Thought Leadership Article

Social supply chains: trend or threat?

Buzzwords like social sharing, interconnectedness, engagement, immediacy and transparency have left the confines of social media discussions dominated by marketers and have started scaring professionals across all levels and functions of organisations.

The Robotics and the ‘New’ Supply Chain: 2015-2020 report produced by www.RoboticsBusinessReview.com included some clues to supply chain changes that need immediate action:

  • tomorrow’s supply chains will be faster, smaller, cheaper and local. Some 70% of the supply chain leaders surveyed for the report were clueless about this new supply chain concept, and most admitted that they had no plans to change things for the rest of the decade
  • in an age of social-media-influenced selling, robot benefits will be huge and hugely transformative. Because robots are mobile computers, they will be able to interact directly with a customer, and be able to circumvent entire back office operations by directly taking customer orders from first interaction through to delivery and even confirmation of delivery
  • the bottom-line concern is that no matter how hard present-day logistics’ systems work, they will never catch up.

While forecasting and the increased adoption of demand driven materials resource planning (DDMRP) have already made significant inroads in reducing inventory levels and response times, data collected through social channels can increase the ability of forecasting systems to track where problems might occur before they occur.

Social media at its core is not about tweeting and liking and pinning and instagramming, but about access to information at a rate and volume that we’ve never experienced before. Adrian Gonzalez, founder and president of Adelante SCM, is spot-on in saying “social media can – and should – play a central role in supply chain management. After all, social networking is not really about socialising, but about facilitating peopleto- people communication and collaboration.”

Humans over the ages have always had an inherent need to gain and share information. With fast-growing popularity of broadcast mass media in the 1900s it became possible to share messages with large audiences quite quickly. However, it remained only in reach of those with big budgets and access to creative content creators.

The digital revolution took mass media one step further by making it possible for anyone with an internet connection to circumvent the privilege and limitations of traditional mass media. The social media revolution made it possible for everyone to share a message instantaneously, and as a result the speed of gaining and sharing information has increased to the extent where businesses and industries managed according to tried and true practices are struggling to keep up.

In 2008 the Future Supply Chain report (available from http://bit.ly/2016FutureSupplyChain) compiled by the Global Commerce initiative included a number of issues that required the urgent attention of supply chain professionals to find solutions that threaten supply chains. With only one year left until 2016, when the report advised these challenges be minimised, most supply chains still struggle with the same issues – collaboration, integration, balancing customer satisfaction and supply chain performance, increased energy prices, and e-commerce.

Similarly the report advised ‘systems of transactions’ be changed to ‘systems of engagement’ and predicted that access to these systems would no longer be limited to a select few companies with big budgets but to all allowing the younger generation of supply chain practitioners to lead the way. This process of change is hindered by experienced professionals who refuse to accept the impact of social media on business. As valuable as these professionals and their skills, knowledge and experience are, they have inadvertently become the ones who are placing supply chains at serious risk. Social media has already started impacting demand planning, sourcing strategies and transportation capacity of existing supply chains, and the impact is likely to increase exponentially.

Supply chains that are truly social demand a change in the DNA of the supply chain by making buyers part of the chain through being socially informed and who enable forecasting and feedback by, for example:

  • developing social listening and collaboration as a strategic capability
  • defining and controlling areas of focus for social input and sharing
  • investing in IT infrastructure that can enable social integration
  • designing processes to apply social insight as-it-happens
  • proactively training on, rather than reactively monitoring, the areas of social focus.

It is of utmost importance that social supply chain conversations not focus on the popularity or comparison of existing social media platforms. The conversation should much rather focus on the genuine acceptance of customer demands that now include simplicity and absolute transparency. Social thinking is not about tools; it’s about a social mindset. Supply chains willing to truly listen, collaborate and share will find themselves in a less threatened position for future growth.

The biggest challenge for supply chain professionals willing to embrace the necessary changes is to convince the entire supply chain to consider approaches that are currently resisted because they pose a risk to the status quo.

