The Impact of Social Media on the Supply Chain: Is There One?

If you are one of the 1 billion people on Facebook, or the 500 million people on Twitter, or the 27 million people on Pinterest, you may see some of these types of comments from consumers while engaging with retailers and manufacturers:

“What’s up with your web page??? I have tried to shop off a wish list & have been thrown off with an error 404. Two days of this. Someone please check.”

“[Brand] says they are now being carried in your stores. Please tell me you have them in your [store name]!!!! These are great for kids with nut allergies.”

“Per your customer service, they do not need to have an item in stock when they run a promotional ad…so if they run free item with purchase, they will run it while they knowingly DO NOT have the item in stock. I will be returning ALL of my purchases from you, not just the one I was scammed on.”

“I’ve been meaning to write this – why, oh why, did you ruin your (cake) recipe?? Sorry, but it’s true….I’ve been eating it since I was 6 – I’m 38 now. Please go back to your original recipe. The new one doesn’t compare with the original one.”

These are just a few of the many comments on social media channels. It is clear that consumers are taking to these channels to not only interact personally with friends, but also to discuss, share and interact with the retailers and brands they associate with.  So, what are supply chain professionals doing with this information? Unfortunately, not much.

JDA recently surveyed 77 companies across all industries including manufacturing, retail, and wholesale/distribution, and the results show that most companies are leveraging key inputs into the demand plan such as marketing data, syndicated data, POS and ordering patterns; however, only one percent of these companies are doing anything with social media for supply chain planning.  Is this response due to the fact that people don’t see the value, or are they simply not aware of the potential?

Social media comments about products, services, or companies offer very valuable information for the supply chain and associated processes. The challenge for any company is figuring out how to gather this data, consume it, respond to it, and leverage it to enhance their position in the market.

So, how can you leverage this information?  It’s all about demand.

  • Use social media insights as a predictor of demand. There are a slew of companies in the market that harvest, cleanse, and analyze social media indicators.  Aligning these calculated indexes may reflect a correlation to the associated sales.  For example, when an existing wine brand receives a positive critique by an influential wine connoisseur, the discussion about that brand goes up across Twitter and Facebook, and so do sales.  Coincidence?  While not all types of products may be applicable to this method of demand trend predicting, tracking these types of fluctuations in social chatter could be an indicator of future demand, enabling companies to adapt more quickly to the ever changing connected consumer.

Social media insights are also valuable for planning in an all-channel world.  Take the example above of a customer complaining about not being able to place an order.  Lost demand?  You bet.  Is it an an opportunity to get to know your customers and put processes in place to enhance their online experience with you?  Absolutely!  Leveraging social media data to understand demand fluctuations – or in this case the potential for lost sales – enables you to plan better for the future.

  • Capturing consumer insights for more effective assortment planning. Consumers talk about what they like, what they don’t like, and what they would like to have in the future.  Understanding consumer sentiment around brands and/or other attributes about a product can enable more efficient assortment planning up front.  A better assortment leads to happier consumers, which leads to more sales. Consumers can tell you a lot about their in-store experience and issues so that you can plan more effectively. Retailers and manufacturers should localize that data to better serve the needs of your customers.  
  • Utilize intelligent product placement on the shelf.  By analyzing keywords and sentiment tied to a particular product brand or attributes, companies can better determine placement on the shelf.  For example, by analyzing the sentiment within the social media channels about flavors of a particular food or beverage item, decisions on placement of those flavors (already included in the assortment) on the shelf can improve based on the additional information.

While social media analysis is certainly gaining traction within organizations’ customer service and marketing departments, the jury is still out on how effectively the same information can be leveraged within the supply chain. Companies must find a way to not only harness that data but manage it from a central hub, sharing and utilizing the data across all groups.

We all know that the volume of social media data, and the insights it reveals, can be overwhelming. It’s also not a simple undertaking to move to the next step of data, aligning it to your supply chain, and making decisions based upon the insights it reveals.  And while I understand why companies are skeptical,

I believe that the insights we can capture from the wealth of information that is now available can only aid in making better, more profitable decisions in the future.

  9 Comments   Comment

  1. Gee, only 1% uses social media. We better start catching up. Social is here to stay. We”re talking about as we talked about the internet 15 years ago. Can we imagine life without internet?

    Social is one of the biggest opportunity and threats for any company and supply chain the next decade. To question or deny that there is an impact of social on supply chains or companies is denying the reality of the world we”re living in.

    Read my blog, the power of social: http://supplychaintrends.wordpress.com/2012/10/09/the-power-of-social/

    cheers,
    Niels

    Reply
  2. Paula Natoli

    Thanks very much for your comment, Niels, and your blog is spot on! I fully agree that companies seem too far behind in the adoption of social media into supply chain. While I knew the number would be small, I was quite surprised at the 1% number! If you are interested in following up and continuing to explore this topic, it would be great to collaborate on a series around the importance of social media and provide our readers with actionable recommendations and strategies.

    All the Best,
    Paula

    Reply
  3. Thanks Paula,

    I”m definitely interested in following up and explore the topic of social. In fact, I did just set up my own company, raised money and started to build my own mobile social networking app across Iphone & Android.

    Although my own app will not be supply chain related I will definitely keep an eye on the development of social in business and supply chain specific.

    cheers,
    Niels

    Reply
  4. Paula ,
    I agree with you all you said is true. There are several challenges ahead.
    Social media for Assortment/Space planning – a really beneficial idea if you get the proper region specific consumer information .
    The challenge will be that data collection should not irritate the consumer and also be safe guarding his privacy concerns.
    For example you get a lot of data from google , twitter , facebook or any other social media , but noone will be sharing the geographic information.

