How Social Is Your Supply Chain and Who Really Cares

While every industry can benefit from social technology, there are some distinct differences in the patterns of adoption. Many early adopter stories we share are about marketing leveraging social media, but social technologies are also becoming more of an operational tool and that makes them interesting for the supply chain.

What is the current state of meaningful social application in business? Here are some of the most notable industry trends and a real world example of social application in the manufacturing sector.

Industry Adoption Trends

Early research into enterprise social media adoption discovered that sectors such as financial services, government and retail were paying attention to the emerging technology, with retail leading the way. In its 2012 trends study, IDC concluded that "Industries that are consumer focused are spending a larger percentage of their IT budget on social media as it is easy for them to make the shift to adopting the way consumers communicate.

For retailers, social media has become a mandatory part of their go-to market strategy, gathering insights and driving sales. In the Financial Services sector, Accenture found that social media was helping advisors to retain clients and increase assets under management. Government adoption of social has been constituent oriented. For example, emergency response for disasters like Hurricane Sandy used social media to disseminate information and respond to citizen questions when phone service was down.

In its look at adoption in Europe, IDC predicted that sectors with a higher level of larger companies such as telecom and oil and gas would have a higher propensity to invest in social media. Within manufacturing; however, IDC found that adoption was lower overall than in other sectors as “most manufacturers still perceive that social media is of low value for the very nature of their business, erroneously identified as being driven by one to one relationships.” It saw differences in manufacturing adoption at a segment level though with computer and electronics, automotive and aerospace, and brand oriented manufacturers in apparel or furniture moving faster than others.

The just published MIT Sloan Management Review and Deloitte global survey found clear evidence that companies across industries are creating value with social business, and are moving beyond marketing. In particular they found that maturing social businesses are not simply "doing social.” Nearly 80 percent analyze social data and 67 percent integrate it into systems and processes to improve business decisions and drive social business endeavors.

From my perspective one of the most telling trends was an IDC finding a few years back that “companies are not taking full advantage of the communications aspect of social media and are using it more as a one-way method of communication for gathering feedback or pushing brand messaging to a wide audience rather than collaborative communication as the medium was intended.”

There are recent indications of change though. In the social business collaboration study from Aberdeen Group, conducted late in 2013 and published earlier this year, it found that over the past 12 months adoption increased for the “leaders” in their study, and they reported an increase in operational efficiency and improvement in the time required to make key business decisions related to social business collaboration, though perhaps a direct cause and effect is yet to be proved.

Social Holds the Cure for Supply Chain 'Disjointedness'

While the manufacturing sector might be slower than others to adopt enterprise social capabilites, social can make a big impact for companies who compete on the basis of their supply chain. Supply chain leaders’ holy grail is the pursuit of the “perfect order” -- the right product delivered in full, on time, every time. While automation has helped to improve order-to-cash and procure-to-pay cycles in the supply chain, managing supply chain disruptions and exceptions remains a throny problem that requires collaboration.

Social media champion, Tony Martins, says the challenge of “supply chain disjointedness” will drive supply chain executives to use social media and social networks in their jobs:

The hardest thing for them to do is to synchronize all the parts of that chain, the various organizations and teams that the material flow goes through. You can see this problem between companies: suppliers that are late, stockouts, excess inventory, and so forth. You can see this problem inside manufacturing operations as well: materials not ready for production or quality assurance waiting for documentation that isn't ready.“

While advanced planning systems can help synchronize the supply chain, only people can solve many of the problems that interrupt and threaten the perfect order. As Martins explains,”the problem is that people of different skill sets are stuck in silos -- functional silos, regional silos or company silos. Bringing them together by traditional means is very slow.”

Logistics managers can find themselves frantically searching through emails or carrier tracking portals to piece together an answer especially when an exception to an order’s “happy path” occurs. In his Social Supply Chains, John Berry notes that organizations that source globally often struggle with achieving accurate and timely information about where their products are in the supply chain:

Since so many companies can be involved in a global supply chain, there’s usually no single source of truth for visibility of an order. This is where social technology could help to offer a solution. If the various supply chain participants could engage in a social community to collaborate on movement of product, the social network could become that single source of truth for product visibility.”

Social tools are poised to provide important community collaboration and visibility across the supply chain. As forward thinking companies begin to accept social technology as an operational tool, I think the results will be remarkable.

Social Helps Tackle the Unpredictable in Your Supply Chain

Imagine the possiblities that social technology might offer. One success story is the TEVA Pharmaceuticals case study. Social software helped TEVA shrink its manufacturing cycle time by 40 percent when the company's ERP apps couldn’t keep up with unpredictable market conditions. TEVA buys raw materials and mixes according to a precise recipe, encapsulates them in pills, packages them, and sells through distributors.

Things can go wrong at any stage of that process. Dealing with exceptions manually was acceptable when they amounted to maybe 10% of the business, but they were becoming more frequent. We found ourselves living in the world of 'not supposed to happen' where more than half the time managers, supervisors, and key resources were handling surprises -- things that were off script. Whenever a business process didn't fit neatly into an ERP application form, the resulting problem would have to be addressed manually,” said TEVA Canada VP of Supply Chain, Tony Martins.

Once TEVA introduced social collaboration tools, problems were resolved more quickly. They found that they were getting advantages similar to other early adopter results. In addition to applying social software internally, TEVA created joint social communities with some key suppliers of raw materials. In one case, this resulted in a 15 percent reduction in lead time, while in another, where the social integration went deeper, the supplier cut lead time by 60 percent.

TEVA is a great success story, but overall there continues to be some reluctance to adopt social in the manufacturing sector. Yet it does now appear that social is gaining relevance in supply chain strategies. Based on the SCMWorld annual Chief Supply Chain Officer survey things seem to be moving in the right direction. In 2012 they asked about what effect, if any, social was having on supply chains. Almost half of respondents (47 percent) said they saw no effect. In the 2013 survey however the proportion saying the same dropped to 37 percent -- a substantial change in the course of only one year.

Where Is This Whole Social Thing Going?

Social in the workplace is here to stay – from retail to financial services to manufacturing, throughout the private and the public sector, and in the smallest to the largest organizations. Looking ahead for the social supply chain, Martins commented: “SCM operations of the future should be social-intense” and “managing and coordinating the supply chain will be more about the ability to master the social model.”

Further, I see that the complexity of digesting unstructured data from social media will demand much more integration into the business. This is where the enterprise information management technology that I often write about will play an important role: to overcome adoption barriers and provide integrated “industrial strength” social solutions for marketing, crowdsourcing and to meet operational goals.

My former company GE has embraced social, using social tools to support its digital strategies. In a recent interview, Rich Narasaki of GE corporate did a great job of articulating a future path:

We're using social to connect with our customers in ways that are much more meaningful and drive real business value. As companies invest more and more in social, they're going to have much more of a bottom-line lens on the activities. In terms of how it plays out, I liken it to e-commerce back in the late '90s, where you had everybody going, ‘Wow, there's going to be no more brick and mortar.’ And then of course things changed in 2000. And now when you look at e-commerce, you just say, ‘Yeah, it's another channel extension.’ And that's what's going to happen with social. It's going to be another natural extension with any business. And it's going to be held accountable to the value it provides.”

I agree with Rich’s view and see that social will be making a serious contribution in the future to how business gets done. But in the meantime, I’m just wondering what Downtown Abbey character would you be?

Title image by JD Hancock (Flickr) via a CC BY 2.0 license