Case study: Is the Procurement Department finally ready for social media?

 social supply chain

Over the past five months I have been fortunate to be immersed in a fascinating customer research project to determine how social media technologies can be applied to the supply chain. There has been a lot of buzz on this idea — how do we use social-based platforms for demand sensing, supply chain monitoring, and improved problem-solving and collaboration.

Despite all the clamor, we found little evidence that anything was actually happening in this space until we happened upon a fellow in Montreal named Tony Martins who has provided a glimpse of what a social supply chain can look like.

The future of supply chain?

Tony had been around a number of different companies in engineering and IT jobs but he found his true passion in Procurement and the opportunity to improve the supply chain. His social media journey began in 2005 when he discovered 500 batches of incoming material stuck in his pharmaceutical company’s supply chain because operators on the floor couldn’t solve anomalies discovered with an incoming inspection. They simply pushed the problematic batches aside because the people who could solve their problem were too far away.

Tony studied this problem and realized that 2/3 of the waste among knowledge workers comes from trying to find the information and people who can help resolve unexpected issues. He calculated that the average time to solve unexpected problems in his organization was four months. The working capital tied up in material sitting on the floor was just the tip of the ice berg! The real opportunity to streamline the supply chain was to keep unexpected problems from becoming a chronic burden on the organization.

Tony started doing experiments to allow the operators to expose their problems by posting them on an internal Sharepoint site. A live meeting was still required to actually solve the issues but quickly exposing the issues was the first step toward greater efficiency. Eventually he institutionalized an Enterprise Social Network to provide:

1) early detection of problems

2) an ability to “absorb” the problem so it doesn’t hurt the whole organization

3) a forum to enable quick reaction

The Enterprise Social Network

When I mention the term Enterprise Social Network, I’m not talking about blogs or Twitter. This is a private and secure Facebook-like system. Some of the leading companies in the space include Yammer, Chatter, Connections and Jive.

During the weekly problem-solving meetings, Tony emphasized that the issues had to be addressed NOW — before they left the room. Eventually his management team became so adept at solving problems quickly, the problems were addressed as soon as they were posted on the internal network — they no longer needed any live meetings at all.

The employees eagerly adopted this new technology because they saw rapid response from the management team, making everyone’s job easier and more productive.

The impact on the organization was dramatic as employees began to spontaneously associate with each other based on problems that needed to be solved instead of roles on an organizational chart.

Eventually Tony implemented systems to solve day-to-day communications problems in addition to the production exceptions, expanded the network to include outside suppliers, and developed advanced organizational thinking to scale his initiative across multiple plant locations when his company was acquired.

The results are in

Significant accomplishments included:

  • Raised service level (fulfillment) from 80 percent to 95 percent.
  • Cycle time reduced by more than 30 percent in the first six months
  • Supplier lead times dropped by 25 percent or more as months of “conversation waste” started disappearing.
  • He implemented a new SAP ERP system without any meetings after the first kick-off week. Every problem was solved through the Enterprise Social Network without a live meeting.

Tony’s journey is just beginning. He is testing new organizational ideas to enable the spontanous association that is the key to rapid problem solving. He is even thinking about models that could predict where interactions should be occurring in the supply chain and then mapping out where they are actually occurring.  This could expose personality and political hurdles as well as best practices of the people who are making this work in the very best way.

This case study is exciting to me because it connects the dots between theory, technology, and the human dynamics needed to successfully apply social networks to a complex supply chain.

Will more companies follow suit? Is the supply chain the next field of progress for social media?

This post was written as part of the IBM for Midsize Business program, which provides midsize businesses with the tools, expertise and solutions they need to become engines of a smarter planet. I’ve been compensated to contribute to this program, but the opinions expressed in this post are my own and don’t necessarily represent IBM’s positions, strategies or opinions.
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  • Yet another example of the “ROI” of social! It’s not just about “marketing and selling”. Great points raised here that everyone should consider.

  • Thanks Steve. Always an honor to have you drop by!

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  • I’d say this falls squarely into the “Hopeful news” category! Given the inherent length and complexity of many companies’ supply chains – both in terms of parties involved and typical operational timeframes – I hope that this becomes a full-blown trend. If it does, both the financial and strategic benefits could be enormous. Great post, Mark!

  • Thanks Pete. It was quite a relief finding this example!

  • Yes, and yes Mark!

    Thank you for introducing Tony Martins’ journey to me, and this community….

    Tony’s mindset, and his work on change, growth, and progress is very exciting,
    extremely needed, and significant as you explain in your presentation above…

    Thank you for the “case study”…

  • You’re welcome. He is quite a guy. It was a pleasure meeting him and learning from a true visionary.

  • So delighted you had a meeting with Tony, and then share your {grow} learning “from a true visionary” with us!

  • Rob

    In 2006 an important multinational had the issue of 1,000,000 faked contraceptive pill blisters out and about in Europe. This is trickier than it seems as the faked substance was chalk and very few boxes were kept by users to later trace the problem. Statistically, some 200,000 unexpected pregnancies would result: we will never know. Unfortunately, they will never know either.

    Examples of social media impacting the supply chain in both consumer and business scenarios abound. What is really interesting nowadays is the ability to process massive quantities of data, of “weak signals”, and take action.

    Imagine, in the case above, if the company had the means to email at least those customers that had paid with credit card or smartphone. Certainly a number of young ladies would have postponed the joy of motherhood.

  • johnbottom

    Nice case study Mark. From our marketing agency perspective, “procurement” has a reputation for slowing processes down rather than expediting them, so it’s great to see Tony’s story.

  • Sounds like they had more than than a supply chain problem on that one! Quite a story.

  • Certainly it is puzzling that there has not been greater adoption of these ideas. The areas is lagging for sure. Great to see you in the comment section John!

  • Linda D’Alessandro

    Great case study, Mark, thank you for sharing. Having worked in business process analysis and SAP implementations for many years, the application of social media technologies to improve internal and external processes interests me particularly, especially in areas like customer support, collaboration and new product development. Also SAP itself uses it’s SAP community network to improve internal and external collaboration. Now, the supply chain embracing social media will bring concepts like Just in time, Lean Manufacturing, Six Sigma, etc. to a new level. I read Tony Martins’ bio, and I was happily surprised to read that he was born in Mozambique and then lived in Lisbon, like my Mom. What a coincidence!

  • Rob

    Indeed. The real issue is that much work happened in tracking all the steps of the supply chain and understand how the faked pills managed to hit the pharmacies’ counters. And yet, no one knew how to inform, not inform, or by other means communicate the “happy” news to the users.
    I would contend that no “fool proof” system will ever be possible, and the more money you spend in enhancing security gives an ever diminishing return. To the contrary, correct social media campaign can be of great help in this.

  • SAP Jam has also supported this type of activity going back to late 2012. The real potential is when social collaboration as a capability is literally integrated with existing enterprise processes, and not used as an exception tool.

  • A mind-numbing problem!

  • I would also recommend Tony’s blog. Deep stuff and very interesting!

  • That is clearly the opportunity Marty. ANd I think it can get there because something like Facebook is already so familiar to people. The usual technology adoption curve is much lower. Thanks for commenting Marty!

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