Social Media and Supply Chain

Markova, Sonja; Petkovska-Mirčevska, Tatjana Article Social Media and Supply Chain Amfiteatru Economic Journal Provided in Cooperation with: The Bucharest University of Economic Studies Suggested Citation: Markova, Sonja; Petkovska-Mirčevska, Tatjana (2013) : Social Media and Supply Chain, Amfiteatru Economic Journal, ISSN 2247-9104, The Bucharest University of Economic Studies, Bucharest, Vol. 15, Iss. 33, pp. 89-102 This Version is available at: https://hdl.handle.net/10419/168778 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. http://creativecommons.org/licenses/by/4.0/ Supply Chain Management AE Vol. XV • No. 33 • February 2013 89 SOCIAL MEDIA AND SUPPLY CHAIN Sonja Markova1 and Tatjana Petkovska-Mirčevska2 1) University American College Skopje, Republic of Macedonia 2) Institute of Economics, University “Ss. Cyril and Methodius” Skopje, Republic of Macedonia Abstract Web 2.0, also referred to as social media, is the use of the World Wide Web to increase creativity, information sharing, and collaboration among users. Social media is driving the rethinking of many of the principles of economics. The use of social media within supply chains is lagging behind their usage for other operational functions, however supply chain management is evolving into supply chain management 2.0.The purpose of this article is to provide researches of the supply chain management a reference with the main concepts of social media: social profiles, social applications, brand outposts and communities, and the social ecosystem. Keywords: customer engagement; real time feedback; social media; supply chain management; supply chain management 2.0; Web 2.0. JEL Classification: M31 Introduction The term "supply chain management" entered the public domain when Keith Oliver, a consultant at Booz Allen Hamilton, used it in an interview for the Financial Times in 1982 (Wikipedia, 2012) and came into widespread use in the 1990s. Prior to that time businesses used terms such as “logistics” and “operations management” instead. According to the Council of Supply Chain Management Professionals (CSCMP), supply chain management encompasses the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third party service providers, and customers. In essence, supply chain management integrates supply and demand management within and across companies. (Council of Supply Chain Management Professionals, 2012) The evolution of supply chain management observes six major movements: Creation, Integration, Globalization, Specialization Phases One and Two, and Supply Chain Management 2.0 (SCM 2.0). The term SCM 2.0 has been coined to describe both the  Corresponding author, Sonja Markova - [email protected] AE Social Media and Supply Chain Amfiteatru Economic 90 changes within the supply chain itself as well as the evolution of the processes, methods and tools that manage it in this new "era". Web 2.0 is defined as a trend in the use of the World Wide Web that is meant to increase creativity, information sharing, and collaboration among users. At its core, the common attribute that Web 2.0 brings is to help navigate the vast amount of information available on the Web in order to find what is being sought. It is the notion of a usable pathway. SCM 2.0 follows this notion into supply chain operations. It is the pathway to SCM results, a combination of the processes, methodologies, tools and delivery options to guide companies to their results quickly as the complexity and speed of the supply chain increase due to the effects of global competition, rapid price fluctuations, surging oil prices, short product life cycles, expanded specialization, near-/farand off-shoring, and talent scarcity. SCM 2.0 leverages proven solutions designed to rapidly deliver results with the agility to quickly manage future change for continuous flexibility, value and success. According to Lambert (2008), the key supply chain processes are customer relationship management, customer service management, demand management style, order fulfilment, manufacturing flow management, supplier relationship management, product development and commercialization, and returns management. Customer Relationship Management concerns the relationship between the organization and its customers. Customer service is the source of customer information. It also provides the customer with real-time information on scheduling and product availability, through interfaces with the company's production and distribution operations. Successful organizations determine mutually satisfying goals for the organization and its customers, establish and maintain customer rapport, and produce positive feelings in the organization and the customers. 