Social Media and the Coming Supply-Chain Revolution

Use of modern communications tools within supply chains is lagging way behind their usage for other operational needs, but change is in the air.
Shawn CasemoreFebruary 29, 2012

We have all witnessed the effective assimilation of social media into marketing and human-resources strategies. However, very few companies have integrated the modern communications tools into their supply chains, even though there are a number of good reasons to do so.

That will probably change over the next few years. Most of the commercially available social-media software products remain in their relative infancy. But 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 to not only improve communications but also build a valuable knowledge repository.

Below are five key benefits of social media in the supply chain, based on our research and work with clients internationally.

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1. Creating Knowledge Networks
Organizations of all sizes are increasingly using Facebook and Twitter to rapidly capture and respond to customer feedback. It’s certainly possible, then, to use social media to get real-time feedback from the supply chain, both internally (inventory, warehousing, and procurement departments) and externally (suppliers and contractors).

The result can be characterized as a powerful, knowledge-absorbing vacuum unit. When a company with a materials or equipment need, say, has a network of suppliers watching its supply-chain Facebook page, it can post the specs on what it needs, pictures and video of the materials or equipment, a due date for bids, and other relevant information. Suppliers can respond, and the company can respond back to them throughout the supply-chain cycle. That leaves a trail of communications that constitute a complete record of the request, the supplier selection and performance, and any related issues that crop up.

Anybody that’s in the network can see all of that information in one place instead of searching through e-mails and other isolated communications. And you can build on that. One effective tactic is a best-practices blog. If someone posts “I tried this and it didn’t work, but I tried that and it did,” that information can be accessible permanently.

The currently popular but static supplier portals will become extinct as these more flexible supplier knowledge networks proliferate.

2. Balancing Speed and Contemplation
Effective decision-making usually requires such a balance. The rapidity with which many social-media platforms can provide video, audio, and written communications across a vast network of suppliers, in real time, will turbo-charge decision-making in the supply chain. It will ensure that pertinent information is considered regardless of how fast a decision must be made.

3. Portable Information Vaults
The continued increase in demand for information portability (i.e., availability over mobile devices) requires the ability to instantaneously access information. E-mail has generally proven insufficient for that purpose. Social media is well positioned to offer the necessary platforms.

4. Replacing Collaboration with Community
Given the risks inherent in global sourcing and the need for continual innovation in order to maintain a competitive advantage, supplier relationships must move beyond collaboration. The still-evolving demand for transparency in business requires ever-closer relationships with key suppliers. Building a community of suppliers where business-critical information, opportunities, and thoughts can be shared and built upon in real time will become the leading edge for many organizations. Social-media platforms are ripe to be the foundations for such communities.

5. Building a Platform for Innovation
Creativity and innovation are the staples of any leading-edge organization. Engaging suppliers, such as through social media, is the best way to stimulate supply-chain innovation.

Examples of innovation across supply chains abound. 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.

You may recollect that transitioning from paper to electronic mail was going to reap big cost savings as a result of reduced paper consumption. In reality the opposite was true, as maintaining hard-copy documents became necessary due to the risks associated with electronic file storage.

The quantifiable benefits from supply-chain integration may not yet be evident, but the transformation of communications and knowledge sharing is inevitable.

Shawn Casemore is president of Casemore & Co., a consulting firm specializing in supply-chain management.