Karsten Horn, director international sales of the Inventory and Supply Chain Division at INFORM, discusses why crowd sourcing will shake up business processes in 2012. He also explains why the supply chain must be prepared to become more ‘social’ with its operations, in order to drive competitive advantage and thrive in the long-term.
Crowding round a business
Innovation and managing talent are clear strategic focal points for CEOs today.
One way that companies are unlocking innovation through knowledge and creativity is an approach known as crowd sourcing. This method enables a company to broadcast an issue to a wide-ranging and diverse audience — using a variety of social media and collaborative software solutions, enabling interaction and ultimately a resolution to the problem.
I strongly believe crowd sourcing is set to shake up business processes this year, and more companies will adopt it as a strategy. Organisations that have already employed this have experienced solutions to internal problems and innovation needs. 2012 presents a strategic opportunity for CEOs and leaders to champion a collaborative digital approach that will allow an organisation to reap the benefits of today’s community-centric culture and instant communications.
Planning for today and tomorrow
One area where crowd sourcing can have a huge impact on business operations is within the supply chain. In the past, many businesses have invested heavily in technology to improve process efficiency. These investments have included traditional ERP platforms that allow companies to gain quick end-to-end visibility of the supply chain.
These systems do not, however, offer much support to evaluate the impact of risk on the supply chain. This often leaves managers making decisions supported by reports written with a monthly perspective – looking backwards at problems that have occurred rather than planning ahead and anticipating or managing them in the real time.
A lack of adequate risk evaluation leaves organisations exposed to higher costs, can have a negative impact on service levels, and leave a business open to significant fire fighting. Additionally, the savings made in improved efficiency at the operational level are often negated by the cost of a solution, such as urgent transport, in an emergency.
Crowd sourcing is a solution which offers CEOs a proactive real-time approach to supply chain management. It enables a business to react instantly to demand changes or problems and subsequently minimise the risk (and consequent impact) and potentially generate advantage from unforeseen events.
Crowd sourcing presents a potential treasure trove of influence and insight to a company’s changing environment – which can have immediate impact on core operations, such as supply chain management.
For example, there are an increasing number of social media tools, mobile and location services that make it simple for people to broadcast data about where they are and what they are doing. This means a plethora of real time information is constantly available, from pinpointing roads in need of repairs to which stores are out of stock on a particular product.
For businesses this real-time data could prove an invaluable aid alongside planning and forecasting technologies, to help deal with unexpected logistic issues such as motorway closures, air freight delays, disasters and extreme weather. Access to this data can enable an organisation to react instantly by putting into place strategies.
As we approach the 2012 Olympics, organisations across the country will be thinking strategically about how to take full advantage. However, they will also be thinking practically about the impact the games will have across operations, as well as on the supply chain.
The Olympics are likely to cause a host of disruptions, particularly around travel. Taking advantage of the insight that crowd sourcing offers – by keeping abreast of communications on social networks, for example – will allow businesses to increase the flexibility and dynamism of their supply chains and enable quicker reactions to changing circumstances.
New Year, new crowd
In my opinion, 2012 will see crowd sourcing become a key enabler for agile response and process handling, and CEOs and business leaders which begin to integrate it into their day-to-day operations will see the most benefit.
This means businesses must begin to establish "listening posts" on various communication channels — such as the various social networks — to capture critical conversations that can drive process decisions within the supply chain. Managers must filter these messages and identify those with the greatest relevance to operations. For example, picking up on extreme weather alerts can help an organisation to react instantly and source alternative transport routes.
Crowd sourcing is an enlightening tool for managers to posses but it is equally as essential that companies are able to make informed long-term business decisions to support their longevity.
To do this, businesses need forecasting systems which provide accurate statistical information based upon historical sales and dynamic parameters that continue to learn. Additional information can then be layered on top of this base information to provide a clearer picture of likely demand.
I believe that data assimilated though crowd sourcing can then be used to support and verify the suggestions given by forecasting systems. For example, supply managers could combine logistics-related information such as road closures with demand forecast-related information, such as products that are trending and popular locations, which may cause spikes in product demand.
Having access to this over-arching information will allow supply chain managers to update both current and future planning parameters and improve the flexibility of the supply chain. This in turn may help companies to increase the availability of products, improve the effectiveness and optimisation of purchasing and stock levels and to make the right planning decisions at the right time.
I predict that 2012 will be the year businesses become more ‘social’ with their operations, in order to drive competitive advantage. Those organisations that effectively layer crowd sourcing over existing forecasting and planning solutions will drive real-time guidance and recommendations and achieve better business outcomes.