1. Social Media And Customer Engagement 1.1. The Social Business Ecosystem The explosive growth of the Internet enabled customers to gain instant access to information via blogs, podcasts, Facebook, Twitter, YouTube, and a number of other social networking sites devoted to customers who shared their views of products through postings on web forums (Tybout and Calder, 2010). Social media combines two familiar words. People are social beings relying upon one’s ability to interact with and influence others in order to survive. In traditional sense, media includes such things as newspapers, magazines, and television. The word media also brings up impressions of how the news is delivered: via print, audio, video, and photographs. Each is an important medium used to engage an audience by telling a compelling story or sharing important news. Thus, social media are media for social interaction, using highly accessible and scalable communication techniques. Social media is the use of web-based and mobile technologies to turn communication into interactive dialogue. Andreas Kaplan and Michael Haenlein (2010) also define social media as "a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0, which allows the creation and exchange of user-generated content." Businesses also refer to social media as consumergenerated media (CGM). A common thread running through all definitions of social media is a blending of technology and social interaction for the co-creation of value. Social media Supply Chain Management AE Vol. XV • No. 33 • February 2013 91 appeals to people across different generations because there are so many different types of social media engagement and there are a large number of social media sites that allow users to generate their own content related with shared experiences and conversations. 1.1.1. Social Profiles (Evans and McKee, 2010) At the centre of the Social Web and the shared activities that define it, there are the online personas of participants. More than with prior anonymous discussion boards, it is an actual identity that is of value in a business concept, since it is generally the motivation of an individual to be noticed. As such that drives social participation in the first place. Though detailed personal information is (still) generally not available except to “trusted friends” or colleagues, the use of a real name or photo in one’s social profile is becoming common. Along with any optionally provided information, the result is a basis for understanding who it is that is actually participating. The profile is therefore the starting point of social interaction between the participant and the online application or other unknown party. The existence if a profile or equivalent is, in this case, what differentiates social platforms and applications from (online) interactive applications. In an interactive application – consider a typical web site – the interaction is between the application and the user: navigate to a help file, download a PDF, or place an item in a shopping cart. In each of these the primary activity occurs between a user and an application designed to facilitate a specific task. Identity – beyond basic security or commerce validation requirements – in this context is of relatively little importance. Because the individual participant is steering the entire process, and because this is typically a task oriented transaction. In a social context, by comparison, the interaction occurs between the participants as much or more than it does between a specific participant and the application or platform. It is not just that someone is doing something as with a transaction site: on the social web, that person wants to be noticed (talked about) or joined with while doing it. The majority of the interactions involve profile-based connections or exchanges: extending and confirming a friend request, sharing a review, commenting. The social profile provides two central social elements, both of which are essential:  A tangible personal identifier around which a relationship can be formed  A framework for accountability for one’s actions, postings, and roles taken in the relationship that forms Taken together, the significance of the profile is its central role in establishing who is participating. The social profile sits at the centre of a strong community. The social graph includes the set of profiles that describe members of a social network and the interactions, activities, and relationships that connect specific profiles on the social Web. The social graph defines the way in which one profile is connected to another. Understanding the construction of the social graph in the context if the profiles (people) collecting around a brand is essential in creating an organic social presence for that brand. AE Social Media and Supply Chain Amfiteatru Economic 92 1.1.2. Social Applications Engagement is central to the effective use of social technology and the creation of social business. Unlike traditional media, social technologies push toward collaboration rather than exposure and impression. The four basic building blocks of “social engagement” are: consumption, curation, creation, and collaboration. These fundamental blocks lead to and support a ladder-type engagement model with customer collaboration – not simply content consumption – as the end point. As such they are useful in understanding various ways in which technologies and strategies can be combined to drive smart tactical, businessbuilding processes in both marketing and operations. Figure no. 1: Structured Engagement Source: Adapted from Evans and McKee, 2010, p. 15 The basic process of engagement begins with content consumption and builds up to collaboration between participants in the creative