Why the success of Facebook will change the Supply Chain

In recent years a new social paradigm has become one of the most influential factors affecting the global economy and everything beyond:

Sharing!

The act of sharing is not so popular amongst children (“You have to share everything, now give that to your sister!”). Apparently though, it is also something that doesn’t always come so easy for adults:

However the success of social media platforms like Facebook (1.11 billion users) and Twitter (200 million users) has presented us with an unexpected phenomenon as sharing has become a very natural act. Numerous technologies incorporate and benefit from sharing information. For example, new startups provide services from sharing cars to apartments. As a consequence, Germany’s biggest IT trade fair, CeBIT, acknowledged the current developments by making “Shareconomy” the hot topic at this year’s event.

The B2C-market as a trigger

A recent representative survey by the German IT-organization BITKOM revealed that 83 percent of all internet users in Germany share digital content online. This is especially interesting for companies given that 44 percent of those internet users provide personal experiences about products and/or services. As potential customers read these reviews and experiences, a profound impact on the economy and business operations as a whole can be realized. Companies are increasingly engaging in social media activities and becoming active players within this market of experiences. As a result, a gigantic pool of ideas is generated, which businesses can anonymously analyze using modern Big Data algorithms and use the results to drive product improvements. Via the social web, it is even possible to integrate customers or other interested parties into the product development process (keywords: “crowdsourcing” or “open innovation”).

The Collaborative Supply Chain

While this aspect is mostly connected to the B2C-market, the philosophy of sharing will sooner or later diffuse into the supply chain and its processes. For example, sharing information between logistics companies is currently very constrained. Although logistics professionals strive for more transparency along their supply chain to achieve optimal processes, there are strict regulations when it comes to providing information to other supply chain participants (e.g. suppliers, retailers). This mentality prohibits a holistic optimization of supply chain processes. Sure, there is always the matter of trust. But in the long run, an encompassing, collaborative supply chain will be for the benefit of all participants as choosing trustworthy logistic partners should be an imperative anyway. At some point in the future, this approach to sharing will be the key to competitiveness as integrated planning will become more important.

Cloud Computing is sharing

On a technological level, the act of sharing is already present in the supply chain. Although initially regarded with suspicion, cloud computing can now be found in almost every phase of the supply chain. A study from Gartner in 2012 revealed that the usage of cloud computing in supply chain management has transformed from being just a minor option to a popular alternative for companies. And there is a solid reason: sharing hardware and software can provide huge competitive advantage. This is especially true for smaller or medium sized enterprises as building up and maintaining a whole IT infrastructure for supply chain software can be very expensive and quite a hindrance for business development.

Although cloud computing is still in the initial growth phase, the technology already offers a significant amount of potential for improving supply chain efficiency and it is the sharing mentality that will play a major part in its proliferation. A very important role will also be assigned to the cloud providers, who will have the responsibility of maintaining high standards of data security in order to preserve the trust of their customers.

Trust is the key

In the end, the success of sharing is strongly connected to the establishment of trust. On social media platforms like Facebook, the users (at least most of them) only share content with people they trust not to misuse the information they provide. For the benefits of sharing to be tapped by the supply chain, companies need to establish business relationships with trustworthy logistics partners and design distinct rules of collaboration. I am not saying it will necessarily be with Facebook, but perhaps some other platform enabling cooperation and sharing across the entire supply chain. Some companies have even started creating their own platforms for sharing, one example being Lockheed Martin’s “Supplier Wire.”

The trend of networked companies promotes an openness and transparency which will change our business world in a very fundamental and sustainable way. This new approach to collaboration offers a plethora of business opportunities as sharing experiences, knowledge and ideas fuels the spirit of innovation and boosts our economy. It would be a shame if trust stands in the way.

One aspect runs in favor of sharing in the supply chain: The social media junkies of today (the average social media user is 36.9 years old) will be the supply chain managers of tomorrow. And with them the philosophy of sharing will gain a whole new momentum.

What about you? Are you already participating in today’s “Shareconomy?”