Social Media and the Supply Chain

Stephen DeAngelis

November 15, 2011

Today you’ll notice that there is a new name, look, and feel to the blog. The change was made to complement Enterra Solutions’ new web site. It seemed fitting to make the change on post discussing social media.

At a recent conference, Adrian Gonzalez asked the audience, “Is Social Media in Supply Chain Management a Waste of Time?” [Logistics Viewpoints, 12 October 2011] To demonstrate that he wasn’t the only person wondering about the answer to that question, he showed the audience a Dilbert cartoon where, in the first panel, a co-worker has just asked Wally for some help. Wally replies, “I can’t help you because I’m busy working on a social network strategy for our global supply chain.” To which the co-worker replies, “That sounds like something that no one wants and no one needs.” Nonplussed, Wally retorts, “That’s probably why it’s taking so long.”

Frankly, a lot of companies are struggling to develop a relevant social media strategy. It’s not easy because each company’s situation is different. Each target audience is different. What social media has to offer various enterprises is idiosyncratic. Based on Gonzalez’ question and his use of the Dilbert cartoon, you might conclude that he is anti-social media. You’d be wrong. He writes:

“Based on the huge turnout and the interactive discussion we had, the vast majority of the people who attended the session–comprised of both young professionals and seasoned executives–recognized the vast potential for social media to enhance the way people up and down the supply chain communicate and collaborate with one another; improve the way companies discover and analyze real-time information to make smarter and faster business decisions; and enable new, more efficient supply chain processes.”

Because social media strategies are uniquely tied to specific companies rather than a one-size-fits-all course of action, Gonzalez concedes that it is easy to be skeptical about all the fuss and bother. The most successful social media strategies, to date, have been consumer facing. Gonzalez, however, believes that is about to change. He writes:

“Up to now, social media has been used mostly by business-to-consumer (B2C) companies to promote their brands and market their products to consumers. The early adopters have been young professionals who already use these tools in their personal lives, and the focus has been largely on enhancing external communication, mainly with consumers. Moving forward, however, more business-to-business (B2B) companies will use ‘social networking’ solutions (which includes not just public sites like Facebook and Twitter, but also enterprise systems like Moxie Software and Yammer) to enhance external communication and collaboration with customers, suppliers, logistics service providers and other partners, as well as improve internal communication and collaboration between co-workers and across functional groups.”

In other words, Gonzalez is predicting that social media capabilities will be used to breach internal corporate silos and external supply chain opacity. He asserts that within half a decade “we won’t be talking about social media in supply chain management–it will just be supply chain management.” He claims that we are at a “social media inflection point.” He underscored his point using the following slide.

At-the-Social-Media-Inflection-Point

To put it another way, social media strategies are not just about getting someone to “like you” on Facebook; or as Lora Cecere puts it, social media is “More than just a F-WORD.” [Supply Chain Shaman, 13 June 2011] She fears that a social technology bubble is being created that could burst and leave disappointment in its wake if not managed correctly. She explains:

“Many of us, … have lived through [tech bubbles] before. … We watch them form and skeptically view the horizon as the press fills it with names and concepts that are new. There will be hype, technology pitches/marketing with over-inflated expectations, brilliant early adopters that will flash with brilliance and then fade, shortly followed by the hangover or period of disillusionment. However, … I believe, that this bubble offers supply chain leaders great promise if we can look past the hype, side-step the early missteps, and shape the promise.”

Cecere makes a distinction between “social technology” and “social media,” which she believes is an end state. She believes that social technology is “more than hot air” and “is ready to take flight.” She continues:

“While the press strongly touts it, I strongly believe that here is more to it than just a ‘F-word’. I believe that it can be the redefinition [of] networks, a new way of defining demand processes from the outside-in, offering new possibilities to listen and have dialogue with the customer’s customer, and to sense market changes with less latency. It is about a new type of technology: networks that can connect the socialgraph with personalized interests to actively communicate with micro-segments of the market. It is about dialogue.”

Cecere and Gonzalez seem to be in agreement on this point: social media strategies for most companies are going to be about communication and collaboration. Cecere is concerned that some people will confuse social media strategies with eCommerce strategies; but, she insists, “the definition of the network is fundamentally different in reach than eCommerce.” She explains:

“[The social technology network] provides a unique opportunity to forge relationships and influence buying behaviors based on friends of friends. Think about what is possible. … We have never had the ability to listen in near-real-time. Supply chain networks have never been based on relationships. Instead, we have depended on order to cash transactions fraught with days and weeks of latency. How could we redefine supply chains if we had technologies that could operate in a different context based on relationships with near zero latency of information. Why is this different than eCommerce? While some might argue that social is an extension of eCommerce, I disagree. The network is fundamentally different. The technology possibilities are different. … As we look at this rising bubble, we need to ask ourselves three questions:

  1. Which are hype and which have real promise?
  2. Given the promise, how can I use these new data sources and improved latency to my advantage?
  3. Are there new ways to define technologies in networks to drive new levels of value?

Today, as I postulate the possibilities with a different set of technologies like Zyngna (gaming), Digital Portfolio (electronic list management), Groupon (social couponing), Spiceworks (sales of IT Technology through a community for the B2B audience), Bazaarvoice (content/review aggregation), ExpoTV (video reviews), I am convinced that this social bubble is growing an infrastructure that, like a bubble, takes many forms and colors before it takes flight. These disparate technologies will rise in their own separate bubbles before they coalesce.”

