In supply chain and logistics, there’s always a new problem to solve or a new opportunity to go after, which often involves some form of innovation — whether it’s a process innovation, a technology innovation, or both. There are many paths companies can take to drive supply chain innovation, but in a recent episode of Talking Logistics, Kristi Montgomery (VP of Kenco Innovation Labs) and Puga Sankara (Co-Founder of Smart Gladiator) discussed a relatively new one: a collaborative approach between logistics service providers and technology companies.
Before diving into the topic, I asked Kristi what lessons she and the team at Kenco have learned since launching the Kenco Innovation Labs almost two years ago. “One of the key learnings is that everyone in the industry is interested in innovation,” Montgomery said. “They might not be able to describe it, but they know it when they see it.”
“We’re finding that our customers are responding very positively to this [focus on innovation],” Montgomery added. “A recent survey by Supply Chain Digest showed that 71 percent of shippers are interested in their 3PLs providing innovation, so we’re finding acceptance in the industry.”
“We’ve also learned that supply chain is a constant cost pressures business, so finding ways to successfully innovate in a very lean startup model and in a rapid development cycle, as well as to openly collaborate with others — the concept of open innovation that Henry Chesbrough introduced in the early 2000s — is really a strong concept for us and it’s all about collaborating with your customers, suppliers, and technology partners to bring innovation into the supply chain. There is no one expert in it; we all come together as a team to develop solutions that are going to change the supply chain in the future.”
This concept of collaborative innovation was put into action to address a problem one of Kenco’s customers (as well as many others in the industry) was experiencing: retail compliance chargebacks. As Kristi describes in the short clip below, their customer was dealing with significant financial penalties and chargebacks for products arriving in non-compliant condition, yet they were forced to accept the chargebacks because they didn’t have a way to prove compliance at the time of shipment.
Kenco initially developed and beta tested its own prototype mobile solution to address this problem. The tests were successful and proved out the concept, but as Montgomery put it, “we’re not in the business of developing software,” so the company approached some of its existing large software partners to add this functionality, but “it takes them a long time to change and add something to their portfolio,” said Montgomery. “They have to decide if they can work it into their priorities, and if they can include it in their next release, it would be a year from now… all together, we were talking about having to wait a couple of years to bring this solution to market and that’s not where we wanted to be.”
In the meantime, Kenco had started working with some accelerators and start-up companies and came across Puga and his team at Smart Gladiator. “Their tagline is ‘Mobile Enabling the Supply Chain’ which fit right in with what we wanted to do with this particular product,” said Montgomery. “It was the right fit for us to go down this path of working with a smaller company that could be very agile and flexible in bringing this product to market much quicker for us.”
The end result of their collaboration was a new mobile app called LoadProof, which was announced this past February after about four months of development, that “increases supply chain visibility by photo-documenting shipments to improve compliance and reduce costs.”
So what have been the results to date?
“The original customer that came to us with the problem has seen a 95 percent reduction in customer complaints,” said Montgomery. “Another customer has avoided $10,000 in chargebacks in just three months, and another customer is finding the solution enormously valuable in being able to prove to their end customer overseas that their international shipments are being loaded and handled properly.”
I encourage you to watch the full episode for additional insights on this topic, including Puga Sankara’s comments around the current state of mobile enablement in supply chain management. Then post a question or comment and share your perspective on collaborative supply chain innovation.