The Case for Disruptive Supply Chain Models

The Case for Disruptive Supply Chain Models

Until recently, I would have cringed seeing the word “Disruptive” anywhere near “Supply Chain.” This pause for concern is a result of the now common industry phase “Supply Chain Disruption” which is utilized to describe everything from a localized component supply disruption to a global supply disruption with multiple suppliers due to a natural disaster. However lately we have come to embrace the phase “Disruptive Supply Chain Models.” Disruptive Supply Chain Models are truly disruptive supply chain models that support the commercialization of disruptive products. In our view high growth technology companies endeavoring to bring to market a truly disruptive product must create, implement and execute a supporting disruptive supply chain model early on in the product development process in order to leverage the full system benefits of supply chain that will allow the product to become disruptive.

Five benefits to build a case for investing your valuable resources early on in the product development process to develop a disruptive supply chain model:

Leverage Leading Edge Technologies

Developing what your future state supply chain model will be as part of the product development process ensures your design and engineering teams will be able to leverage leading edge technologies. A documented Beta supply chain model will allow you to start outlining the latest technologies from software to electronic components that will increase the finished products chance of commercialization success. Further, outlining a complete list of each of the planned program leading edge technologies upfront in the product development process will greatly reduce the time and commercial risk of bringing the product to market by allowing the team to highlight any major roadblocks upfront.

Utilize Latest Processes

Disruptive manufacturing processes such as Alotech’s Ablation Aluminum Casting can greatly strengthen components while reducing weight. However in order for companies to realize the full benefits of the latest processes it is critical that companies identify specific new processes they wish to utilize early on in the product development process and incorporate a buffer in their timeline for unforeseen new process challenges. Companies can also greatly reduce their product launch risk by developing backup plans for the most innovative processes to ensure their product launch remains on time if one of the latest processes are delayed.

Incorporate Innovative Materials

Innovative materials such as biomimetic materials that are not readily available can take time to develop reliable supply with strategic supply partners. It is thus critical for designers and engineers to partner with supply chain professionals early on in the product development process to identify possible innovative materials and then quickly define directional sources, timing, costs and investment to most efficiently incorporate the innovative materials into the product development timeline. Further early collaboration between designers, engineers and supply chain professionals often leads to previously unknown materials entering the product development discussion and ultimately being incorporated into the final product.

Implement Right Organization Structures

High growth technology companies have many creative options today to create “virtual businesses” that only a few years ago where not possible. Over the last several years leading Silicon Valley hardware entrepreneurs have leveraged the full benefits of organization structures that approach nearly 100% variable costs minus a few Co-founders. Companies utilizing strategic supply partners to support parts of the organization from sales, marketing, design, engineering to supply chain are on the rise due to the immense benefits that high variable cost structures provide organizations such as reductions in need fundraising, ongoing operations costs, and operational risk.

Utilize Appropriate Financial Models

Designing your product hand in hand with supply chain professionals from day one considering the financial models upfront will ensure your ultimate finished product meets program timing, investment, and cost targets. High growth companies will then be able to more accurately identify that appropriate type of financial models to utilize in launching new companies. As an example, utilizing an innovative process might require more upfront capital investment for the company resulting in the company having to raise more venture capital funds in order to appropriately account for this planned process investment. Outlining the needed technologies, processes, materials and organization structures in the product development process allows high growth technology companies to have a clearer plan to funding their venture and statistically to have greater success in raising funds due to this upfront planning.

In conclusion, a truly disruptive world class supply chain that is both defensible and sustainable should identify, prioritize and incorporate disruptive technologies, process, materials, organization structures, and financial models upfront in the business model, product development process, and supporting supply chain model to best ensure the future state product disrupts the market. To achieve product large scale adoption and growth the most important customer needs and wants should be addressed in leveraging disruptive technologies, process, materials, organization structures, and financial models. We hope the case for creating, implementing and executing a disruptive supply chain model early in your product development process will aid your efforts in bringing your disruptive product to market.