Social Media: A Platform for Supply Chain Innovation?

Tools such as Facebook and Twitter seem like the perfect solution to an age-old problem in forecasting: How do you communicate real-time supply and demand data from any point in the supply chain? And with the added benefit of mobility, social media could revolutionize supply chain management.

Proponents of social media cite a number of advantages over typical networking solutions: They are open (meaning they are hosted on the Internet), portable, and instantaneous. The author Shawn Casemore writes in a CFO magazine article that social media can provide a platform for supply chain innovation.

“Creativity and innovation are the staples of any leading-edge organization,” he writes. “Engaging suppliers, such as through social media, is the best way to stimulate supply-chain innovation.”

The speed at which social media platforms can provide video, audio, and written communications across a vast network of suppliers can “turbo-charge” decision making in the supply chain, according to Casemore. However, few companies have integrated social media tools into their supply chain platforms. That is set to change:

Early adopters of dedicated platforms for real-time communications within the supply chain, such as Home Depot and Teva Pharmaceuticals, have developed and are evolving solutions not only to improve communications but also build a vast knowledge repository.

The electronics industry has embraced social media, but there are still many questions about its use for supply chain purposes. Social media are proving their value in customer engagement. {complink 2470|IBM Corp.} found in a recent study that C-level executives are tapping social media as a feedback tool. EBN contributing editor Tam Harbert writes in her report on the study:

With customers and business partners, CEOs see social media as a key enabler. More than half expect social channels to be a primary way of engaging customers within five years. Companies are also investing in data analytics to convert customer data into insights and insights into action. More than 70 percent of the CEOs are looking for ways to understand customers and improve responsiveness. CEOs, particularly those in the electronics (86 percent) and automotive (80 percent) sectors, are making major changes to respond better to individual customer needs. “This is now a continuous feedback kind of world,” said one CEO. “We need the organizational nimbleness to respond.”

It isn't a stretch to convert that information for use in the supply chain. An OEM Facebook page could show product specs, pictures, and videos; list its materials or component needs; and set a deadline for bidding. Customers could provide feedback on a product's performance or a company's customer service and support. Queries could be sent to an OEM, which could respond immediately. “That leaves a trail of communications that constitute a complete record of the request, supplier selection and performance, and any related issues that crop up,” Casemore writes.

A key question in electronics, of course, is how much information should be easily visible to any user (including your competitors). Casemore writes that anybody in a company's network can see information in one place, “instead of searching through e-mails and other isolated communications.” In the eyes of the electronics supply chain, that may not be an advantage.

Most supply chain data is transmitted via EDI, a proprietary communications system set up with vetted and trusted suppliers and customers. Though social media can let users select (Friend, follow, etc.) specific users, it is difficult to verify the identity of users without relying on Facebook or Twitter to intervene. EDI and comparable systems are also automated to send demand signals when supplies are depleted anywhere along the network. Communication via Facebook and other social platforms relies on having all your contacts monitor the page at the same time or through email alerts.

EBN has found that, in electronics, users are most likely to use social networking for troubleshooting and reaching out to peers. Design engineers may use social media to keep working 24/7 in all regions of the world. A quick Facebook post or tweet — “Has anyone had experience with the clock speed of this widget?” — can reach hundreds of peers. Designers can also use these platforms to collaborate with their peers by sharing their experiences with a specific component or design.

When it comes to purchasing, however, users do not volunteer information. Many electronics companies have proprietary pricing arrangements with suppliers. An order size can offer clues about the volume a product is expected to yield. The mix of devices can provide clues about the product's design. Typical supply chain networks are set up with firewalls to keep such information from being shared.

The gray area between personal and professional relationships is also a sticking point. A poll of EBN readers indicated a big gap between the personal and professional spheres. More than 89 percent of respondents said personal friends and contacts should be separate from professional friends and contacts.

Maintaining such a separation is possible, of course, but managing multiple personalities on social sites quickly gets confusing. For the time being, at least, the electronics industry is integrating social media, but at a very cautious pace.

In future posts, I will look at some of the other attributes of social media and their application in the supply chain.

6 comments on “Social Media: A Platform for Supply Chain Innovation?

  1. bolaji ojo
    September 18, 2012

    Barbara, I think social media can be used in the supply chain but simply as another source of information about developments and purchase patterns rather than as a serious tool for communication between buyers and sellers. For now, many companies are using social media to engage with their audiences and publicize their activities. They are in what I can the exploratory phase of the possibilities of social media. It will take some time for this to evolve into a viable business tool.

  2. Barbara Jorgensen
    September 18, 2012

    Blaji: Agreed. I tend to always look at things in terms of a transaction base–can it be used to transact supply chain orders, etc. — whereas the real value of social media comes from the information it provides. I agree there is a lot of room for it in the supply chian world.

  3. _hm
    September 18, 2012

    Many organizations will not allow their employee to participate in this type of activityies unless it is proved. Also, risk involved with this is much higher. One needs to be very careful.


  4. Greg Riemer
    September 19, 2012

    I think your point about security and authentication is spot on. Yet once you start to close communities and networks you generally lose a large portion of your audience. It's a tough balancing act and one that will need to be addressed before social channels will truly impact the supply chain, because without executive buy in it will not happen.  

  5. KevinPermenter
    September 19, 2012

    Social networking goes beyond facebook and twitter. The idea that social media equals facebook is just not right. There is a growing number of enterprise software companies that are offering social networking products including SAP and Mahattan Associates. These software companies are realizing that many companies are a already cobbling together internal social network (wikis, video sharing, messaging) for disementating information quickly and efficently within their companies. Your blog mentioned TEVA but companies like Target, Home Depot and Sears are all ultilizing social networking to coordinate supply chain functions and operations. Please don't gloss over the importance of internal collaboration and coordination to supply chain performance and the role that social networking will play in facilitating it. 

  6. Barbara Jorgensen
    September 20, 2012

    @Kevin: Thanks for your input and keep reading! There are several follow-up stories to this one on social media. I was recently directed to several such case studies on the integration of social and the enterprise. I plead guilty to limiting my examples to twitter and Fb as they are the platforms I am most familiar with. (In fact, many of the companies that provide cloud-based collaboration platforms use Fb as an example.) More research to do.

    Good point on internal collaboration. I wonder whether there is research on the use of social media vs intranets? I know it isn't an eithe/or decision, but I find users tend to favor one over the other.

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