Parameters to design your supply chain organization
There is no one single structure that fits into all types of possible supply chain organizations. Every company needs to evaluate critical design elements and answer few questions to arrive at the right organizational structure for its supply chain. Following table is a list of questions that needs to be considered while designing an organizational structure - Please have a look and do share your critical comments and inputs.
We recently concluded our All Hands Meet where I got an opportunity to meet my fellow colleagues from a practice called Next Gen Commerce. As the name suggests, it is associated with clients that are aggressively forward looking and ready to take bold steps in leveraging new technologies and venture into new domains to gain consumer mind share. One of the great things that I heard was about how companies especially in developed economies are trying to capitalize or monetize information that's available on net - basically using what we all call "social media" to gain competitive advantage.
While I was thinking all this and trying to imbibe all great things that I heard, I was wondering if there could be an impact of social media on supply chains. This blog of mine is therefore of an exploratory nature (since I have little awareness on this subject) where I would like to share my thoughts and seek your inputs and comments.
I am sure Social media is something that all of us know in bits and pieces, and it touches our lives today in some form or the other. The typical examples of social media are facebook, twitter and blog sites such as ours. Some of these are subject-specific and lot of these are fairly generic and provide a platform for people to share their experiences, ideas and opinions in this borderless world. Although, it is just a platform for people to exchange information, but I am sure, it has a powerful influence to businesses and of course, to supply chains.
The extent of impact of social media to supply chain may vary across industry segments, for e.g.- companies in a typical service industry or consumer goods are definitely more prone to get affected than others. While I am not going to detail on where the impact is felt more, but in general, there are few questions that come to my mind when I think about all this:
1. Which are the areas within supply chain that are likely to get affected, and why?
2. Have companies realized this trend or still think it as relatively premature to act on?
3. If companies wish to leverage social media for improving supply chain performance, how to actually operationalize such a vast amount of data that's available to us
4. And so on and on.....
Let me share my thoughts specific to just point no. 1 listed above.
In my understanding, unlike other traditional media such as print and television, social media is one of the channels where people can freely express their opinions about the various products and services used. The consumers become brand ambassadors and companies are left with no option but to manage perception created due to all this. Social media acts as a strong medium to influence consumer behavior and thereby company's sales. Let's take a simple example: you wish to buy an electronic product, what are the immediate steps that you are likely to take. Look for the various ads, see the commercial, and talk to friends and relatives to gain more information about competitive brands. What are the chances of you likely to go to a social media site and search for this product/brand that you wish to buy and read various comments that are posted? I think the chances are high; most of us do that, and very often get influenced by what others have experienced...
Take another example: suppose you plan to buy food products or anything like that for your baby, don't you think, you would definitely reach out to your friends in your network to seek more information. This being a different type of product category may drive people to closed-group communication rather than going out in public to seek information. Such closed-group behavior (just like 'group think') is easily enabled through social media sites that are present today, and therefore, will really impact a consumer's buying behavior.
The two examples that I shared show how company's sales may get influenced by interactions/communication that happens on social media. If I need to link this behavior to understand its impact to a supply chain process, the closest that come to my mind is 'demand planning'. We all know that the key aspects of a typical demand planning process include 'sensing' and 'shaping' of demand. As per AMR Research's definition, Demand sensing is the amount of time it takes to see true channel purchase or consumption data and Demand Shaping is a series of focused activities to drive and improve revenue. Demand sensing is a critical input to make Demand shaping process more effective.
Marketing professionals spend dollars on research and promotions to understand and influence consumer behavior to create pull and increase company's topline. As more consumers move to social media and start using networking sites to influence their decision making, I think, marketers have an opportunity (and of course the associated challenges) to sense changes in demand more quickly and capture this new trend in their demand shaping process. Demand planners need to design this additional feed of information from marketing team in the overall demand planning process in order to capture the latest consumer behavior and feed it back to supply side. To me, this is a great thing to happen since now, we have the information directly from consumers (no intermediaries or research agencies are involved) at a much faster rate.
Having said that, I think there are many challenges to face, before this information is really put to use. The foremost being "How to do all this or How to operationalize". Issues like Data quality, loads of data, more noise in data, etc etc need to be managed... and I really don't have answers to all these questions.
So, I urge all of you to share your experiences and especially the examples if you have seen companies leveraging social media in improving supply chain performance. Please do share your comments, thoughts and feedback on this subject. I am sure there are many other facets of supply chain where businesses will see the impact happening; definitely areas where a company works with other trading partners such as suppliers, logistics providers etc. It is just a beginning of a new supply chain world and this will definitely result in addition of a new chapter to most of supply chain text books we have today... Look forward to hear from you all.