Today’s Lunch Discussion: Five Emerging Supply Chain Trends

Since starting Circumnavigating the Social Economy, a large part of each day has been filled with conversations around emerging supply chain trends. This has been accompanied by offers to attend conferences and participate in product/strategy briefings.

Based on these conversations, I’ve put together a brief list of five trends that I’m tracking. The first is an outgrowth of last week’s post, the next two are from ongoing discussions with key vendors, and the last two came courtesy of two articles I ripped out of The Wall Street Journal this week.

Demand for social supply chains is starting

Last week’s post on social supply chains drew several positive comments and a lot of personal email. While readers acknowledge that there are cultural/political barriers, many see the need for a collaboration medium like salesforce.com’s Chatter to serve as the system of record for all discussions between brand owners and tier 1 suppliers. Let’s see where this goes.

Hottest trend:  Supply Chain Control Towers

Over the last three weeks, I’ve talked to three software vendors that are developing control towers to manage the extended supply chain. Not surprisingly, each has taken a different tact. One is focusing on the infrastructure needed for near real-time sense-and-respond.  Another is morphing planning and execution functionality to allow changes in supply and demand to cascade up and down the chain from the brand owner to the supplier’s supplier.  The third is adding simulation capabilities on top of its popular planning software.

This is just the start.  Many more vendors are expected to offer their own versions over the next couple of quarters. 

Supply Chain Execution-as-a-service

In the last 10 days, executives at two software firms asked me for my perspectives on outsourcing core supply chain processes.  At first I thought they were talking about some of the demand planning outsourcing that Accenture was performing for clients at a Mumbai site that I visited in 2007.

That wasn’t what they meant at all.  Instead, they asked what I thought about contract manufacturers offering to manage the procurement and manufacturing processes for their customers.  While it’s hard to imagine a company like Dell ceding this level of control, I could see how this type of service would have appealed to salesforce.com in the fictional DealBook scenario I created last week.  This bear’s watching.

Titanic supply chains

Six years ago while I was at AMR Research, I wrote about the concept of “predatory supply chains.” I argued that smart companies look for ways to cut off their competitors’ oxygen.  The two examples I cited were Apple’s cornering of the flash memory market before the launch of the iPod, and Toyota’s investment in and purchasing deal with a core supplier of hybrid transmissions that prevented others from matching Prius sales.

What’s the flip side of predatory? How about Titanic where a partner’s failures can sink your boat?

Last Tuesday, The WSJ wrote about how “Nokia’s Troubles Hit Suppliers.” Nokia’s cell phone sales woes have caused problems for chipmakers at STMicroelectronics and Texas Instruments. STMicroelectronics’ wireless division saw a 34% drop in second quarter sales over the same period last year. This resulted in a $102 million operating loss. 
Nokia is TI’s primary customer for applications processors having bought 85% of units shipped. TI recently blamed Nokia for its lower quarterly sales guidance. Overall, TI’s share of that processor sector has dropped from 34.5% to 19.2% over the last year.

It’s not just Nokia’s travails. Hewlett-Packard’s recent decision to stop producing WebOS products could not have been viewed as good news inside Qualcomm which had been a key chip supplier.

Retailers:  Give your best customers a free iPad

OK, so this one is a stretch. Last Wednesday, The WSJ published an article based on a Forrester Research survey that found that tablet users were more likely than PC users to buy something from a retailer’s site – 4-5% conversation rate versus 3%. The same piece said that tablet users also spent more per order – as much as 10-20% more.

If you remember my reference to Burberry in my September 8^th post, it would not be too much of a leap to imagine the fashion leader distributing tablets clad with its iconic tartan pattern to key customers. Here we see the convergence of social commerce with the social enterprise. 

What do you think?

As always, I welcome your feedback and ideas. Please add to the conversation.

Bruce

Wake Me Up When September Ends

Ah, September can be such a cruel month in New England. As the first day dawned, the Red Sox were in first place, 1.5 games ahead of the Yankees and 9 wins better than Tampa Bay. It was great to be a Boston sports fan.

Well, you know what happened next. The team with the third highest payroll in baseball limped on to a 7-and-20 record over the final four weeks. After Hurricane Irene swept through on August 28, the Sox never won back-to-back games.

