Why Should Supply Chains Like Facebook?

shutterstock_117240742By Dr John Hopkins.

If somebody mentions the word “Facebook” to you it is highly unlikely that the first expression that comes to mind is “powerful supply chain tool”– but amongst the plethora of pictures of friends’ babies, cat videos and Candy Crush updates, there may well lie a powerful platform that can help you to better understand your customers and increase the awareness of your brand. If used properly of course.

As we know, supply chains are simply networks of interconnected businesses, involved in the ultimate provision of product and service packages required by end customers, and it of the utmost importance that the businesses involved understand as much as possible about what products and services these customers actually want. Even the most efficient supply chains in the world will quickly fail if the wrong products are being delivered in the right quantities, at the right quality, to the right place at the right time. Social networking sites allow businesses to negate this problem by directly connecting them with their customers in real-time.

Social networking sites are internet communities where individuals can interact regardless of geographical distance. Participating users join a network, publish their profile and any content (pictures of babies, cat videos, etc!), and create links or connections with other users with whom they wish to associate. The resulting online network provides a basis for maintaining social relationships, for finding users with similar interests, and for locating content and information that has been contributed or endorsed by other users. The widespread advancement of digital media in recent years has seen these sites rapidly become vital platforms for interacting, communicating and sharing, to the point where they have become an everyday component in people’s lives.

The potential to connect and interact with extremely large cohorts has obviously caught the attention of businesses around the globe, offering them an ability to become ‘friends’ with users, whilst presenting users with the opportunity to follow or ‘like’ a business or brand that has particular appeal to them.This creates a direct two-way business-to-consumer (B2C) information flow between the brand and a confirmed interested party (i.e. potential customer), with the user subscribing to targeted information about new releases, offers or events that are posted directly onto their news feed, whilst being able to make comments or send feedback directly back to the business. They enable organisations to create customised online communities and initiate digital conversations with, and amongst, their consumers. Being able to take advantage of our natural social networks is a highly effective mechanism for driving awareness or creating interest, and can be utilised by supply chains in forecasting demand or gauging reaction to new or future products lines.

Data mining, the extraction of previously unknown and potentially useful information, is a technique for identifying patterns in data that can be utilised in making accurate predictions about the future. Social media is an effective platform for extracting real-time information from the crowd. Comments made on Twitter can be mined as a means of gaining knowledge about emerging topics and breaking events. The nature of Twitter is that users can see not only their own followers but also who else those followers are following and who else follows them. The same happens with friends-of-friends on Facebook. A ripple effect of sorts occurs whereby a user is able to see information about all their own friends and identify who, in turn, they are friends with. Social media sites, by their very nature, encourage users to share information amongst their peers by liking, sharing or reposting. If something is deemed interesting by its initial audience, they are likely to share that content with their own networks, distributing viral videos, creating additional brand-related content, tweeting about the brand or posting comments about their experiences on Facebook. Once shared, the value of that content increases significantly as it becomes a post from a trusted source, a friend, rather than from the brand or organisation itself. Consumer-generated content like this is rapidly gaining traction as part of the decision-making process for customers considering a purchase, and as such is something that supply chains need to be aware of – the speed and extent to which opinions can be distributed via social media networks is nothing short of staggering. Say, for instance, one hundred of your Facebook friends decide to like one of your posts, and each of those users in turn has one hundred Facebook friends of their own, that post has already had exposure to a potential audience of 10,000 users. But, if friends of the original user also then choose to share that content, exposure to your content rapidly increases. This transmission of information is an important mechanism via which social networks affect their user’s decisions and behaviour and, when you consider the number of followers that brands like Starbucks (35 million) and Coca Cola (71 million) have, the numbers become mind-boggling. This makes it all the more important that the messages you are sending out are always the right ones.

Social customers possess the tools with which to share and socialise any information they receive with their own peers with the click of a mouse or, more likely, by tapping on their smartphone or tablet’s touchscreen. This digital word-of-mouth, and the influence it may have on what products will sell or indeed should even be made in the first place, is regarded as being so significant that established terminology, such as production and consumption, is now being challenged by some scholars with new hybrid descriptions such as ‘prodsumer’and ‘produser’. Supply chain partners are turning their attention to their customers’ interactions, by monitoring social media and tracking consumer commentary and feedback, rather than focussing solely on transactions. This is a strategy called Social Customer Relationship Management (Social CRM or CRM 2.0). Recognition of this can provide valuable insights into what consumers are actually thinking – the Holy Grail for supply chains – but it requires the development of new strategies in order to better engage with emerging social consumers and enrich their customer experience.

However, even without having to go to these lengths, social media still offers great opportunities for businesses just looking for an additional sales channel, a new tool for leveraging information about their market, or for enhancing communication, knowledge sharing and collaboration – either internally or with their supply chain partners. A Facebook page is quick and easy to set up, free to use, and there are no specialist web skills required in developing one. Once up and running, the opportunities to connect are limitless. Users’ profiles alone are a treasure trove of information about the owner of that profile, such as their real name, gender, date of birth, home address, mobile phone number, hobbies, interests, education, employer, drinking habits, sexual preferences and orientation, political beliefs, and relationship status. If, for instance, you are in the wedding dress-making business, access to this kind of information makes targeting single or engaged women, between a certain age range and living in a specific geographical location, a fairly simple task.

 

Dr John Hopkins is a Senior Lecturer in Supply Chain Management at Victoria University. His research interests include newly evolving e-business and telecommunications models, the business impact of social media, greening strategies for supply chains, and the management of information in supply chain environments. For more information, please visit business.vu.edu.au/scm