Supply Chain Frontiers issue #17. Read all articles in this issue.
MIT is part of a critical supply chain at energy giant BP – the supply chain of Human Capability, according to company CIO John Leggate. The novel supply chain delivers innovative ideas several years before they reshape the business environment and enables BP to stay ahead of the competition. Leggate’s own role reflects this out-of-the-box mentality; in addition to CIO he is Group Vice President, Procurement and Supply Chain Management.
BP has developed a unique channel for new ideas called the Blue Chalk Process, which Leggate described during a special presentation organized by MIT Supply Chain Management Club this October. The process “is a lot about learning to thrive and survive in a rapidly changing world,” he said. It is a world which is “at the busy cross roads of Moore’s Law and Globalization,” and navigating this intersection “is akin to crossing Times Square at peak traffic with the traffic lights down!”
Blue Chalk events consider perhaps two big-picture themes, such as geopolitical trends and the nature of the workplace. BP’s business needs over the next five years and beyond are also included in the mix. In planning these events, the company looks for potential major dislocations and world-class themes, and presenters who are on the leading edge of their fields. “The meetings are often a bit edgy” Leggate said, with the first day typically involving an “overload of input.”
A handful of viable ideas may emerge from this creative cauldron, and these are put on trial within the organization. “These trials operate at the edge of routine business,” he said. From the emergence of an idea through trial to introduction at scale and finally to business as usual can take at least four to seven years. This is a fairly typical innovation cycle. For instance Leggate pointed out that it took about four years for DVD’s to supplant VHS. However, the pace of innovation is speeding up. “Now typically the adoption of digital innovation from a first awareness or “sensing” of the new technology to mainstream implementation typically takes about 18 months,” he said.
Over the last decade BP - as well as many other businesses - has been engaged in a process of continuous transformation through automation and the adoption of digital technologies. In 2004, $9.6 trillion of the $ 55.6 trillion of worldwide trade was directly transacted on the public internet, he said.
The dark side of this dependency is the risk of system failure, which is where Leggate’s multi-stranded corporate role comes in. “Cyber security and supply chain security are increasingly part and parcel of the same aspect of business,” he said.
Leggate likened the global digital economy to the Wild West of a hundred years ago, in that both frontiers are characterized by high opportunity and risk. “You’ll see that cloud of dust coming over the hill and before it hits town, you need to work out whether it’s the stage coach or bandits coming to loot and pillage your corporate business model,” he said.