The innovation equation

Innovation can be groundbreaking and paradigmatic, like the invention of the computer, and lead to other innovations as offspring of the initial idea, i.e. the Internet. Also, innovation can be improvements to a system or product, that will solve issues that arise as the initial innovation matures - these innovations are pivotal to optimize efficiency. What we will try to disclose in this white paper is how companies in the parcel logistics industry continuously can contrive innovative ideas that improve efficiency.

What is innovation?
There are many definitions and notions of what innovation is, what it takes, and how it is done. Michelle Greenwald, founder of DigitaLatest, and Marketing Professor at NYU Stern School of Business, states, that innovation can be described as something that: “(Challenges) conventional notions of how things have been done before” . John Bessant, Author and Professor of Innovation and Entrepreneurship at University of Exeter, says that: “It’s all about what users want and need, so it’s up to businesses to make sure that they have a good set of antennae to pick up on these trends” . Greg Satell, Innovation advisor and bestselling author states that: “We tend to think of innovation as arising from a single brilliant flash of insight, but the truth is that it is a drawn-out process involving the discovery of an insight, the engineering a solution and then the transformation of an industry or field. That’s almost never achieved by one person or even within one organization” . This means that while the initial innovative idea might develop in the mind of a single person, development, progression, execution, and implementation of that idea is not. To be successful in innovating, it is pivotal to have broad and deep knowledge of the market the idea is targeted towards. First of all, the idea must bring something new to the table. Secondly, it needs to satisfy needs and demands not necessarily conscious of by the market. And finally, close cooperation and trustful interpersonal and inter-corporate relations between companies.

Inter-corporate relations drive beneficial innovation
As established, it takes market insight to innovate; insights into your business partner’s needs and demands and the end-user’s preferences – insights that take time to gain, and willingness from all parties to share knowledge with the other to gain more of. Rene Korving, DHL Express B2C Program Manager Ground Operations Europe, explains how SwipBox use their insights to innovate and create value for DHL Express:

“What we see in the cooperation with SwipBox is that it’s a real partnership, so we work in openness and honesty. (…) I’m not only feeling like a customer, it’s a real partnership. (…) Sometimes it feels like we are just working as colleagues in one company - It’s not the case of course but it feels like it at least. (…) We look at a company that is looking into innovation in new ways, and not only waiting for me as a so-called customer to come up with a question or a demand, but perhaps also surprise me sometimes with a good idea; hmm have you ever thought about this solution? - That’s how we cooperate”.

Rene Korving’s statement demonstrates that innovation is a non-linear process that is never completed – it is a circular process that involves inhouse expertise, as well as close cooperation with business partners. Moreover, it proves that sharing of knowledge and being proactive in the search for innovative ideas add value to the equation (Innovation process illustrated below).

The last-mile logistics case
Taking a look at the parcel logistics industry, companies handling logistics are continuously looking at systems and processes that can streamline their businesses. For decades, the industry has been working on implementing new hardware, software systems and processes to make first-mile logistics more efficient, however, last-mile logistics seems to remain the headache in the business. While shopping for goods is increasingly digitalized, handing over parcels remain analogue in nature. However, digital inventions have had an impact on last-mile logistics, such as the invention of the global positioning system, GPS, which has enabled more efficient ground logistics and computer software, that have systematized procedures. Nevertheless, these inventions have not entirely solved the major problems of last-mile logistics; lowering the mileage and time consumption of the physical process of handling single parcel hand-overs. Drone deliveries, like Amazon’s Prime Air and Autonomous Vehicle deliveries might not be perfected yet, but in the near future they will probably be seen in our cities and disrupt commerce, and thus, e-commerce and the parcel logistics industry – along with networks of manned service points and parcel lockers. By centralizing end-user handovers, both types of networks are combining analogue and digital features to make last-mile logistics more efficient. However, these products and services have not just dropped down from the skies. Companies, such as Danish SwipBox, have specialized in providing innovative products and services for logistics providers to capitalize on. Only the future will show how the above-mentioned innovations, and the combination of these, will add to the innovation equation of the parcel logistics industry.