The dreaded and feared collapse again reminded Fenway fans of the opening paragraph from A. Bartlett Giamatti’s great essay, “The Green Fields of the Mind.” Here’s how the former commissioner of baseball described our dependence on the sport:

“It breaks your heart. It is designed to break your heart. The game begins in the spring, when everything else begins again, and it blossoms in the summer, filling the afternoons and evenings, and then as soon as the chill rains come, it stops and leaves you to face the fall alone. You count on it, rely on it to buffer the passage of time, to keep the memory of sunshine and high skies alive, and then just when the days are all twilight, when you need it most, it stops.”

October can be a nasty stretch, too. In a few weeks we will be reminded of the 25^th anniversary of Game 6 of the Sox-Mets World Series. Please wake me when October passes, too.

Get Ready for “Social Supply Chains”

When Marc Benioff outlined his vision for the “social enterprise” at last month’s Dreamforce, he described social networks for employees, customers, and products.  Being a long-time supply chain analyst, I was surprised that he didn’t talk about social networks for your suppliers. 

Let me do it for him.

This past week I was in the Rocky Mountains to attend E2open’s (www.e2open.com) annual customer event.  As I sat listening to some of the world’s smartest supply chain practitioners talk about the challenges keeping up with an ever-expanding list of new SKUs and new product categories (e.g., tablets), I wondered whether Chatter could be deployed as the preferred collaboration medium between brand owners and their top suppliers. 

After all, it would seem that you would want to capture most or all of the back-and-forth discussions on forecasts, purchase orders, engineering changes, shortages, and other factors versus using email, IM, fax, etc.  in this case, Chatter could be used as a knowledge management system, too.

If you’ve been around chief procurement officers for Fortune 100 high tech companies, you know that they tend to be deadly serious people.  While many CPOs might read this and spontaneously scream “Not in my lifetime!” let me outline a social supply chain scenario for you.

Caution:  This scenario has a 0% probability

Imagine that Marc Benioff and Michael Dell are meeting right now to discuss Marc’s idea for the salesforce.com DealBook, a new tablet designed specifically for business apps.  Over lunch, Mr. Dell agrees to license some of his IP and to share his suppliers in exchange for royalties on each unit sold.

When Mr. Benioff returns home, he announces the news to his executive team.  They immediately create “Project Aloha,” and set up new Chatter streams including “Launch Teams,” “Development Schedules,” “New Product Ideas,” “Tier 1 Suppliers,” “Carriers,” “Competition,” “Sales Forecasts,” and “Cost Targets.”  In addition to all internal communications, Chatter also becomes a content repository as third party information such as IHS’ iSuppli Teardown reports get added for all to share. 

Next step:  Create a social network for suppliers

Here’s what could happen next:  Within 72 hours an internal team makes the trek down 101 to E2open.  Their goal is to get rapid access to the 50,000 suppliers in E2open’s trading network.  When they get there they discover that their new partner is a salesforce customer and used Force.com to write a new application to streamline the onboarding process.  A deal is quickly negotiated, but with one condition – Chatter will be the collaboration standard for all supplier interactions.

Over the next few weeks and months the network expands from design firms, contract manufacturers and Tier 1 partners to include critical suppliers embedded deeper in the supply chain.  It also includes selected AppExchange partners who have agreed to provide free 90-days trials of their software as well.  In a short time, Chatter is conveying P.O.s, demand updates, engineering changes, and updated launch information to key suppliers. 

Then expand to customers/partners

Thanks to the network, the sales team soon has DealBook prototypes that they can preview to selected carriers, retailers, and customers.  Verizon and BestBuy ask salesforce.com to create a shared partner network built around Chatter.  They want to begin training employees and creating marketing plans ahead of the launch.

As word begins leaking out about Project Aloha, salesforce.com turns to its Radian6 team to monitor the buzz.  This gets shared over Chatter to the employee, supplier, and partner networks.

Leveraging Chatter on the day of the launch

On launch day, salesforce.com sends its employees out to key retail sites to track the success of the new DealBook.  Immediately, the field begins submitting videos of the lines outside the store and interviews with customers and the retail employees.  Messages are coming in on product sales and competitive responses.  Every comment is recorded on the new Chatter Map and arranged by geography. 

As the first batch of DealBooks quickly sells out, salesforce.com sets up a new Chatter stream to track re-sale prices and volumes on eBay and Craigslist.

