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Social Media Will Revolutionize Supplier Management

Proponents of social media expect tools such as Facebook, Twitter, and Google+ will revolutionize the way supply chains are managed. A recent article in CFO magazine lists five benefits social media provides to the supply chain. They are:

  • Creating Knowledge Networks
  • Balancing Speed and Contemplation
  • Portable Information Vaults
  • Replacing Collaboration with Community
  • Building a Platform for Innovation

CFO cites Wal-Mart, Intercontinental Hotels, and Network Rail as examples of companies that have used social media to innovate:

    Wal-Mart has developed its Supplier Greenhouse Gas Innovation Program to reduce GHGs across its supply chain. Intercontinental Hotels engages its suppliers to develop sustainable food-resource chains in order to reduce cost, improve quality, and support local communities. Network Rail launched an Innovation and Supplier Engagement Program in 2011 to improve customer-service levels and reduce cost.

The electronics supply chain also strives to reduce costs and improve quality, yet social media hasn't gained a lot of traction. A recent study conducted by {complink 2470|IBM Corp.} shows how executives' attitudes about social media vary from industry to industry. The report stated:

    A higher percentage of CEOs in education (77 percent), telecommunications (73 percent) and retail (72 percent) expect social media to be a key channel for customer engagement. In industrial products, only 34 percent of CEOs believe social media will play a significant role — the lowest of all industries; insurance (51 percent) and electronics (52 percent) are below the overall average.

The study doesn't delve into the exact reasons for the differing attitudes. But it appears that rather than using social media as a platform to conduct business, electronics executives view it as another means to collect information about customers. The IBM study adds:

    An electronics industry CEO from Japan described how his organization is helping B2B customers innovate by “incorporating the end user's voice directly into product development.”

In this regard, electronics distributors may be uniquely positioned in the supply chain to benefit from social media. Components makers share their product development roadmaps with distributors so distributors can target new-product design opportunities. If a component is placed in a design, that information is channeled back to the supplier. This data helps suppliers determine which products are most successful; which applications components are being used in; and the profile of customers most frequently using the devices. All of this information, industry insiders say, can assist component makers in developing their next-generation products.

For manufacturers and OEMs, the channel can provide feedback on supplier quality, order and delivery performance, lead times, pricing, and potential second sources. Since brand owners (OEMs) frequently outsource their manufacturing, suppliers have to be carefully vetted because a missed delivery can mean entire production lines shut down. Manufacturers also have to know that if product A is unavailable, product B is ready to ship.

However, much of this data is already captured and utilized by the typical electronics supply chain systems: ERP, MRP, EDI, and in-house solutions. Much of this data is considered highly proprietary by suppliers, distributors, and OEMs. Brand owners frequently secure preferential pricing from suppliers that they don't want to share. Component and board designs are considered a “secret sauce” by both component makers and OEMs. Since distributors and electronics manufacturing services (EMS) providers both service OEMs that compete with one another, a great deal of information is kept in silos to keep it secure from prying eyes. The “openness” of social networking may conflict directly with certain supply chain practices.

For this reason, electronics executives may be approaching social media with caution. According to the IBM study, which noted:

    Despite social media's frequent use as a way of communicating to customers, CEOs recognize its real value as a source of insight and a means of collaboration. “We use social media less as a marketing or distribution channel and more as a knowledge platform to obtain information about customers,” explained an insurance CEO from Switzerland. Of course, engaging with customers via social media escalates expectations for timely, relevant and individualized interaction.

The role of social media in the electronics supply chain is still very fluid. Could it be used as a transactional platform? Possibly. Can it be used for sales and marketing information? Absolutely. In upcoming blogs, I will look at the portability and collaboration benefits of social networking. The challenge for the supply chain will be balancing these benefits with the unknowns of social media. “We're not yet comfortable that social media has matured to the point we'll benefit more than we'll suffer,” explained an industrial products industry CEO in the IBM report.

26 comments on “Social Media Will Revolutionize Supplier Management

  1. bolaji ojo
    September 21, 2012

    Barbara, You asked a significant question in the post and in an earlier one. How will companies decide which messages can be relayed via social media and which ones must stay within a proprietary system in an industry where key details of a supplier relationship are usually kept hidden from other suppliers not to mention the public.

  2. t.alex
    September 21, 2012

    I think professional social networks like LinkedIn and a few others are the right tools in this case. We are typically in touch with vendors and customers via LinkedIn, aren't we?

  3. Ashu001
    September 22, 2012

    Bolaji,

    For this we need excellent Social Media Experts in charge.

    Only professional and experienced pros can ride the Social Media Wave effectively.

    Regards

    Ashish.

     

  4. Houngbo_Hospice
    September 22, 2012

    @tech4people:

    Many companies are still trying to figure out how social media can help them better understand and attract the attention of their target customers. They definitely need the expertise of professiionals to help them implement adequate strategies in order to achieve their goal.

  5. Houngbo_Hospice
    September 22, 2012

    @talex:

    LinkedIn seems to be the largest professional networks, but I think that Facebook and Google+ are also great places for professional and business networking.

  6. t.alex
    September 23, 2012

    Yep definitely. However be careful not to let customers or vendors bug you through Facebook after work hours. They may think that you are contactable easily.

  7. Ashu001
    September 23, 2012

    Rich,

    Lol!!

    You seem to have picked up all hat Ails Social Media perfectly in this Blog-post!!!

    Brilliant,Brilliant stuff!!!

    You have outdone yourself once again!

    At the end of the day,you need people who can successfully maneovere this space effectively-Else it will turn into nothing but a sinkhole for Precious Company resources.

    Regards

    Ashish.

