4 February 2014

Social Media Are Transforming Supply Chains for Efficiency and Economy

Social Media Are Transforming Supply Chains for Better Efficiency and Economy

If you want to see ROI from social media, the supply chain is one place to look. Supply chain networks and social media are made for each other. Enterprise social media can be the resilient, always present connection between the many participants and information sources in a supply chain network. If businesses use social media effectively in their supply chain operations, they can make people and processes more productive, serve customers better, and generate savings and efficiencies. Success in this effort depends largely on two factors: the best match between business requirements and technology tools, and a strategic, controlled approach to supply chain and social media integration that is based on measurable goals.

Given that social media are already optimized for mobile scenarios and always available, it’s not surprising that many companies can take advantage of the rich potential of social media to increase the efficiency of supply chain operations and make workers’ lives easier. A large number of early adopters are enterprises that deploy their own social media streams—for example, Yammer—to facilitate easy communications among employees. Some of them are already using social media for supply chain-specific tasks, for example, to match multimodal carriers with available freight or to enable shippers and carriers to share loads and capacity with logistics partners.

Delivering on time more often, running out of inventory less frequently

Many companies using social media in their supply chain are finding it difficult to quantify the real advantages of doing so. Especially when they use social media they do not own, such as Twitter streams, meaningful data may be difficult to come by. Industry reports on this topic are relatively poor in numbers. Industry adoption of social media has so far been slow.

However, supply chain analysts have found that businesses that do make use of social media deliver goods to customers on time in a little over 94 percent of their deliveries. Social media abstainers’ on-time delivery clocks in at close to 92 percent. This may not be a huge difference in absolute numbers, but translated into customer lifetime revenue and customer loyalty, it is certainly consequential. When it comes to inventory management, companies using social media report out-of-stock situations in close to 3.5 percent of inventory inquiries. Those that don’t more than double the occurrence of out-of-stock reports, which again could make a significant difference in a company’s customer retention and general perception.

Intelligent agents accelerate value generation from supply chain and social media synergy

The effectiveness of social-media communications among employees, and between companies and their value chain partners and customers, depends much on people’s readiness to engage. The application of social media to the supply chain gains a deeper dimension when you add intelligent agents to it. Intelligent, automated software agents could, for example, detect available capacities in a fleet of trucks, collate loads already in transport or available for pickup, and map capacities and loads to delivery destinations. They could notify drivers and supply chain managers of recommended adjustments in capacity utilization with possible consolidations and streamlined vehicle routing. Those capabilities could help a company optimize its use of resources and provider faster delivery at a lower cost. Similarly, intelligent agents could play a productive role in correlating warehouse locations and spaces with customer locations for more efficient sourcing and shipping of merchandise. Or, they could apply a company’s set criteria to the selection of logistics and shipping service providers, which could enable the business to realize savings and obtain better performance from its trading partners.

Companies’ ability to take advantage of intelligent software agents together with social media in their supply chains depends on a resilient infrastructure as well as the use of the most efficient programming tools. Leading providers of ERP and supply chain management systems already incorporate social media capabilities in their current or upcoming releases, and provide development resources that can enable technologists to build valuable integrations between ERP, social media, and the intelligent agents they create.

Advantages of a structured, measured approach to social media in the supply chain

Many supply chain experts recommend that companies embrace the opportunities social media present to the supply chain, but do so in a structured, controlled manner. Businesses need to set firm, measurable goals for what they want to accomplish, and should perform and evaluate pilot projects before committing the enterprise to a new way of working. Employee adoption should be one important metric they consider. They also need to carefully examine the many available software tools and determine which fit best into their processes and business model.

Behind early adopters, increasing momentum

Industry research indicates that the trend to use social media to improve supply chain productivity is going to continue and become stronger as more businesses join the momentum. Close to 60 percent of companies not using social media in their supply chain today state in surveys that they plan on doing so, given the right tools and resources. The most frequently mentioned usage scenarios include tracking shipments and providing accurate product and pricing information.

There are many other, likely applications where social media can benefit the supply chain, including real-time assessment of customer demand. Employees can also draw on social media to exchange best practices, resolve supply chain bottlenecks, or address urgent customer needs.

Have you made any experiences in incorporating social media into your supply chain? I would love to hear from you - Do contact us!

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Eric Van Hofwegen
Eric Van Hofwegen,
Eric Van Hofwegen,
Solutions Consultant

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