Meanwhile, marketing has created a new social network for the DealBook itself.  Customers log on to download the video of the Metallica performance at Dreamforce.  They also post their ideas on new features they want to see in DealBook2 as well as their views on how the new tablet stacks up against the iPad.  Thousands post YouTube videos and Like it on Facebook.

What do you think?

Still sitting there with your arms folded muttering “Not in my lifetime”?

As always, I welcome your feedback and ideas.

Bruce

What’s Next: A Salesforce Social Network for Ad Agencies and Marketers?

Last week I wrote a piece for salesforce.com’s CloudBlog that asked “Will ‘Mad Men’ Drive the Social Enterprise?”  This fleshed out some of the ideas I raised in last Monday’s post on social networks.  The not-so-subtle message was that the cloud leader should be aggressive in pursuing relationships with ad agencies.

This drew a comment from one reader questioning whether there was a role for agencies in the Social Enterprise.  He didn’t see the need to let any company come between our customers and our brands.

Embrace, Don’t Replace

That kind of thinking fails to take into account the existing, often long-term, relationships between agencies and their clients.  Instead of trying to displace the creative team, salesforce.com must embrace them. Taking a page from Facebook might be a good start.

Last April, the social network giant started Facebook Studio for agencies and marketers.  The site features “Creatives Talk Live” webcasts, a Learning Lab to help agencies and their clients get started with social networks, a Studio blog, and a directory of the global agencies that are members of the community.

The most attractive part for agencies, though, may be the opportunity to brag about their work.  There is a Gallery of nearly 250 submissions built on Facebook.  Most are built around well-known brands.  You will also notice a Showcase featuring the top 20 campaigns.  Facebook describes this as “celebrating the very best work created using Facebook.” 

These are brilliant ideas.   No other industry gives out more awards than the advertising world. 

You can be sure that the “Likes” for each campgaign are closely monitored, too.  Overall, 162,000 Like Facebook Studio.

What do you think?

Should salesforce.com create its own Studio?   It has a lot of the pieces that creatives need – Radian6 for sentiment analysis and data visualization, Force.com and Heroku for custom development, and Chatter for collaboration.  It also has the advantage of being more open than Facebook in that it embraces Google, Twitter, and other social networks/tools.

As always, I welcome your feedback and ideas.

Bruce

P.S. Here are the links to the Cloudblog and CloudAve posts.  You can add your comments there, too.

http://cloudblog.salesforce.com/2011/09/will-mad-men-drive-the-social-enterprise.html

http://www.cloudave.com/14943/will-%e2%80%9cmad-men%e2%80%9d-drive-the-social-enterprise/

More New Social Network Opportunities

In my last post, I wrote about salesforce.com’s plans to provide social networks for employees, customers, and products.  Now it seems that I can’t pick up a newspaper or magazine or my laptop without seeing a wide range of potential applications, especially around social networks for products.  Here are some examples:

Social nets for products:  Look to medicine and the wisdom of cars

Reading the online edition of MIT’s Technology Review is as much a part of my daily routine as enjoying a cup or two of coffee.   Over the last few weeks, TR has published several pieces on emerging medical innovations that one day may be a critical part of our health care.  For example, there was a piece this morning on a new tumor monitoring system that can be implanted in the body to measure blood oxygen levels.  The data would be fed wirelessly to your doctor.

Other articles have discussed sensors that can monitor blood pressure and glucose levels.  Both TR and The New York Times have published pieces on sensors/monitors embedded into temporary tattoos.  These “epidermal electronics” might one day replace the maze of wires attached to a patient’s body.

As I write this, I am wondering how this gets commercialized.  Does my doctor’s office sign me up for a modest fee or will it be advertising-supported?  Can I use Chatter to talk to my doctor and with other patients with similar diagnoses?

As for vehicles, I’m a sucker for an article promising me “personalized directions” based on traffic, weather, and my own driving habits.  In late August, TR published an article on a study conducted by Microsoft Research in China.   Apparently, researchers tracked the GPS movements of 33,000 taxi drivers to figure out the optimal route based on the day’s conditions.   

What about road safety?  Last week, TR described some new work being performed on vehicle-to-vehicle, and vehicle-to-infrastructure communications.  It quoted the U.S. Department of Transportation as estimating that “80% of serious accidents could be avoided” if we could tap the wisdom of cars.