The benefits of social supply chains, however, far outweigh the risks:

Manage exceptions and risks faster – Supply chains can save time by evaluating the financial and operational consequences of any proposed changes in a timely and effective manner, and reach a quick consensus and compromise on the course of action. An e-mail to 50 people that might be able to work on a solution takes considerably more time to process and return feedback than a post on an internal, collaborative social network that can simultaneously reach 50 000 people who already have the answer.

Shorten inventory lead times – “The speed of the chain is not really related to the systems used by the various companies – it’s all about people, and people talking to people,” said Tony Martins, the VP of Supply Chain at TEVA Canada. “Traditional command and control structures are outdated. Social media can create a virtual table around which resellers, wholesalers, manufacturers and suppliers can sit at the same time, and work towards fulfilling market needs all at the same time … not in a linear process as is currently the case.”

Reduce response times – Being able to alter distribution based on social data, available in real time and at low cost is no longer a distant dream, but a reality already in use globally. Demand for new products based on trends can adjust import quantities, delivery schedules and even inform innovation. Adverse weather conditions forcing delivery delays can be logged and communicated before posing a threat to driver and fleet safety or customer satisfaction. Low stock level alerts can be triggered simultaneously at the retailer, manufacturer and distributor.

Leverage supplier communities – By leveraging supplier communities to make business decisions and improvements to the supply chain and the systems managing it can have a significant reduction in research, development and even IT support costs.

Transparency – Social networks can provide a wider view of the supply chain and enable a large kinetic entity, rather than static and separated cogs.

Innovate and improve – Social networking can help companies generate more – and better – ideas for improving supply chain processes and solving existing problems by tapping the collective insights, knowledge and expertise of employees across all levels of the enterprise (and beyond). If companies are already using ‘crowdsourcing’ to drive innovation in product development, why not apply the same concept to drive innovation in supply chain management?

Measure effectively – Fill-rate, accuracy and on-time delivery type metrics only inform how well we did our jobs, but do not provide the full view of how well we serviced our customers. Insights generated by monitoring social media channels provide extremely valuable insight that can have significant impact on supply chain planning.

Supply chains have run out of time to be comfortable and complex. In less than 18 months end-users will have found or designed a way to bypass the traditional supply chain by simply using existing technologies in new ways. It is time to take to heart the wisdom of Charles Darwin: “It’s not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”

