Social Media & SCM

Published by MBA Skool Team, Published on September 28, 2013

The growth of social media has happened at an astronomical rate and there is much noise in the business arena about the use of the same. This article tries to explore the areas where social media is making an impact in the supply chain of businesses.

(When is the last time you liked in FB (Facebook) or added a connection in LinkedIn or tweeted?

If the answer is less than a week and you are interested in learning the implications of it in your supply chain then you are in the RIGHT place. )


What is Social Media?

It is simply a platform for people/organizations to create, share, and exchange information in virtual networks. More technically, A. Kaplan and M.Haenlein defines social media as "a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0 (coined in 1999 to describe websites that use technology beyond the static pages of earlier web sites), and that allow the creation and exchange of user-generated content”

No one knew that the social media will be put into such an immense use in business world when in 1997 Six Degrees came up allowing users to create profiles. The future of supply chain is all set to be disrupted by social media. One of the major challenges in a supply chain is the visibility due to latency in information. The power and widespread reach of social media is attributed to the faster exchange of information. A marriage between both is what termed as ‘social supply chain’. But, many executives in the field of supply chain believe that the biggest challenge in adapting to social media is ‘unclear business value’

Research by Aberdeen Group in the retail sector shows a clear advantage enjoyed in the supply chain performance by the companies that have adapted to social media. The stock-out rate for company with presence in social media was 3.4% which is less than half to that of the companies who are not present in social media (7.2% for others). Also the report indicates that the benefit of cost reduction in fulfillment costs enjoyed by the companies with presence in social media.

In 2011, Teva Pharma, Canada optimized its supply chain through social media; the management required the right information on issues to solve them immediately. The problem faced by TEVA was its weak collaboration culture. It tackled the issue by adapting to an internal social media tool which helped them overcome the challenge and reach a service level of 95% and it reduced its manufacturing cycle by half to 35-40 days.

Home depot uses an internal social platform called “The Warehouse” which helps in internal communication between sourcing manager and the internal customer. It helps in achieving better visibility, which is a major challenge in the retail sector. The sourcing manager now could easily get feedback from the stores.

Enterprise software giant, SAP acquired Crossgate in order to provide the vital network between the business partners at the enterprise level. Crossgate would help the companies stay connected with its trading partners and links the pre built business partner profiles. This will assist the customer to extend the end-to-end business process working on SAP. This will help them network to make information exchange faster and collaborate better.

Moxie, a customer centric social software suite, helps in converging customer communications and employee collaboration. They all set to disrupt the space with their offering of full featured enterprise software for free. This is set to roll more balls in the field of supply chain as more enterprises would switch to use them in their operations.

Walmart has taken into social media as they want to follow its customers where they are. They believe that social media could assist them in adjusting their in stores inventory. With most stores serving local community with differing assortments, social media helps them predict the demand and determine what to be stocked in the store.

One of the challenges faced by social supply chain is that supply chain leaders are currently having a myopic view on it. In addition to that, listening to social media to collect information from customers is considered a burden in addition to the already performing work. Hence there could be the necessary change only when the underlying working process is tuned to favor the working using the social tools in view of achieving better results by the organization. With the stage set for social supply chain, organizations that move forward disrupting the environment are sure to reap the benefits of early adopters.

Thus, these social media software used in the field of supply chain is set into disrupt the existing ERP and create more information flow. Are we ready to tap them?


About the author

Manoj Hariharan - a student at IIM Raipur – PGDM (FT) course. A graduate in Manufacturing Engineering from College of Engineering, Guindy, Manoj had worked with TVS Sundram Fasteners in the functional area of procurement and Future Retail in inventory management. His areas of interest include Operations research management and Supply chain management. 

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