SDCExec.com Online Exclusive

Social Media Drives B2B Collaborative Efforts in the Supply Chain

Social networking sites are not new. By now, we’re all familiar with platform giants Facebook, LinkedIn and Twitter. And new mediums continue to develop. Pinterest marks the third most popular U.S. social networking site behind Facebook and Twitter, according to New York, N.Y.-based Experian Marketing Services. FamilyLeaf gives members a more intimate online setting to communicate with family more privately. Google+, StumbleUpon, Tumblr—the list goes on and on as use of such mediums dates back to the 90s.

And such environments are not going away. 91 percent of today’s online adults use social media regularly, Experian Marketing Services finds. What’s more, a number of businesses in the supply chain—an area which initially was slow to adopt the use of such online sites—are now not only embracing their use but tracking the data for return on investment (ROI); and developing their own internal cloud environments to engage staff with customers, distributors, potential clients and other key executives.

While some businesses still doubt the effectiveness of using such platforms for sales, marketing and business growth, evidence proves that social media creates an opportunity for suppliers and vendors. In a report from IDG Research Services and Kemp Goldberg Partners, one-third of 150 qualified respondents said they would recognize their vendors and suppliers more positively if they were to use social media to engage with them. Additionally, more than half of survey respondents engaging with supply chain partners via social networks frequently or occasionally share information with others, utilize it to stay current with industry trends and interact with other industry experts and peers.

But in order for adoption to continue to grow, it will be up to those vendors and industry executives utilizing social networks now for business collaboration to educate others in the supply chain of the benefits it brings—not just in Business to Commerce (B2C) but Business to Business (B2B) environments.

Supply chain social collaboration on the rise

“The conversations about social media are happening all the time,” explained Gregory Hedges, Managing Director, Protiviti, Menlo Park, Calif. “We’ve seen it on the business to consumer side and you see it even on the business to business side. And leveraging it is a strategic choice that supply chain executives consider all the time.”

According to Aberdeen Group Inc., 44 percent of companies currently use social networking to support their supply chain while 37 percent of companies confirm that they will start to use social networking as a part of their supply chain processes in the next 12 to 24 months.

Global supply chain solutions provider Manhattan Associates Inc., Atlanta, demonstrated their communal actions with their Manhattan SCOPE framework which combines social networking capabilities with actionable data for improved operational results. Rosslyn Analytics’ RA.Pid Supplier Risk Profile data services and analytics platform links tagged data to both external and internal sources for analysis in real time. Basware’s Alusta platform delivers business to business (B2B) transaction collaboration between buyers and suppliers. Social commerce trading platform Gotradelive launched earlier this year and enables small-to-mid-sized companies to sell, source and promote products and services confidentially in this supplier network.

“There is no doubt in my mind that social media and the mining of the data that it creates will drive supply chain efficiency,” confirmed Domenic Champa, Managing Director, Protiviti. “The extension of the internal networks to provide connectivity between trading partners is expanding exponentially. If you take a look at the users involved with social media today, you’ll see that we’re at an inflection point. At every conference in the last couple of years, we witnessed these social media tracks which were always the most crowded and the most vocal. Now, social media is still more of a marketing tool but you’ll see it become more of an operational tool to connect customers with manufacturers, and manufacturers with real demand so they can manage the supply chain functions.”

With the advent of mass media, the slew of virtual tools available for supply chain executives to communicate is endless—from email to blogs to Skype, Google Chat and more. And while most B2B companies are already utilizing social media, further analysis and understanding of its provided data and potential risks are areas which businesses need to continue to examine and track.

For global consulting firm Protiviti, when it comes to the use of technology in audit processes, social media and cloud computing are among top concerns, according to their “2012 Internal Audit Capabilities and Needs Survey.” The report cites that in addition to internal audit executives understanding these areas and their risks, they must also know “how their organizations are leveraging and controlling them in order to perform their jobs at a high level and add value to the organizations they serve.”

And while privacy is another obvious factor that many would consider before utilizing cloud-based social platforms, it is important to also understand the use of mobile applications and the relevant risks in accessing data via hand-held devices.

“At Protiviti, we recognize that social activities are introducing new ways to acquire customers,” said Hedges. “But when it comes to the privacy and security of these platforms, it’s about really understanding the terms with mobile applications and social. Mobile apps are an extension of social media—they are just another way to connect and collaborate. And it comes down to really making sure that people understand ‘is there private information actually stored on the mobile device? If not, where is that data stored? Is it on a server that can be accessed via the cloud?’ Some platforms have less security than others. There are inherent risks in the platforms themselves and what it was designed to do that auditors and others need to be aware of as well.”

With its RA.Pid Supplier Risk Profile, Business Intelligence as a Service (BIAS) provider Rosslyn Analytics, New York, N.Y., enables finance, procurement and supply chain organizations to evaluate, monitor and mitigate supplier risks in real time in five business days.

And while the overall crux of the platform is to provide data services and analytics, it uses its RA.DAR engine to stream data through an automated process. And just like Facebook users are notified when a “friend” posts a new comment to their profile, when a risk profile changes within Rosslyn’s RA.Pid platform, all users that have exposure to that risk profile are notified immediately through an alert mechanism, confirmed Charles Clark, Chief Executive Officer, Rosslyn Analytics.

“When we automatically extract data from a client, all of the details of that client get pushed up into the RA.Pid platform,” explained Clark. “RA.DAR gets to work just like LinkedIn gets to work with one’s name. Change your name to the name of a supplier and it ensures that the name is spelled correctly before associating that with a unique identifier. So just like one’s name which is tagged, we tag every single supplier, commodity and every single unit of relevant information before associating that information with all of the other information we have internally and externally.”

