social

Taming the Supply Chain. Will It Ever Be Social?

by Lora Cecere on September 30, 2012 · 7 comments

The supply chain is knotted. It is unruly. It is complex.  Will it ever be tamed through social?

Yesterday, @DamarqueViews asked me a question on twitter: “What do you think are the greatest barriers in the adoption of social technology in the supply chain?”  I laughed.  Such a deep question on twitter. I tried and tried to figure out how I could answer this question in 140 characters on Twitter.  I could not. It was preposterous to try.  So, I thought that I would write a blog to answer what seems like a simple question.

For many readers that know my background, they know how deeply I have thought about the topic. I find the evolution of social technologies, and the promise of social, exciting for the supply chain. So much so that in 2010, I believed that the convergence of social and traditional enterprise applications would happen quickly. It is one of the reasons that I went from working at AMR Research to being a partner at the Altimeter Group. It is also why I launched the Rise of Social Commerce Event at Altimeter. It is why I bought a license for Jive and built the Supply Chain Insights Community.

My writing in this area was very early. I quickly found that the two topics were worlds apart. I had to learn a new language, a new set of vendors and connect with a new group of users. It was earlier than even supply chain innovators. What I found when I tried to help supply chain leaders connect the dots was:

Today’s Social Push is Marketing Driven. There is a Big Difference Between Marketing-Driven and Market-Driven Supply Chains. 

I find that the social work is usually being done by the digital marketing team that is worlds apart from the main marketing team; and that the marketing group is worlds apart from the supply chain team. To use an astronomy metaphor, it is like a person on earth trying to talk to a person on one of  Jupiter’s 67 moons, and then connecting with an array of stars in the Milky Way. Yes; someday it will happen, but not any time soon.

A marketing-driven organization is one that is good at marketing.  They excel in the four Ps of marketing. These organizations often have a digital marketing group residing within the organization that is aggressively working the convergence of e-commerce, social, and mobility.  I see the value. I get it. However, most supply chain professionals do not know these individuals. The digital marketing group is often siloed. I found that I was often introducing the two organizations to each other for an awkward conversation.

In contrast, a market-driven organization connects bidirectionally market-to-market to orchestrate the signals to shape demand and mitigate risk (buy-side to sell-side and back). They price and position based on marketing swings. They understand how to shape demand to maximize profit.  These organizations listen for market opportunities and translate them to their suppliers. They are proactive through demand, design and supply networks.

Traditional marketing is about yelling a message.  Companies have rewarded marketing departments for many years to have the same message yelled rhythmically into the market.   The supply chain team’s role has been to take these orders and fulfill them.  The concepts of social –listening, testing and learning — are revolutionary, even for marketing. They are just now becoming a topic for the VERY EARLY adopter in supply chain management. Yes, you see Dell with their social listening organization; and yes, you see weekly meetings at Whirlpool to discuss twitter feedback; but this is the exception, not the rule.  The idea of marketing talking cross-functionally to supply chain, quality, and customer service teams to discuss even customer quality feedback weekly is in itself a new concept.

It will not happen through social CRM. Customer Relationship Management (CRM) technologies create a more efficient marketing and sales team, but they are not good listening posts for customer data.  Salesforce.com will only help in the automation of the sales group, it is not the answer for the supply chain. Sentiment Analysis and Text Mining Tools offer promise, but the typical social listening tools used in digital marketing like Coremetrics and Radian6 are grossly inadequate. Why? These tools only answer the questions that we know to ask. They do not answer the questions that we do not know to ask.  For example, would Toyota have thought to ask the question, “Are my brakes failing?” Or Kellogg the question, “Do the liners in my packaging stink?” The social signals for both companies were in the twitter feeds for months before they picked up product quality problems.  In January 2010, Toyota had a very messy recall for nine million vehicles globally.  In 2010, Kellogg had a problem with an odor in waxy resins found in the package liner. Total charges were $46 million with a $.09 impact on earnings per diluted share. Would social listening have helped? Absolutely! Are the organizations ready to do it now? Sadly not.

