Driving Innovation in Logistics: Case Studies in Distribution Centres Claudine A. Soosay and Paul W. Hyland The concept of innovation is valued in most organizations to create and sustain competitive advantage. Firms need to innovate in order to stay ahead in the market. Businesses are expe- riencing the internationalization of technology-driven competition, globalization of manu- facturing, shorter product life-cycles, increasingly sophisticated customers needs and a greater integration of technologies (Shepherd & Ahmed, 2000). These challenges have compelled organizations to develop innovative strategies, products and processes. One area that is increasingly seeking ways of adding value through innovation is the logistics function. This paper examines and compares factors that are driving innovation in Australia and Singapore in distribution centres part of the logistics function that has been slow in the past to innovate. any differences between the drivers of inno- vation in Australian and Singaporean distri- bution centres. Innovation Organizations competing in dynamic markets with rapidly changing technology should attempt to counter the risk of being overtaken by competitors, or underestimating any poten- tial challenges they face. For them to be successful, they may need to innovate (Johne, 1999). Innovation is considered a fundamental component of entrepreneurship and a key element of business prosperity (Nonaka & Takeuchi, 1995). This is becoming even more evident as developed economies move into a post-capitalist, knowledge-based society (Drucker, 1992). There is continuous change in the state of knowledge, as well as the exponential advancements in technology, consumer demands and global competition (Johannessen, Olsen & Lumpkin, 2001). The combination of a strong market presence, compelling product offerings and the ability to attract, retain and harness the energy of the best and brightest employees will enable com- panies to sustain profit margins, sales growth and market valuations. Innovation in prod- ucts, processes and organizations is required to make the difference (Brafman & Folmer, 1998). DRIVING INNOVATION IN LOGISTICS 41 © Blackwell Publishing Ltd, 2004. 9600 Garsington Road, Oxford OX4 2DQ and 350 Main St, Malden, MA 02148, USA. Volume 13 Number 1 March 2004 Introduction F irms need to innovate quickly before their competitors just to stay ahead. Producing the same things more efficiently alone is no longer sufficient. Strategies and programmes that have worked in the past may not be relevant today. Innovation can be the dif- ferentiating factor in sustaining an organiza- tion’s long-term competitiveness because it allows for quantum leaps in capacity and value-added growth. At present, markets are experiencing the internationalization of technology-driven competition, globalization of manufacturing due to faster tran sitional flows of materials and money, compression of product life cycles, need for greater integration of technologies and increasingly sophisticated customers (Shepherd & Ahmed, 2000). These challenges have inevitably resulted in many organizations turning to innovative measures and strategies. This paper examines the drivers of innovation in the logistics function with particular emphasis on distribution centres. Specifically this research seeks to iden- tify the drivers that are operating in distribu- tion centres and to determine if these drivers are internal or external. As businesses seek to find more ways to innovate, the emphasis has moved from the production function to other links in the supply chain. Using a series of case studies this research attempts to identify if and how drivers of innovation vary and if there are