Overcoming supplier risk

To better manage privacy concerns and supplier risk, a number of supply chain service providers offer their own internal cloud platforms for customers to communicate more privately with other industry executives.

Basware’s Alusta B2B platform for e-invoice and purchase to pay (P2P) transactions enables buyers and suppliers to communicate via this network, making open collaborative business commerce a reality for organizations of all sizes. Additionally, it enables real-time visibility of what is happening with any transaction, interaction or relationship which gives each party the ability to manage any disputes that arise and handle immediately.

“The platform is designed to provide rule-based interfaces to people depending upon what their function is within an organization,” explained Robert Cohen, Vice President, North America, Basware Inc., Stamford, Conn. “In too many organizations, there is a communication gap within companies and externally as well. If we can internally combine the procurement and the sourcing professionals with those in finance and accounts payable, then we have opened up that social collaboration. Doing so, there is a better flow of information so they can better understand if there is a problem with the supplier, or a problem between the supplier and production or shipping. On the external side, if you are a buying company, now you are communicating better with your suppliers and understanding issues that are there as well. It all comes down to effective visibility,” Cohen continued.

Yet, a perception gap still remains as the average P2P executive “likely views social networking in the workplace as, at best, a trivial pursuit and at worst, a hue productivity drain” according to a report commissioned by Ardent Partners Ltd. and Basware. Its findings show that “changing the language from ‘social’ media and networking to ‘collaborative’ technology and networking will help more businesses focus on and realize the present opportunities.”

“It’s not just about the chat—it’s about the business,” confirmed Keith Collins, Chief Marketing Officer, Gotradelive, Palo Alto, Calif. “Using Facebook or LinkedIn is all well and good but the reality is that those tools are not relevant to business. The application of photo sharing or chatting with your friends is just not the way businesses do business. Instead, they need to think harder about how they can utilize the Internet to be more efficient.”

Additionally, 62 percent of finance executives surveyed in Basware’s “Cost of Control: Disrupted Networks” study claim that connecting disparate parts of the purchase and payment process within their businesses will be critically important in the next 12 to 24 months.

“Purchasing and payables are not talking to one another as closely as they should be,” said Cohen. “If procurement is purchasing—whether it’s for materials or indirect services—and payables or finance isn’t aware of that until the invoice is delivered, then all of a sudden, they are hit with a liability. By having procurement and payables working more closely together to run reports, then finance and treasury can know about that liability 60 days before it’s due.”

Environment data analysis

While the argument stands that the use of social media can be more beneficial to some environments versus others—e.g., retail versus food—the analytic capabilities used to track specific data in one scenario may be relevant across other processes in both environments. Hence, what one collaborative platform may do for a retail environment can provide benefits to other linked processes in the supply chain.

Take, for example, commercial trading and social commerce site Gotradelive. The platform enables businesses to increase inventory turnover and improve their cost of goods sold. Consequentially, this can lead to a decreased loss of perishable items, decreased excess items and can help motivate agricultural industries and growers not only to produce but move product faster, giving them the opportunity to increase profit share.

“There’s this big opportunity in today’s market to mix social and commercial for businesses,” confirmed Collins. “Most platforms are either social or commercial or very consumer-oriented. And while providing business networking is not new, building the applications on the platforms is new as is providing real commercial useful tools for businesses to use with their private networks. Where we are different from eBay and other commercial online tools is that we don’t make a charge based on the transaction.”

Recently launched in California, the trading and social commerce network enables businesses to connect with customers, suppliers and partners to promote, source and sell products globally. Business that want to go beyond the basic service package and further customize and brand their communication and Web pages can do so at $15 per month for the premium service.

“Our mission is really to create a broad range of tools to help people with their everyday business as well as their excess problems,” Collins added. “There are hundreds of millions of small businesses in the world and they are the powerhouse of the economy—whichever nation you are looking at. It is important that those businesses really step up with efficiency and growth to try and solve the world’s economic crisis. What we are doing is providing tools that help that efficiency to small businesses that otherwise would not have been able to access that type of capability.”

And as the cloud and such social and collaborative environments continue to enable users with data analytics and communicative networks, they will need to understand how to effectively utilize them to not only grow their own business but add improved functionality to the global supply chain.

“Now, you can have multiple networks of external resources, functionalities and ecosystems that can seamlessly integrate with internal networks of people—the synergies are huge,” added Clark.

As both public and private environments continue to push collaborative efforts in supply chain forward, businesses will need to assess which strategies work best for them in building their growth.

“The whole business here is about identifying how you use the more public platforms to drive people to your private ones,” said Hedges. “From a B2B perspective, Google+ really tries to keep supply chain relationships going in between transactions, sales and product delivery. But it’s an outpost, just like Facebook, Twitter or LinkedIn—they are all outposts to drive people back to your own site, to your own platform, so that people understand more about your company.”

It’s about leveraging the best of social media from the outside and incorporating it into solutions internally, Cohen confirmed.

“CFO’s want the different parts of procurement, accounts payable, treasury and sourcing to all speak to one another,” he said. “Social collaboration and networking will help that.”

The power behind collaborative B2B networks

Be it social platforms or collaborative networks, the supply chain is embracing a whole new way of connecting key executives together—from manufacturers to distributors to finance and even warehouse management executives. And they must leverage such capabilities and understand the data provided to manage their processes and the global supply chain for future growth.

“Companies understand that the use of social media is going to be required in the future,” said Champa. “There is a gigantic pent-up demand to improve based on real customer connection. But the capability to translate that data into the supply chain doesn’t yet exist to the extent it needs to. In order to get there we have to move from social media to social technology to pass that onto organizations.”

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