process. This is the kind of activity that binds community members together. Taking off on this, there are specific social applications – forums, collaborative tools, contests, and games among them – that brands can implement to lead the participants through steps of engagement that drive business. The social applications are not necessarily communities per se, they are more generally enablers of an activity or outcome that is useful to the members of a community with which an application is associated. Social applications are designed to facilitate accomplishing something in the context of a shared or collaborative goal. They are designed to be a part of a larger social framework – the ecosystem – in which their audience spends time. The next step in the social engagement process is curation. Curation is the act of sorting and filtering, rating, reviewing, commenting on, tagging, or otherwise describing content. Curation makes content more useful to others. Consumers are often more candid in their reviews of products and services than marketers. The reviews of reviews help others interested in the specific product or service to sort out and make sense of specific reviews that they consider most helpful for their specific need. Reviews become truly valuable when they can be placed into the context, interests, and values of the person reading them. Beyond curation is what is more generally recognized as “content creation”. Unlike curation which is a response to an event, creating requires that community members actually offer up something that they made themselves. Brands can encourage creating by providing tools, support, help, templates, samples, and similar. Driving the content creation is an underlying theme: people like to share what they are doing, talk (post) about the things that interest them, and generally be recognized for their own contributions within the larger community. Reputation management, a key element in encouraging social interaction, is based directly on the quantity and quality of the content created and shared by individual participants. Supply Chain Management AE Vol. XV • No. 33 • February 2013 93 Finally, at the top if the set of the core social-business building blocks is collaboration. Collaboration is a key inflection point in the realization of a vibrant community and the port of entry for true social business. Collaboration occurs naturally between members of the community when given the chance. Blogging is a good example. A typical blog has a numerous examples of posts, reinterpreted by readers through comments that flow off to new conversations between the blogger and the readers. Bloggers often adapt their blogging thoughts based on the inputs from the audience. Back on the business context, taking collaboration into the internal workings of the organization is at the heart of the social business. 1.1.3. Brand Outposts and Communities Communities are built around things like passions, lifestyles, and causes, the things that people choose to spend their time with. Very often, a brand, product, or service by itself does not warrant a community of its own. For most businesses and organizations, the places where customers willingly spend their time – often engaged in conversation about the business or organization – is a social network or online community that is dedicated not to brands, products, or services, but rather to other people like themselves, with interests like their own. Fundamental to the brand outpost and its role in social business is that it is part of the larger community. Effective brand outposts are created where a target audience already exists, such as: Facebook Business Pages, Twitter, YouTube channels. 1.1.4. The Social Ecosystem The social ecosystem provides three fundamental opportunities for understanding and leveraging the behaviors associated with collaborative interaction. These opportunities – the social graph, social applications, and social platforms (fig. nr. 2). Figure no. 2: The Social Ecosystem Source: Adapted from Evans and McKee, 2010, p. 103 The social graph provides a framework of understanding who is related to whom, who is influential, where to look for potential advocates, and what is happening right now. Social AE Social Media and Supply Chain Amfiteatru Economic 94 applications are extensions to the core capabilities of the social platforms and software services that support social networks. They provide additional, specific functionality that makes the larger community and platforms useful to individual participants. Social applications enable the extension of relationships between a brand, product, or service to the individual level by providing very specific, member-selected functionality. Finally, communities and other social platforms built around passions, life-styles, and causes provide gathering points for individuals interested in socializing and collaborating in pursuit of the specific activities they enjoy together. 