    Without a region specific input you really cant make much adjustment to your SKU.

    – Majush

    Reply
  5. Thanks Paula, great to see that some noise is being made on the issue of social media in the supply chain. I conduct regular research on this topic and find it hard to identify practitioners who really ”get” this concept. There is a great amount of interest out there in social media within the SC community, but the vast majority seem unable to see beyond using the platform as just another marketing tool.
    I regularly survey roughly 1000 supply chain and logistics professionals and have evidence that the small number of companies who are using social media as part of their demand forecasting strategy are seeing higher than average growth.
    I”m not sure whether you saw the (latest) story regarding Kate Middleton and her Topshop dress, which sold out within 1 hour – this all started with a photo that was posted on Twitter. Reacting to demand such as this within an hour is perhaps asking too much, but given that Zara are able to design, manufacture and ship products within 24 hours surely means there is massive untapped value here.

    Anyway, interesting stuff. If you have the time I would be interested to talk a little more about what you are doing in the marketplace.

    Reply
  6. Paula Natoli

    Thanks very much for your comments!

    Majush – I agree with you that region information is necessary when looking to leverage any of this information on a local level. As a starting point, being able to leverage all data could help with upcomimng trends, etc. that could be applicable in all regions. However, if you really want to tie it to localized assortments, or specific sku/store information, national level social data will be difficult. But note that there are some technologies out there that are working to link social comments to a region/location through some algorithms that link multiple social media sites together. Interesting, and scary stuff at the same time!

    Justin – the Kate Middleton dress sell out is a great example! To your point, maybe reacting within an hour is tough, but the power that social media can have over consumer demand is inevitable, and it is up to us as supply chain professionals to determine how to leverage it. I would absolutely be interested in having a follow-up conversation.

    Thanks!
    Paula

    Reply
  7. This is such a great article. I am a student at the University of KwaZulu-Natal and my Masters thesis is based on the potential that social media has towards improving agility in supply chains. My study is focused on the fashion industry, where responsiveness is important, especially due to the industry’s volatility. It was interesting to note from the comments, the response to the Kate Middleton dress, a clear reflection of how social media can be useful for better anticipating potential demand. There have been some great new applications and social media is now useful even for Supply chain risk management. For example, Twitter is usually a great source for real-time information about what is currently happening in places. A simple tweet about a road closure or accident or even a strike in a supply chain partner’s facilities, can be great for the supply chain network to respond to risk quicker. Knowledge of an accident could mean quickly communicating to truck drivers to change routes, thus avoiding delivery delays. It’s also a great way to become aware of any issues in the supply chain. Consumers commonly complain about service and quality problems on social media and monitoring this information could reveal potential quality concerns. It could even mean realising the need to make a product recall in time, before other consumers purchase a potentially harmful product. Social media is definitely a tool that supply chain leaders need to make use of. I was a little uncertain about continuing with the study due to the limited information that was still on it but as my research has progressed,I am finding more and more useful articles, such as this that are showing me that this seemingly difficult topic to research on will be valuable at the end of the day!

    Reply
  8. This is a very important article you have done, Paula.
    Customers are directly telling companies what they need–what they think. And ironically, this data is almost free. The question then becomes, what is the future of product companies who do not avail themselves of EVERY OPPORTUNITY to engage with their customers?

    Reply
  9. Kaitlyn Bigham

    As a student studying Supply Chain Management and a “millennial”/”digital native”, as many of my professors call members of my generation, I find this post to be quite interesting and very surprising. Only 1% of companies use social media for Supply Chain planning? On one hand that shocks me because everyone I knew uses social media on a daily, and sometimes hourly, basis. On the other hand, I see how that is possible because it is so new and companies are just trying to figure out how to make it work for them. With all of the social media sites it is difficult to keep up. That is why I believe companies, especially retailers, should have at least a small social media department. This could be housed in their marketing department, customer service department, or all on its own. Their job would be to monitor social media such as Twitter, Facebook, personal blogs, and any other public forms of communication for any mention of their company or associated brands. With the help of algorithms, hashtags, and company accounts that consumers can communicate with, companies can improve in all areas of business, including customer service, advertising, marketing and supply chain. As mentioned in a previous comment, Social Media is here to stay. It is not only a great communication device but also a great tool. The trick for companies is figuring out how to effectively use that tool (in many different capacities) and then measure its effectiveness.

    If the social media team were to gather data on trending or up-and-coming items they could convey that message to the buyers and the supply chain specialists so the company could plan on a surge of inventory from a particular area or vendor. Social Media will become more and more important to supply chain professional as the race to Omni-channel supply chains increase. Consumers will have the best feedback for supply chain individuals. It will allow them to know what is being done right and what can be improved upon. It will also allow supply chain professionals to be informed on what the consumer values most. This will be extremely valuable as companies battle to increase customer satisfaction through quicker, more convenient home deliveries while keeping shipping costs as low as possible. In my opinion, companies should have a social media team or a social media specialist for certain departments in order to respond quickly to issues, spot trends in demand, and relay information to supply chain professionals who can optimize both the transportation aspect of business and the level of consumer satisfaction associated with it.

    Thank you! This was such a great article to read!

    Reply

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