Article

Social supply chains: trend or threat?

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

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