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Social Media and the Supply Chain, Part 1

September 12, 2012


Social media is a phenomenon that people are still trying to figure out how best to exploit. For example, in a Dilbert cartoon strip, Wally tells a fellow worker he can’t help him because “he’s busy working on a social network strategy for [the company’s] supply chain.” The fellow employee retorts, “That sounds like something that no one wants or no one needs.” Unflustered, Wally responds, “That’s probably why it’s taking so long.” When Adrian Gonzalez asked participants at a conference how many of them felt that Wally’s fellow worker had the right idea, he says a solitary hand was raised. [“Is Social Media in Supply Chain Management a Waste of Time? Logistics Viewpoints, 12 October 2011] Commenting about that occasion, Gonzalez writes:

“Based on the huge turnout and the interactive discussion we had, the vast majority of the people who attended the session–comprised of both young professionals and seasoned executives–recognized the vast potential for social media to enhance the way people up and down the supply chain communicate and collaborate with one another; improve the way companies discover and analyze real-time information to make smarter and faster business decisions; and enable new, more efficient supply chain processes.”

Atin Bhola agrees. “One of the key factors contributing to the success of a supply chain is the collaboration between the supply chain members,” he writes. “Research has proved that the use of social media can vastly improve the sales, lower costs of procurement and bring about innovation in the supply chain.” [“Supply Chain Collaboration and Social Media,” Supply Chain Management, 5 September 2012] Gonzalez and Bhola agree also agree that social media has primarily been consumer facing. “Up to now,” Gonzalez writes, “social media has been used mostly by business-to-consumer (B2C) companies to promote their brands and market their products to consumers. The early adopters have been young professionals who already use these tools in their personal lives, and the focus has been largely on enhancing external communication, mainly with consumers.” Bhola adds:

“Today, customers are influenced by reviews and comments of supplier/company posted on social media. Also, since the amount of people using social media today is so huge that the number of likes/dislikes on a product/company can greatly influence a customer’s perception. If data from such social media can be integrated to supply chain, it can prove to be a great tool to attract customers.”

Bhola explains that one reason social media has been almost solely focused on consumers is that “in today’s competitive environment, it’s difficult to find new customers.” With so many potential customers using social media sites, it’s natural to see those sites as potential pools of customers. He continues:

“Hence, it’s getting increasingly important for companies to increase revenues with existing customers. The only way this can happen is to collaborate effectively with existing customers to turn them into big accounts. Social media can be a wonderful tool to bring about this change.”

Both Bhola and Gonzalez believe that the time has come to use social media in a much broader way. Gonzalez explains:

“Moving forward, however, more business-to-business (B2B) companies will use ‘social networking’ solutions (which includes not just public sites like Facebook and Twitter, but also enterprise systems like Moxie Software and Yammer) to enhance external communication and collaboration with customers, suppliers, logistics service providers and other partners, as well as improve internal communication and collaboration between co-workers and across functional groups. Five years from now, as one of the panelists (Michael D’Angelo from Volkswagen) commented, we won’t be talking about social media in supply chain management–it will just be supply chain management.”

Bhola adds:

“A study has revealed that employees [using social media capabilities] are able to interact more effectively with their suppliers and attain the latest information regarding the latest trends and technologies through the use of social media. Interaction through social media with suppliers can help bring about better service and on-time deliveries. This, in turn can help the vendors as well, since the customers start trusting these vendors and start giving them bigger business based on their reliability and sustenance. This eventually can turn into a symbiotic relationship since longer vendor collaboration leads to lower costs.”

Trevor Miles agrees with both Bhola and Gonzalez that social media capabilities should be more widely used. In fact, he notes that such capabilities are now being referred to as “engagement platforms.” [“Engagement Platforms need Responsibilities,” The 21st Century Supply Chain, 30 August 2012] Miles begins his post quoting from another blog written by Ray Wang entitled The New Engagement Platform Drives The Shift From Transactions. Wang wrote:

If Business Value And Outcomes Are The Goal, Then We Need An Engagement Platform For The Enterprise. …  The arrival of engagement platforms does not signify time to throw out the transactional systems. In fact, those systems provide the foundation required for engagement. The engagement layer exposes transactions and allow for deeper interaction and richer sources of information. However, the transactional systems lack the ability to support engagement. … While crafting the right strategy should be designed prior to any technology selection, once completed, the technology to support the strategy does not exist out of the box from ANY solution provider. Unfortunately, the technologies to achieve engagement remain disparate and hodge podge.”

Miles writes that he agrees with Wang but he believes “there are two critical capabilities that are needed to make a solution relevant to the enterprise space.” He explains:

“The first is to take social network concepts and convert them into a responsibility network. In business, specific people need to act, so messages/alerts need to be directed, not broadcast to everyone. Secondarily there is the need to separate the urgent from the important, to increase the signal to noise ratio. In other words, there is the need to be able to evaluate the business impact of a piece of information.”

In order to evaluate a piece of information, Miles writes that a business must know the “why, who, and how” associated with that information. He explains:

“For example, a supplier may decommit from an agreed delivery date. Who needs to know and why? The answer will depend on each person’s responsibility. Clearly the purchasing agent should be notified. Who else? Well, that depends on the impact the late delivery has on the rest of the supply chain. If it is going to mean that a production plan needs to be revised then someone in manufacturing needs to know, but whom? How do you determine the person to tell when your supply chain is outsourced? If the production plan needs to be revised, is there a revenue and customer service issue? Which customers are affected? Who should know about the revenue impact and who should know about the customer service impact?”

I find Miles’ arguments compelling. If you can implement an engagement platform that performs as he envisions, you don’t need much imagination to understand the powerful impact it could have on an enterprise. Miles goes on to explain his vision a bit more. He writes:

“As I commented in 2011 in a blog titled ‘Who should know?’ The key to the use of social networks in the supply chain, tremendous value is added by determining:

  • What are the downstream and upstream impacts?
  • When will these occur?
  • How much do these impact performance metrics such as revenue, customer service, equipment utilization, etc.?
  • Who needs to be informed and what actions do they need to take?

“What is also required is a collaborative environment in which the people impacted and responsible for taking action can evaluate different scenarios to determine how to overcome the issues at hand. They need to be able to run rapid what-if analysis to determine the operational and financial impacts of a decision in order to make trade-offs across competing function and organizational metrics. We call this an Operations Control Tower, in which orchestration across multiple functional boundaries is a requirement.”

Clearly, advanced technology is required to implement fully the kind of system that Miles lays out. Tomorrow we’ll continue the discussion about the impact that social media can have on a business.

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