If I correctly sense what Cecere is saying, these are the early days of social technology and so it makes sense that social media strategies are difficult to develop. It also explains why Wally’s co-worker would remark that a social media strategy sounds like something that nobody wants and nobody needs. Cecere insists, however, that you should care and you do need it. She continues:

“For supply chain leaders, I believe that the social bubble has the potential to fuel more than a Facebook phenomenon. Here I share why supply chain executives should look more broadly at this technology than social media, and how to steer supply chain leadership teams through the hype cycle. …

  • Mobile Internet is growing at 8X the rate of the web browser when Netscape launched in 1994. In 2010, there were 8.2 billion mobile applications downloaded. Kleiner Perkins forecasts that mobile traffic will grow 26X over the next five years. Mobile applications are an accelerant for social dialogue.
  • Social commerce, nascent when Altimeter launched the Rise of Social Commerce last year, is now a market. On average 65% of consumer brands have more Facebook traffic than website traffic. Buying directly from Facebook or through Twitter is an accepted practice and virtual currency and reward systems are gaining ground.
  • The use of social technologies to improve customer service is also blossoming. When it comes to defining customer service, both Facebook and Twitter have some unique advantages, and new customer service models are taking form.”

Cecere points out, however, that some technology vendors are trying to jump on the social media bandwagon even though their products “have no direct connection to social commerce.” Their attempts “to be cool” make no sense Cecere insists and warns, “Buyers beware.” Although some “opportunities” don’t make sense, she insists that many do. She explains how one can tell the difference between real and false opportunities. She writes:

“As we think about the supply chain as the flow of goods and services with minimal information latency that maximizes our cash opportunities, this wave offers new hope to redefine the supply chain to drive a step-change. However, this can only happen if we avoid the potholes:

Social networks are not an extension of eCommerce. While many companies have entrusted their social strategies to the eCommerce team, I don’t believe that social commerce is an extension of e-commerce. The fundamentals are different. Social commerce is a new channel. I believe that companies that see social technologies as an extension of e-commerce will fail to reach full potential.

Inside-out versus Outside-in. I also don’t believe that social [networks] should be owned by marketing. In fact, I think that the hype caused by social media for social’s sake in marketing will give a premature death to many well-intended initiatives. Buyers just don’t want to be YELLED at anymore.

“Instead, I believe that social [networking] is a way for us to truly get to know our customers, our shoppers, our buyers. You may use your favorite term–customer-centric, demand-driven, market-driven–but I believe that the real difference happens when the design of the supply chain starts from the outside in. Leaders will learn how to listen to their customers, will redesign processes to use near-real-time feedback, and the ideation cycle can be redefined to better source and use consumer insights. Instead of a blind, unintelligent, costly response called supply chain today; companies will build sensing mechanisms and learn near-real-time through test and learn systems. Seems simple enough, but while the promise is large, the answer is in the future. The concepts are vastly different than traditional supply chain management, and social technologies offer us some important technologies.”

I believe that Cecere is spot on when she writes “the promise is large” but “the answer is in the future.” Companies like mine are learning along with our customers how best to use data collected through social technologies as well as how to use social media opportunities to increase sales. I believe the learning curve will be steep, which is why social media commentary has been so prevalent. One of the biggest opportunities, Cecere notes, is for manufacturers to go direct to end-user customers. She writes:

“Manufacturers are trying to gain power to have more muscle with retailers and improve global presence. … The rise of social commerce gives mid-market companies a new opportunity to build a relationship directly with the shopper and better manage the long-tail of the supply chain more easily. There is less channel friction for a manufacturer to sell directly to the customer than we saw in the evolution of eCommerce.”

She does offer a word of warning, however. She states, “Social must come before Commerce.” She explains:

“Social commerce – the use of social technologies to enhance and define the shopping experience – is a new channel. It is also an exciting new way to build a direct relationship with the shopper. However, it is only successful if social precedes commerce and the manufacturer builds a relationship with the shopper. It should not be seen as an extension of advertising or e-commerce. It is about building a relationship that can be enhanced by commerce. It is too important to leave in the hands of marketing.”

At this point, Cecere and Gonzalez appear to diverge slightly on what the future holds. Gonzalez sees corporate collaboration and communication as the principal benefits of social technologies while Cecere sees the rise of social commerce. Both, of course, could be correct. Cecere, however, focuses on the social commerce aspect and offers a little advice. She writes:

Be where the Action is. For a company to be successful, carefully craft your presence in four social media: Twitter (customer service and listening), Facebook (direct connection with fans), YouTube (product advocacy and usage tips) and Linked-in (for Human Resource purposes). This is important to business and defining new business processes. Forge a cross-functional group to think about how social, mobile and tags can be used to redefine supply chain, customer service, human resource processes, innovation and sourcing processes.”

Although companies have good reason to be concerned about cybersecurity, Cecere believes they need to find a way for employees to employ social media at work. She writes:

“I am embarrassed when I visit promising companies and see employees interacting on social networks for business purposes off of their personal mobile devices. Supply chain is business. Social is a new way to redefine this business process. … Train your employees on your social policy and begin the building of new supply chain processes from the outside in.”

She concludes, “At the end of the day, it is about building and enhancing the relationship to improve value in the value chain. It is not about technology for technology’s sake. It is not about cool toys for cool boys and girls. Likewise, don’t hamstring your teams initially with Return on Investment (ROI) goals, instead invest in social technology projects when there is a promise to improve the relationship, reduce data latency and improve the context of information.” There is still a feeling-out process going on when it comes to social technologies and the supply chain. Most analysts insist that there is value to be found; but, they are still not quite sure exactly where to look. Don’t get discouraged. As Cecere says, the answer you are looking for may be in the future. So if you find yourself in the situation where developing a social media strategy is taking a long time, don’t get stressed out — you’re not alone.