Can Twitter Help You Make Smarter Supply Chain Decisions?

For years, I’ve been telling supply chain executives to think beyond Facebook, LinkedIn, and Twitter when thinking about the role of social networking in supply chain management. My main message: Think of social networking as another set of communication and collaboration tools, which include discussion forums (think LinkedIn groups), document sharing (think Dropbox), video conferencing (think Skype), texting and micro-blogging (think Twitter), video and photo sharing (think YouTube and Instagram), and blogs and wikis (think Wikipedia).

I also point out that social networking is making inroads in supply chain software (see Macrolynk and Cloud Logistics), and that the next phase of Supply Chain Operating Networks is about facilitating communication and collaboration between supply chain and logistics professionals — that is, SCONs are becoming the business equivalents of Facebook and LinkedIn.

Today, however, Facebook, LinkedIn, and Twitter are starting to play a role in business processes beyond branding, marketing, and customer service. As I wrote last December in Facebook for Supply Chain Communication and Collaboration?, Facebook is rolling out Facebook at Work that “lets you create a work account that is separate from your personal Facebook account [and lets you] use Facebook tools to interact with co-workers.” Meanwhile, LinkedIn is making moves in marketing and sales automation that is putting it on a collision course with Salesforce.com. And last week, IBM and Twitter announced “the availability of industry-first cloud data services that allow business professionals and developers to extract actionable business insights from Twitter data.” Here are some excerpts from the press release:

Twitter is like no other data source in the world. It is a real-time, public, conversational and global information platform where voices from around the world are speaking about every topic imaginable.

But for business professionals to do more than social listening – to be able to use Twitter data to inform their organization’s most essential decisions -– they must first isolate the signal from the noise. IBM does this by enriching and analyzing Twitter data in combination with millions of data points from other streams of public and business data – such as weather forecasts, sales information and product inventory stats – to uncover powerful correlations that drive more actionable insights.

IBM says it has worked on nearly 100 customer engagements in this area, and here’s one of the insights it has drawn so far (emphasis mine):

Twitter is an effective demand signal for the apparel industry because as focused as it may be on individual commentary, this creates a compelling picture of worldwide trends.

Manufacturers want to know what products to make and when, but constantly changing retail trends and habits make it harder to understand and respond to demand. IBM found that Twitter is a valuable indicator of demand for the apparel industry and other manufacturers. By using psycholinguistic analytics from IBM Research to extract a full spectrum of psychological, cognitive and social traits from Twitter data that influential fashion bloggers generate – combined with operational data such as sales and market share information – manufacturers can better understand why some products sell well while others don’t. They can also improve merchandising strategies and provide input to future product development.

Simply put, Twitter is a source of rich, real-time data that when combined with other data sources (such as operational data) and processed through sophisticated analytical tools can provide companies with valuable, non-intuitive insights, which then lead to smarter decisions and actions.

As we’ve seen in the past, Twitter can also provide companies with more timely and insightful insights about emerging risks and events, enabling them to take corrective action sooner and thus prevent (or minimize the impact of) a supply chain disruption. For example, according to an October 2011 Wall Street Journal article, “When Virginia’s magnitude 5.8 earthquake hit [in August 2011], the first Twitter reports sent from people at the epicenter began almost instantly at 1:51 p.m.— and reached New York about 40 seconds ahead of the quake’s first shock waves…The first terse tweets also outpaced the U.S. Geological Survey’s conventional seismometers, which normally can take from two to 20 minutes to generate an alert.”

In short, what I’ve been saying for years remains true: social networking in supply chain management goes beyond Facebook, LinkedIn, and Twitter. But moving forward, those entities will play a growing role in supply chain processes, either as sources of business-relevant data or as providers (directly or via partnerships) of enterprise applications.

Are you a believer or a skeptic? Post a comment and share your perspective!

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