It is clear to many logistics practitioners that the journey towards net zero still requires substantial technological innovation. For example: range and payload limitations restrict the impact of electric vehicles, (sustainable) hydrogen technology is still in development, alternative low-emission fuels are available but need to be scaled to reduce their costs.
However, it appears as if many companies conclude that it is therefore not yet necessary to explore these technologies. They see the need for ongoing technological innovation in the external world, but many do not acknowledge that is also requires innovation within their organization. At AllChiefs we believe that it is important to start exploring what implementation of these technologies will entail for your business and how it will impact your operations.
Schumpeter defined innovation as the practical implementation of ideas that result in the introduction of new goods or services or improvement in offering goods or services. We believe that when it comes to practical implementation of ideas, now is the time for companies to develop understanding of what these new technologies will mean for their operations. Innovation is not just about developing technologies to the point where they perfectly fit within a business-as-usual or ‘how things are done right now’ scenario. Innovation should be focused on how you can deploy these technologies as soon as possible and what changes this may require in how you think about your business operations. This includes engaging with your third-party contractors, your own production and commercial teams, as well as your customers.
Your innovation strategy for sustainable logistics should be focused on how technological and/or business operational changes and improvements will make your company more successful in the long term. How can it help you in making your company more distinctive, creating a more differentiated value proposition to your customers? What are the common practices or believes that need to be challenged in order to accelerate the net zero transition? At a minimum, you need to be prepared for the potentially disruptive impact that new technologies and their roll-out may have on your business and logistics operations. Testing and learning about new technologies in small pilots right now, is the right thing to do to ensure that you are ready for large scale deployment when you think the time is right. It gives you time to understand what operational changes may be required and start acting on it. It will also help you in being prepared for adoption of the new technology. For example, what does it mean for driving time and driver hours, how do you plan your fulfillment cycles, how does the ordering behavior of some of your customer need to change?
When new technology reaches the point of cost parity and readiness of large-scale deployment, there may be a real risk of supply-demand mismatches. This will be hard to predict, but at a minimum should be considered as you think about implementation of your roadmap. This will be unique for each company, but do you feel comfortable assuming that you will have sufficient access to new technology assets if you are a follower rather than an early adopter? How critical is access to new technologies for you in order to secure your net zero roadmap? What risks does it expose you to, and do you have alternatives for mitigation? All such questions are relevant today as you design your innovation strategy and your reduction roadmap. Do not just focus on technologies or changing practices that you want and can implement today. Rather, design your innovation strategy so that it supports your sustainable logistics emission reduction strategy in the long term.
When it comes to test and learn, we believe it is not necessary for every company to do that independently. Collaborations within your value chain, with peers, or even with companies in different sectors, can be very meaningful in implementation of your innovation strategy. We have come across many of those pilots undertaken by companies in cooperation with others to understand what implementation entails. For example, how to align on transport requirements with a partner while both simultaneously satisfying your own customer service level expectations. We believe that thinking smartly about collaboration and partnerships as part of your innovation strategy is the right thing to do. It can also require a change in the relationship with your third-party contractors, as a yearly tendering process may not incentivize them enough for investing in innovation.
We believe this is a step-change for many logistics practitioners, as they need to shift from a day-to-day operational focus to a broader and more long-term strategic mindset when it comes to anticipating the needs and requirements for the net zero journey in sustainable logistics. It will most likely require internal collaboration across functional silos, between the sustainability team, logistics, procurement and business operations.
Do you have sufficient clarity on your innovation strategy?
Inspired?
Visit our Sustainable Logistics page for more information on how we think about net zero logistics.