The ends of the supply chain–both in customer and procurement– are fragile. We have built transactional buying relationships. True relationships in the supply chain are few and far between.

Is there promise? YES!  Would I like to see adoption? Absolutely! Will it happen soon? No.  What would companies do if they wanted to accelerate the progress?  They would take the steps to be market driven. To do this, they would map the customer signals back to their supply chain through value-based mapping. They would ask how social can impact their supply chain source, make and deliver processes. Which would lead them to implement text mining/sentiment analysis as a core project for 2013 into their business intelligence systems.  Are supply chain organizations doing this? Sadly no.  Instead, the supply chain organizations are investing in bigger, better and faster ERP systems and they let the digital marketing organization continue their work in isolation.

Enterprise and Social Technologies are Like Oil and Water. Last month, I was at a chemical manufacturer, and the Chief Supply Chain Officer walked me to the elevator. He said, “Lora, you write a lot about social technologies. We use Yammer. I don’t get it. I just don’t understand the value proposition. All of these conversations are out there in a disconnected way, what value is this to my organization?” This conversation typifies the discussion. For most leaders in supply chain and manufacturing, this is a new world, and not one that is well-understood or valued.

When you make a salad dressing with oil and water, you need an emulsifier.  A substance to suspend one liquid in the other. I think that this is an appropriate metaphor. Supply chain systems are based on transactional data.  These technologies are VERY structured with well-defined data models. Social technologies are unstructured and random. By definition, the tagging and categorization gives a flat architecture.

On one of your blogs you take the popular view that Enterprise Social Networking is a growth market.  You support it with the statement that Forrester estimates that the market will be worth around $6.4 billion in 2016. This is a ten-fold jump. In 2010 the value of this market was $600 million. I am an old gal. I am suspicious. In 2001, Forrester and Gartner had also promised that the B2B supply chain exchange (marketplace) organizations would also transform the supply chain about the time of the ecommerce bust in B2B. The promise was that 35% of Supply Chain transactions would happen in B2B exchanges. That they would grow ten-fold by 2010. It did not happen. Remember the promises of Transora, Covisint and Commerce One? For those that don’t remember these names, let’s just say that the analysts got it wrong. It did not happen. As an analyst that has done this type of prediction for many years, I just find this hard to believe.

The month that I left Altimeter I had a deep and heated  discussion with Charlene Li, founder of Altimeter Group, on this same topic. Charlene wrote the report http://www.altimetergroup.com/research/reports/making-the-business-case-for-enterprise-social-networks. Charlene was arguing that social networking would be a separate and distinct technology market.  I just cannot see that it will happen this way.  I see enterprise social networking as a technology that will be consumed by larger platforms. It believe that it will become part of the existing processes of order-to-cash and procure-to-pay. We can already see this in the launch of SAP’s Streamworks and INFORs Infor10 ION Workspace.  I believe that Microsoft’s acquisition of Yammer and VMware’s purchase of SocialCast are also steps in this direction. I believe that Jive and Lithium will get purchased by the enterprise players and embedded.  They will help, but the assimilation will not be fast.

I believe that social technologies will be suspended in the Enterprise Resource Planning (ERP) technologies as they mature.  I believe that we will soon see Microsoft include enterprise social networking in Microsoft Dynamics and AX.

So in closing, “What do I think are the greatest barriers in the adoption of social technology in the supply chain?”  The biggest barrier is us. The supply chain leader will have to first learn about social technologies to apply them, and the digital marketing person will have to learn about supply chain before he can have the discussion. Is there value? Absolutely!  I believe that the greatest value lies in reducing signal latency in the extended supply chain. It can improve new product launch.  It could redefine quality systems.  It could be used to connect the value network collaboratively. I could go on and on. There are lots of possibilities.

Today, data latency in the supply chain is too long. However, to use social data to improve signal latency, organizations will have to first learn to listen before they can create an organization to use social data.  They will have to take the challenge to map the processes from the outside-in versus relying on conventional data that is inside-out. Unfortunately, in my opinion, it will take a material event, like the one above for Toyota or Kellogg, to understand why it matters.