Written by: Juanita Vorster
Date: 25 May 2015
  • Warehousing in South Africa today – and the near future Worldwide, in the warehousing business, when future operations are discussed, the conversation is likely to be about more automation, greater variety, better systems, more integration, more efficiency and greater flexibility. The dreams, discussions and plans focus on issues such as robotics, the ‘Internet of Things’, tomorrow’s deliveries by drones, 3D printing, multi-channel fulfilment, ecommerce growth, rapid fulfilment and the need to individualise operations.
  • Warehousing 2018: from cost centre to growth centre Warehousing operations and IT professionals need to respond positively to the significant changes and challenges that will be influencing the industry over the next five years – or face disaster.
  • Raising productivity and morale in the warehouse It’s a well-known fact that happy and motivated workers produce better results. A recent study found that happier workers were 12% more productive than their counterparts. It underlines staff morale and wellbeing is not just an HR goal: it’s fundamental to business performance levels.
  • Supply chain orchestration – people are needed to play the music It’s easy to think supply chains consist of co-ordinated processes, enabled by cool IT, through which needed products flow smoothly with occasional storage to the end consumer. Great in theory but it takes the right people doing the right things at the right time to make end customers happy.
  • Africa: the giant IS awakening – seriously September saw the respective international conferences of two major supply chain management industry bodies – that of the International Federation of Freight Forwarders Associations (FIATA, in Taipei) and that of the Chartered Institute of Logistics and Transport (CILT, in Dubai). At both gatherings there was substantial African representation and, at the CILT Convention, Africans were in a clear majority. What does this imply for African businesses?
  • The Moneyball Problem OPSI Systems recently hosted the annual Operations Research Society of South Africa’s (ORSSA) conference, and it served as an illuminating example of the intersection of experience, education and technology.
  • Warehousing in South Africa today – and the near future Worldwide, in the warehousing business, when future operations are discussed, the conversation is likely to be about more automation, greater variety, better systems, more integration, more efficiency and greater flexibility. The dreams, discussions and plans focus on issues such as robotics, the ‘Internet of Things’, tomorrow’s deliveries by drones, 3D printing, multi-channel fulfilment, ecommerce growth, rapid fulfilment and the need to individualise operations.
  • Warehousing 2018: from cost centre to growth centre Warehousing operations and IT professionals need to respond positively to the significant changes and challenges that will be influencing the industry over the next five years – or face disaster.
  • Social supply chains: trend or threat? Buzzwords like social sharing, interconnectedness, engagement, immediacy and transparency have left the confines of social media discussions dominated by marketers and have started scaring professionals across all levels and functions of organisations.
  • Raising productivity and morale in the warehouse It’s a well-known fact that happy and motivated workers produce better results. A recent study found that happier workers were 12% more productive than their counterparts. It underlines staff morale and wellbeing is not just an HR goal: it’s fundamental to business performance levels.
  • Bridging the divide between fleet managers and drivers The relationship between drivers and fleet managers can often be challenging due to high productivity pressures and a lack of understanding regarding each side’s difficulties.
  • CHEP ‘Blue Motion’: gaining instant control of the SC CHEP South Africa’s newly launched ‘Blue Motion’ mobile application will allow wholesalers and retailers greater control over their supply chains. Named for the company’s distinctive blue pallet range, the application provides its customers with a mobile asset management system utilising real-time data, which can be formatted to suit customers’ specific needs.
  • Horses for courses – hub and spoke in rural Africa Moving goods from source to destination through Africa is a multidimensional challenge and one where first-world thinking still trumps appropriate. A change in game needs to happen.
  • Human error and accidents and the role of self-regulation Companies using third party contractors to move their goods are confronted with the challenges of poor economic growth, ever increasing transport costs and high rate of accidents. In an environment with one of the worst accident rates in the world, where accidents cost the economy an estimated R300-billion annually, something different needs to be done, but what?
  • The Analyst Age Data this, data that – data is certainly getting its due, but where do you fit in?
  • Supply chain orchestration – people are needed to play the music It’s easy to think supply chains consist of co-ordinated processes, enabled by cool IT, through which needed products flow smoothly with occasional storage to the end consumer. Great in theory but it takes the right people doing the right things at the right time to make end customers happy.
  • Truck drivers: obsolescence or opportunity? As new technologies shift the dynamics of employment in the supply chain, transport managers will have to gauge where the real benefits lie, and nowhere is this more apparent than future self-driving vehicles.
  • An Imperial solution in Malawi An effective supply chain model established by Imperial Health Sciences to deliver essential medicines to the people of Malawi has successfully achieved this goal, and, in addition, has resulted in the growth and development of a local logistics service provider.
  • Africa: the giant IS awakening – seriously September saw the respective international conferences of two major supply chain management industry bodies – that of the International Federation of Freight Forwarders Associations (FIATA, in Taipei) and that of the Chartered Institute of Logistics and Transport (CILT, in Dubai). At both gatherings there was substantial African representation and, at the CILT Convention, Africans were in a clear majority. What does this imply for African businesses?
  • Powering up your distribution As South Africans struggle with load shedding and Eskom angles for a hefty rate increase, we’ve been learning – with something bordering gleeful resentment – about the intricate details of national power supply.
  • Out … but not forgotten Outsourcing logistics and supply chain functions is commonplace today by manufacturers and shippers – but do customers get the deal they expect or deserve? It depends.
  • Managing change for long-term success The second episode of a three-part serialisation of the supplychainforesight 2015 research report highlights that with new technologies being introduced, and companies competing in an increasingly cutthroat and competitive ecosystem, the ability to make key shifts and transform from within is becoming essential for survival – and for long-term business success.
  • Exciting times – harvesting our youth dividend Legislation and other Government interventions may assist in transforming our society into one in which the limitations on each individual’s success are only self-imposed. A more important element to a nation’s success, however, is that those who have gained experience and expertise take proactive steps in using those assets to invest in society’s future – our young people. We examine the opportunities this represents.
  • The Moneyball Problem OPSI Systems recently hosted the annual Operations Research Society of South Africa’s (ORSSA) conference, and it served as an illuminating example of the intersection of experience, education and technology.