     

  8. Ashu001
    September 23, 2012

    Alex,

    It actually depends.

    If you use Social Media extensively(outside of Work);then you should maintain seperate Profiles for work and Personal reasons.

    In fact I would go so far as to maintain completely different User accounts for this purpose.

    Else thing can get way too messy unneccesarily.

    Regards

    Ashish.

  9. Ashu001
    September 23, 2012

    Houngo,

    You need one person to manage all various networks and react accoridngly.

    No doubts about that.

    Regards

    Ashish.

  10. elctrnx_lyf
    September 23, 2012

    The social network is a great place of collaboration by sharing information to many parties instantly. But it requires a great deal of effort from EMS and Distributors to develop right applications that can be effectively used.

  11. hash.era
    September 23, 2012

    True social media can do big things but it lacks professionalism right now. The biggest out of the lot is FB and two words about it but when you try to do some serious business or marketing with a social media network, you do need to look into professionalism as well or else your business too will look like a joke.

  12. Ashu001
    September 23, 2012

    Electric,

    My points precisely!

     

    Ashish.

  13. FLYINGSCOT
    September 23, 2012

    The role of social media is still emerging in the electronics industry.  It certainly offers another medium for discussion but the exact purpose is still unclear.

  14. hash.era
    September 23, 2012

    Yes indeed the purpose is not clear at all but if you can make it work I feel the option a Platform for Innvoation is truely matched. For that you need to make big changes. Is the social media networks ready for it ?

  15. mfbertozzi
    September 24, 2012

    @Flyngscot: I agree with you, there is still a long way to run, anyway we can mention some successfull examples already in place; the area of end users support (or post-sales support) have celebrated a speed-up in the interaction among vendors or providers and customers.

  16. Himanshugupta
    September 24, 2012

    @FlyingScot, the current form of social media is not suitable to cater the electronic industry. I think that the chatter that social media generate is more garbage. Until there are ways to target more specfic audience or able to find more relevant information from chatter, the social media will keep evolving. 

  17. ahdand
    September 25, 2012

    I dont think with the current process this will be true. You need a high level of professionalism inorder to manage or handle the enteripse level actions.

  18. Barbara Jorgensen
    September 25, 2012

    I think if any of us had the answer to social media's impact we'd be counting our dollars on a private island somewhere. One reader made a good point that i try to keep in mind as I continue to examine social media both personally and professionally. Within an organization, social is a great collaboration tool. I see it in action every day within my organization. (I'm way behind the curve on its implementation…) It takes a fair amount of discipline to use it effectively, but I think in-house use can provide clues to social's external application.

  19. alawson
    September 25, 2012

    @Barb — Always excited to see you tackle the Social question, Barb. Well-written article. It seems that upper level management in the industry sees the importance and the usefulness of the social model, but have been unable to pull the trigger on a large scale. With no viable examples within the industry, it is hard to make a significant success case, and so we hear the same comments and excuses we have for 3-4 years now.

    I know am in the minority with my views on the power of Social, but I think more people would see it differently if they had more time, more education, and were given good reason to make use of the tools. It falls to the companies involved to set the right example and provide guidelines that bridge the learning curve and viable information rewards for time spent. And yes, those endeavors usually begin in house by setting the tone that social is a useful tool in our communication arsenal.

     

  20. Ashu001
    September 26, 2012

    Rich,

    One just can't win an argument with you can we?

    Could'nt agree more !!!

    Regards

    Ashish.

     

  21. prabhakar_deosthali
    September 26, 2012

    While so many other ways are available for Supplier management, I do not see any need to encroach upon the social networking media for this purpose. Let the social media remain something you brood over after the few cocktails at a business party or on a lazy weekend.

    Why should we try to pull them into business mainstream?

    These media have their own charm. It is like your gossip corner where you free up your mind after a day's hard and boring routine.

  22. Barbara Jorgensen
    September 26, 2012

    Hi Andy: Social does have its advocates, such as yourself, and they continue to speak out and educate the rest of us. For us slow-adopters, I think part of the issue is managing the feeds that come in from the various sources and culling through the spam.

    I also think for many of us, the status quo is good enough. I segment my contacts into various categories and manage them using tools such as LinkedIn, Fb etc. For me, social doesn't simplify things, it makes them more complicated. But I am willing to be convinced otherwise 🙂

  23. bolaji ojo
    September 26, 2012

    Himanshugupta, The chatter in social media can be considered “noise” but a lot of that occurs more at the general level that at the corporate level. Companies typically invest a lot in communication media and if they are spending money on social media they usually try to ensure the return on the investment is tangible. They may not be able to full measure the ROI now but money won't be flowing into social media if it's not profitable.

  24. itguyphil
    September 27, 2012

    I have come across a few CRM systems that actually tap into your 'social' contacts and allow you to see their feeds real-time so you can address issues realted to yourself easier.

    I don't recall the name (saw it on a webinar) but it seemed pretty helpful and aided in the confusion of having to switch back & forth between different devices/tabs to respond.

  25. Barbara Jorgensen
    September 27, 2012

    Hi Pocharle: I have too, and I cite a couple of examples in my follow-up to this article. Manhatten Associates is one such company and a major pharm company as well. I'd like to see a demo on this at some point to see how it works. It makes sense, as long as you can filter out the “noise” and cull/retain the valuable information. I must say this is one of the more logical approaches I've seen to integrating social into the workflow.

  26. Himanshugupta
    September 27, 2012

    Bolaji, i completely agree with your view that money won't be flowing into social media if it's not profitable. Companies are still trying to gauge their ROI in social media. Its not clear how much impact social media have or will have on communication medium. The best example is i think Facebook, whose shares are down (i think) by 40% or more from the time of IPO.

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