Let me know how I did answering your question. And, for all of those following the blog, please join in the discussion.  Have a great week! It is a beautiful day in Baltimore. I think that I will go for a run.

 

 

Spice it up?

by Lora Cecere on July 22, 2011 · 0 comments

 

Wanted:  Orange shirts for green guys.   

Needed:  Community members with strong commitment, passion and vision. 

Yes, Spiceworks is calling all to a new form of community.  It is a new way of buying and deciding how to buy IT solutions.  It is one that is “spicing” up the sale of software and IT solutions.  The company’s name will be a new concept for most of my readers, but I feel that there are some significant trends to track. 

Background:

About a year ago, one of the founding partners of Altimeter asked me to share my perspective on VRM.   Sigh , I HATE acronyms.  I tried to control a visceral response.  Here was a new three-letter acronym in the market.  So, I obligingly asked, “What is VRM?”  The response was Vendor Relationship Management.  The look was: “What are you, Stupid?”  When I asked how VRM is different than Supplier Relationship Management (SRM), I got a dispassionate look.  Yes, the social guys are labeling what is known in enterprise applications as SRM as VRM.  SRM and VRM are procurement systems that are coming from different starting points, but are attempting to put the “R” (relationship) into the world of procurement.

In March, this little known community – Spiceworks — crossed this chasm.  Spiceworks is a community service designed to help small and medium businesses with improving networking decisions.  The community targets directors of IT that are buying materials, supplies and services to improve their IT networks.  Spiceworks recently added capabilities to enhance buying.  The company added features like Request for Proposal (RFP), purchase list management, organizing what they need to buy and evaluating purchases through ratings/reviews. 

Social is converging with supply chain management.  It is on the edges, and in the words of one of my fellow partners at Altimeter, Jeremiah Owyang, “There are two degrees of separation now.  Soon it will be one….”  It is for this reason, that I have been investing my time in understanding the definition of social applications and sharing insights on the pending convergence.

Why I think that it Matters:

For me, Spiceworks is a poster child of what is to come for enterprise applications.  It is a friendlier, more effective buying experience for four reasons:

Upside Down.  Changing the Paradigm.  It brings social to the business-to-business (B2B) experience.  To do this, the community launched 270 vendor pages and encouraged vendors to develop vendor ambassador personas –green guys– in the community.  A green guy’s role is to SERVE the community.  It is only after they SERVE the community can they earn the right to service the business.  Today, there are fifty green guys—vendors– active in the community.  A green guy, like Lauren Mccadney affiliated with CDW page is live at: http://community.spiceworks.com/profile/show/Lauren%20(CDW)?filter=contributions.

My point of view:  As you enjoy your cup of coffee this morning, consider JUST HOW DIFFERENT THIS IS.  Let me repeat:  a process where vendors serve the community first before they can ask for the sale.  This is a polar opposite from the traditional license sales model of enterprise applications.

Relationships matter.  The world of social is moving downstream to shape the face of enterprise applications and the enterprise application market is moving upstream embedding social capabilities.  I question how this will evolve?  In my quest for the answer, I asked Spiceworks for their perspective.  I asked, “Why did you build this functionality versus embedding existing Supplier Relationship Management (SRM) software?”  Their answer was interesting.  They felt that it was easier to build the functionality for three reasons:

  • Right fit for the market.  The Small and Medium Size Business Market (SMB) needs an easy to use solution.  Their term is “lightweight.”  The belief is that the existing SRM functionality is too complex for this market.
  • You can put enterprise into social, but it is tough to put social into enterprise applications.  Spiceworks perspective is product marketing teams within enterprise applications are not as focused on the social principles that build community.  Social is at the core of this new offering.  The belief is that it is easier to build transactional systems around the needs of social communities than to put social into enterprise applications.  (This is an interesting conundrum.  And, it is a point of view that Salesforce with Chatter or SAP with Streamworks does not endorse. But, my users of Salesforce Chatter or SAP Streamworks discuss openly how the social workflows are not well-integrated into the business application.  So, I am watching to see how this evolves.) (Is this analogous to you take the girl out of the country, but you cannot take the country out of the girl?)
  • Integrated Workflows.  The workflows in a community buying experience are different.  Spiceworks felt that it was easier to deliver integrated workflows by building the solution too.  In their words, “social is part of their DNA.”   It took them three months to build.
  • 

