding drivers, these self-driving vehicles could have a very bright future.

Uber for Freight. This is not a new idea by any means, but new technology makes on-line freight scheduling a more economic and efficient process.

The Internet of Things. Here again, as fork lifts, packages, tractors, trailers, and robots are equipped to communicate with each other, human intervention becomes less necessary.

Big Data. Everyone is aware of the increasing amount of data and information that is available to the supply chain manager. The issue is not the amount of the data, but what you do with it.

There are others Sashihara did not mention. Such things as 3 D printing, artificial intelligence, and robotics in general certainly qualify as disruptive technologies. He did say however, that the innovators of disruptive technologies tend to be small companies that are willing to take a risk and do not have to worry about disrupting core businesses.

To me, who develops them is really beside the point, however. Supply chain managers need to stay alert and when there is a new development that can enhance their efforts, they should be prepared to seize it. Better still, do not hesitate to take a risk and introduce your own disruptive innovations. They may not be as far-fetched as you think. Certainly, improving present methods has value, but jumping way “outside the box” may be even more rewarding.

Written By: Clifford F. Lynch