Social Supply Chain Management

Social supply chain management seeks to incorporate the social network, social interactions and social data to enhance relationship management with all stakeholders, in order to maximize value in the final market place at less cost to the supply chain as a whole.

AN ESSAY BY PROF. DR. RICHARD WILDING OBE: Richard Wilding is Professor of Supply Chain Strategy at Cranfield School of Management, U.K. He was appointed Officer of the Most Excellent Order of the British Empire for services to business by Queen Elizabeth II, and specializes in supply chain strategy, resilience, and techniques for aligning supply chains to maximize customer value and reduce cost.

Fueled by the success of social media among consumers, social collaboration tools have begun appearing in the world of business, within supply chains. According to their proponents, social collaboration can transform the working of modern supply chains.

Workflow within supply chains has traditionally followed organizational structures and relationships. From order acceptance to fulfilment and dispatch, activities are broken down into logical steps, and passed between functions such as sales, production, and distribution.

So too with communications, which are directed to a particular person or function. To employ the metaphor of the telephone, there must be a number to dial; or in email or “snail mail” terms, an address. The socially enabled supply chain either sidetracks this, or adds a collaborative layer that sits quite outside normal organizational reporting structures. Instead of the telephone or mailbox, it functions rather like a student noticeboard.

But it is a student noticeboard that is technology enabled: problematic orders can be “followed,” “liked” or “tagged,” bringing any subsequent relevant information directly to the follower’s attention. Digital imagery enhances communication, too. In an era where camera-equipped smartphones are ubiquitous, capturing and posting an image of a damaged pallet or misplaced consignment is the work of a moment.

At Cranfield School of Management, we’ve been able to study the social supply chain within two real-world supply chains. Together, they straddle all four communication modes of the social supply chain: one-to-one, one-to-many, many-to-one, and many-to-many.

The first environment is Travis Perkins, a FTSE 100-listed builders’ merchant and home improvement retailer, with brands that include Travis Perkins, Wickes and Toolstation. Here social collaboration takes the form of “virtual communities” within the firm’s 200+ outlet Wickes DIY estate, powered by Google+ Communities, a social media collaboration tool.

One such community, Availability+, is focused on improving on-shelf availability within Wickes stores, linking together store-based personnel with personnel drawn from functions such as inventory control, marketing, distribution and logistics, purchasing, quality and merchandising.

The second socially enabled supply chain is that delivered by 2degrees, a specialist firm delivering supplier collaboration communities on behalf of businesses as diverse as Asda, pharmaceutical giant GSK, Kingfisher, and the Irish food board Bord Bia. 2degrees enables businesses to leverage their supplier base to fulfil goals that would rapidly exhaust corporate bandwidth if tackled through conventional means. At Asda, for instance, a many-to-many community of suppliers, known as the Asda Sustain and Save Exchange, focuses on sustainability and cost efficiency, with 2degrees facilitating communication and knowledge sharing.

That said, the use of social tools within supply chains will not automatically be a success. For all the enthusiasm about applying social collaboration tools in a business context, success is far from certain. Why? Because the social supply chain operates through a combination of both flattening the organization structure, and simultaneously weakening the walls of its silos. In other words, it works precisely because it enables individuals to communicate without going through “proper channels.”

And the more hierarchal and rigidly structured an organization, the more resistance there will be to this. Moreover, for social collaboration tools to succeed, their usage has to be ubiquitous – even among individuals who may be reluctant to engage with social tools in a personal, consumer-centric context.

That said, five basic rules can help to maximize the potential for success.

1) For the Social Supply Chain to be effective, content, scale and culture are key.

At Wickes, using Availability+ is not mandatory. Likewise, suppliers within the Asda Sustain and Save Exchange are similarly under no coercion to use it. In both cases, people do so because the virtual community helps them to perform their jobs better. And as a result, it is important not to be too directive about how people use such communities. Inevitably, this involves ceding an element of control, and empowering people with the freedom to make decisions, raise problems and provide solutions in the manner that they think best.

2) Properly implemented, the Social Supply Chain is more effective than other communication channels.

At its simplest, the social supply chain connects people who have a problem – or who need information – with other people who can resolve their problem or provide the required information. Critically, they don’t need to already know and have a relationship with these people. All they need to know is that they can simply post a message, and someone will respond. In other words, they are getting to the right person, automatically. Within both Wickes’ Availability+ virtual community and the Asda Sustain and Save Exchange, this has had a transformative impact. Because communication is so straightforward, and the resulting replies so rapid, individuals are much more likely to initiate communication, or participate in online discussions, seeing it as a way of time-efficiently getting their jobs done.

3) The Social Supply Chain’s “many-to-many” communication transcends the traditional vertical approach.

Traditional communication approaches are silo-based: a query raised at the bottom of one organizational silo must travel upwards before it is appropriate for it to cross to another silo for actual resolution. The social supply chain dispenses with this model. Within Asda’s Sustain and Save Exchange, for instance, the whole point is that (say) an engineering manager within one supplier can engage directly with the engineering manager of another supplier, in order to share experiences and insights into (say) low-energy lighting, heat pumps or energy-efficient compressors.

4) The Social Supply Chain is public, with no place to hide.

The social supply chain is public, so posts made by users are visible to the whole community. Issues are raised in a corporate public forum, open for all to see, with the speed and effectiveness of any resulting resolution also open for all to see. As in the physical one-to-one context, this encourages people to respond fully and effectively to any questions and issues raised, knowing that their peers – and their superiors – are viewing their online actions and the speed and efficacy of the responses that they make.

5) Social Supply Chain communication is two-way, not just one-way.

A significant advantage of the social supply chain is that it unlocks a powerful medium for two-way communication, quite outside the normal protocols and circulation lists associated with conventional organizational communication paradigms and workflow. A supply chain director, for instance, would not normally expect to be privy to reports from the front line in terms of delivery reliability, stockouts, damage and the effectiveness of promotions. At Wickes, for instance, Availability+ has made it possible to get near real-time feedback on how a given promotion is working, in terms of identifying the best-selling items, and any opportunities to fine-tune and improve it. Best practice can then be distributed community-wide, all within a matter of hours.

In summary, Facebook and Twitter are barely a decade old. And even today, some voices doubt that they will have long-term staying power. Inevitably, the prospect for social supply chain initiatives is even more fragile.

That said, these five basic rules should help your social supply initiative to succeed.

Published: June 2016

Illustration: Bernd Schifferdecker