In the vehicle examples, there would be no shortage of potential providers.  A quick list would include car companies, insurance firms, SiriusXM satellite radio, and quick serve restaurants – “Today’s traffic is brought to you by McDonald’s.  Hey, the highway is backed up for eight miles thanks to the rain.  There’s a McDonald’s at the next exit.  Come on in for an Egg McMuffin and wait out the storm.”

Social nets for customers:  Cars, tires, and newspapers

In his August 31 keynote, Marc Benioff talked about the conceptual social network he designed for Toyota.  On that same day, The New York Times wrote about how Ford was teaming with Zipcar to reach young drivers.  Ford will be supplying the car sharing service with vehicles on 250 college and university campuses in the United States.  You can already imagine the Chatter stream on recommendations for car preferences, restaurants, lodging, and tourist attractions aimed at this demographic.

Keeping with the focus on vehicles, in mid-July Bloomberg Businessweek wrote about Continental’s efforts to reach the “tire guy” at local car repair shops and garages around the U.S.  During the course of the year, the world’s fourth largest tire manufacturer will invite 950 independent reps out to its south Texas track to test drive its products.  This is big business as the local guys influence 80% of the purchase decisions in the $13 billion retail market  for new tires. 

Again, you can imagine Chatter streams with video clips featuring squealing tires (and corresponding ring-tones).  Watch how Continental’s tires handle adverse conditions.  Check out their traction and braking.  View how the company differentiates from its competitive positioning.  Oh, and feel free to do some merchandising.

As for newspapers, this morning The Boston Globe introduced its first pay site – www.bostonglobe.com.  The big technological innovation is the new “responsive web design.”  Basically, the paper automatically renders to the traits of the viewing device, be it smart-phone, iPad, or PC.

I looked to see if the new version offers a Chatter-like feature.  The website said only that a “comments” section is planned.  I suspect that this will be more of an internal political/cultural issue than a technical development. 

Social nets for employees:  Don’t forget your alums

Last month TR had a short piece on Infosys’ iEngage, an internal network designed to link its 130,000 employees who are spread across the planet.  It has also opened up the site to an estimated 20,000 former workers.  If you’re planning a social network for employees, you may also want to figure out how to include support for former workers.  They can be an important source for new business or may be interested in part-time work.

What do you think?

As always, I welcome your feedback and ideas.

Bruce

A Closer Look at Salesforce.com’s “Social Enterprise” Strategy

At the annual Dreamforce conference last week, salesforce.com’s Marc Benioff unveiled his company’s “Social Enterprise” initiative before a very crowded and highly enthusiastic audience.  In the first of his two keynotes, Mr. Benioff described his plans for social networks for employees, customers, and products.   This post looks specifically at those offerings.  Look for other Dreamforce analysis to follow.

In my view, the company’s collective genius comes in delivering brand-new-to-the-market-software while simultaneously providing dramatic improvements on existing concepts.  For example, any one who built an intranet portal using Plumtree or worked on the internal team that created IBM’s BluePages, could argue that they were ahead of the curve on employee social networks.  Likewise, Communispace would claim that it has a 12-year head start developing digital communities around consumer brands.

The difference, though, is in salesforce’s ability to seamlessly integrate/embed all of the new software into its existing platform.  It then leverages its user experience to create strong, favorable buzz, stimulate global demand, and execute on a broad scale. 

If you’re thinking that my view may have been altered by standing too close to the stage while Metallica performed at the opening night soiree, then you don’t understand the rapport that Mr. Benioff and team have with their customers.  It’s very Apple-like.

 Here’s a closer look at the three new social networks, and some speculation on what could come next.

Employee social networks:  What does your company use to help speed information-sharing? 

How do you find out about the status of a development project or a large $MM deal?  Do you subscribe to those teams or do you email/call friends involved?  Tools like Yammer are OK if you want people to know what you’re doing, but they were not designed for real-time collaboration. 

Salesforce.com’s Chatter changes all of that.  During the opening keynote, I sat next to one of the company’s top executives.  Pointing to his iPad, he showed me how he used it to keep track of specific deals, customers, sales teams, and documents.  The new release of Chatter adds support for presence, chat, sharing, workflow, and approvals.  There is also an API for third party vendors so that their apps can “talk” to Chatter.  Chatter also allows customers and partners to be linked in to the conversation.

The only pieces missing seemed to be a template for actually creating an employee profile and a framework for talent management.  While you could use your LinkedIn profile as a base, that’s really designed to attract attention outside of your company.  In addition, there’s a lot of proprietary information that you would not put into that network.  (Note:  Many customers use Force.com to create these employee-centric applets/applications.)