My Point of View:  We are on a collision course between social reformers and ERP expansionists.  I believe that the drive to design enterprise applications from the outside-in to be market driven and the need to build around relationships will tilt in the favor of the social reformers and not in the favor of the ERP expansionists.  The discontinuity of this technology trend will drive more and more buyers to cloud services.

A new chance to design reward systems.  Last week, when I was at SAP Base Camp, there was a discussion of how they get feedback from customers.  SAP has 24 industry groups designed to get customer feedback.  I give SAP kudos for designing one of the best customer advisory systems in the industry.  However, the governance model for the customer advisory boards for enterprise applications even in a more advanced form like at SAP is missing a critical ingredient.  It is one that was not possible in the 1990s when enterprise applications evolved.

My Point of View:   It is not sufficient to accept input equally from customers, instead, I think that the governance model should reward customers based on knowledge and rate input into development based on knowledge and contribution to the community.  This is counter-intuitive to the traditional enterprise application customer advisory boards that reward two types of behavior:  those that yell the loudest or the company that pays the most maintenance.  In social communities, the reward systems are critical to driving engagement.  For example, Spiceworks rewards community members based on a “heat rating” based on the spice level of peppers.  Community members compete to see who has added the most “Spice” to the community via a “heat index” based on pepper nomenclature (see figure 1).  Believe it or not, members of this community want to be a Capsician.   As a result, all users of the community instantly know the “credibility” of the user giving input.  Bottomline:  Users of software are not equal in either insights or knowledge.  Communities give us new ways to drive reward systems and to categorize feedback based on a span of knowledge.

Figure 1:  Spiceworks Pepper Index

Not just about Transactions.  It is a way for vendors to get feedback about options, new products, services and market requirements.  It can fuel innovation networks.  AMD and Intel are using it to gain early insight on features and market drivers.  Communities can play a new and exciting role in bi-directional feedback for innovation networks.

My Point of View:  The “ends” of the supply chain are frayed.  CRM and SRM are not sufficient APIs or adaptors to connect value chains. There is no “R” or relationship in these enterprise applications.  These adaptors and aligned, enriched relationships are an important steps in defining outside-in processes for demand sensing, insights for open design networks and ensuring social responsibility.  This is a trend that has broader implications.

Conclusion

Talking to Spiceworks both excites and depresses me.  I love what they are doing, but I wish that it had broader applicability.  I would like for there to be a Spiceworks type of community for supply chain management technologies.  I firmly believe that the traditional method of selling enterprise applications for supply chain– licensed sales with long sales cycles – is broken.  It only rewards the sales person that gets a large paycheck.  I would love to see supply chain applications sold on a community built for the community that can accelerate value and technology evolution.  I feel that this is a much better model than customer advisory councils.

I have read three surveys this week that estimate that supply chain managers trying to understand social concepts is less than 3% of the population.  While the flames are burning up the processes of marketing, and challenging the processes of human resources, the supply chain management community is largely unaware. This is my source of depression.

What do you think? Should VRM and SRM be allowed to co-exist?  How do you think that the worlds of social communities and enterprise applications will collide?  Are you ready for a friendlier, more social buying experience? 

I am in seat 1C on flight 1771 on my way to San Diego.  I am traveling between two client engagements.  One on the revisiting of Sales and Operations Planning to be outside-in on Software as a Service platforms and the second to better understand how to use structured and unstructured demand signals.   This is my world.  I am bridging between the old and new worlds of Supply Chain Management.  It is keeping me hopping.  Watch for more posts next week.