Customer social networks:  Extending your brand

The best argument for customer social networks came when Burberry CEO Angela Ahrendts joined Mr. Benioff on stage.  Ms. Ahrendts had a slide of the napkin that Mr. Benioff had used to draw all of the links between her company’s goals and the various constituencies that her company serves, and the various ways that his company could help hers.  She then described how Mr. Benioff had whipped out his iPhone to snap a photo of the results of their impromptu brainstorming session and then emailed it to his team to solicit input for how they could best help the $2B fashion leader.  Immediately, ideas come in from around the globe via Chatter.

Burberry’s employees tend to be young – more than 70% are under 30.  This Facebook generation is a natural for collaboration tools like Chatter.  Its employee social network appears to be tightly linked to the new product launch of Burberry Body fragrance.  Combining the two networks creates a high level of transparency around the campaign and results.

There’s more to customer social nets than Chatter and a cool website.  There’s also the ability to monitor and respond to all of the comments that consumers are making about your brand.  As Mr. Benioff noted, there’s a lot of social traffic to navigate.  Every day more than 200 million tweets traverse the globe.  Meanwhile, you and your peers are updating your Facebook page to the tune of 1.5 billion posts a day.

Again, there have been tools like Umbria that provide sentiment analysis.  Let me remind you though that the salesforce difference is that everything is seamlessly integrated into the core.  There’s no jumping in and out of disconnected apps or multiple log-ins and windows.  It’s all right there on your laptop, iPad, or smart-phone.

One last point, I see customer social networks (and the product version, too) as creating a whole new sales channel in the creative community, especially the interactive agencies who want to leverage their research capabilities and creative skills.  This has enormous potential.

Product social networks:  Linking to the Internet of Things

Four years ago Mr. Benioff used the Dreamforce stage to unveil Ideas, a website designed to gather customer likes /dislikes on products, services, and policies.  This started as an internal tool and quickly spread to Dell and Starbucks.  Thanks to one customer’s post on MyStarbucksIdeas.com, coffee drinkers now have the option of putting a “splash stick” in the hole on the lid to keep the contents in the cup.

While Ideas seems to have receded into the archives, I was really intrigued by the concept of a product social network.  The idea came from discussions that Mr. Benioff had had with Toyota. Instead of friending the car company, your BFF could be your Prius.

Personally, I couldn’t imagine being a frequent visitor to a car company’s website.  But, if I was a Prius owner, I might be interesting in improving my mileage or extending the life of the vehicle.  In the future, after your commute home, your Prius could connect to salesforce.com and report the number of miles driven, the average speed, and details about fuel consumption.  In the morning a message could be pushed to your iPhone offering a graph on how you did yesterday against your peers and offering suggestions for improvement.

There are already tools like that in use today.  Nike and Adidas have designed software for runners that track distances, speed, and performance relative to goals.  Wait until this expands to other exercise equipment, medical devices, and prescription drugs.

The product social network has already extended into routers from Enterasys.  While I’m not sure what kind of conversation you could have with a piece of networking gear, I can envision a world where sensors and the physical plant can provide status reports and alerts over Chatter.

Where will salesforce go next with social networks?

Given my background as a long-time supply chain analyst, I would assume that someone inside salesforce.com is already thinking about social networks for suppliers, trading partners, logistics, and distribution. 

Product lifecycle management is another area ripe for information sharing and collaboration.  I remember the bewildered looks on the faces of PTC executives when I suggested that they add market-related information to Windchill. 

I would also look for social networks geared around the public sector – whether something like an Open311 initiative for a municipality or a campus-wide offering for your alma mater covering everything from curricula to intramural sports or a hub for your favorite cultural activity or charity.  All could benefit from getting closer to constituents. 

I could also make the case for social networks built around your favorite sport/sports team or hobby.  Think of the opportunities for highly targeted marketing.

And lastly, what about the home version?  Forget about emailing or texting your spouse and kids.  Set up Chatter streams to track activities, projects, vacations, family obligations, homework, and the like.

What do you think?

OK, OK, so maybe I’ve gotten way ahead of where salesforce.com is headed.  I did want you to get a sense for why I think the social enterprise/social economy is such a Big Idea.

As always, I welcome your feedback and ideas.  Please add your thoughts to the conversation.

Bruce