1.1.5 Social Media and Customer Engagement Retail is an area in which there was an opportunity for social marketing, and especially social location marketing, to be leveraged early and often. Social location marketing has the ability to impact the purchase decision cycle at all points – brand awareness, brand elevation, brand consideration and purchase. Social location sharing is specific to a location. It happens as someone becomes or is in the process of becoming a customer, visitor, or user. Retailers – especially those with brick and mortar stores – are acutely aware of the need to provide their visitors with a great experience to ensure that their visitors become customers. More important, retailers want those visitors turned customers to become repeat customers. They utilize online forums to connect with their customers, engage feedback, and create loyalty. According to an internet survey by the Pew Research Center’s Internet and American Life Project (Hampton et al., 2011) Facebook is, by far, the most popular social networking site (SNS). Of those who use a SNS, almost all use Facebook (92%). Facebook is followed in popularity by MySpace (29%), LinkedIn (18%), Twitter (13%), and other social network services (10%). There is notable variation in the frequency of use of SNS. Facebook and Twitter are used much more frequently by their users than LinkedIn and MySpace. Some 52% of Facebook users and 33% of Twitter users engage with the platform daily, while only 7% of MySpace users and 6% of LinkedIn users do the same. By comparison, 62% of MySpace users, 40% of Twitter users, and 44% of LinkedIn users engage with their SNS less than once per month. Only 6% of Facebook users use this platform less than once per month. The eight norms that guide consumers when they go shopping are:  Freedom: Give me choice and the more the better  Customization: Make it my own  Scrutiny: I will check it out before I go to the store  Integrity: Does this company deserve my money?  Collaboration: Let me help you make your product or service better  Entertainment: Make it fun  Speed: Serve me now  Innovation: Give me the latest The impact of social networks on shopping habits is immense and already visible. Marketers follow customers into the social communities, hoping to be their friend and catch Supply Chain Management AE Vol. XV • No. 33 • February 2013 95 their attention. In the blogosphere, customer review engines, consumer advocacy sites, and other non-traditional social spheres all interact to influence customer decisions. Thanks to social media, companies are turning their consumers into producers – that is “prosumers”. Figure no. 3: Retailers Online Engagement with Customers Source: Kohl’s Facebook Page available at http://www.facebook.com/kohls Prosumerism is more than extension of mass customization and customer centricity. It is what happens when producers and consumers both actively participate in the creation of goods and services in an ongoing way. The concept of prosumerism is not new. Marshal McLuhan introduced the idea in the early 1970s and Alvin Toffler introduced the term in the 1980s. (Tapscott, 2009) Prosumerism has become a tremendous force with the underlying message that technological advances enable the producer and the consumer to merge. Prosumerism is largely the manifestation of interest-based communities working together to solve a problem or improve a product or service. Today we have masscollaboration and mass-communication technologies, such as blogs, wikis, and other Web 2.0. tools, that allow those groups to function and flourish. 1.1.6. Today’s Social Customer To understand today’s social customer it is important to understand the demographic facts. The Baby Boom (1946-64) generation refers to people born after the war. The economy was very strong after the war, giving families the confidence to have lots of kids. By 1957 American families had an average of 3.7 children. (Tapscott, 2009) The Baby Boom became the TV Generation, it was the impact of the communication revolution led by the rise of television that shaped this generation more than anything else. In the 10 years following the boom, birth rates declined dramatically with 15 percent fewer babies born. Hence the name The Baby Bust (1965-1976). The Baby Bust term never caught on – instead, they are called Generation X, after the title of a novel by Douglas Coupland. The X AE Social Media and Supply Chain Amfiteatru Economic 96 refers to a group that feels excluded from society and entered the labor force only to find that their older brothers and sisters had filled all the positions. Gen X-ers, now adults between the ages of 32 and 43, are among the best educated group in history. They are aggressive communicators who are extremely media-centered. The boomers started having children in greater numbers after 1978. The Net Generation (1977-97) is the echo of the Baby Boom, and is also known as Gen Y, or Millenials. By 1997, there were almost as many 5to 9-year-olds in the U.S. (19,854,000) as there were 30to 34-year-olds (920,775,000) (fig. nr. 4). Figure no. 4: Demographic Breakdown of U.S. Population by Generation Source: U.S. Census According to an internet survey published on June 16, 2011 and conducted between October 20 and November 28, 2010 by the Pew Research Center’s Internet and American Life Project (Hampton et al., 2011), the number of those using social networking sites (SNS) has nearly doubled since 2008 and the population of SNS users has gotten older. In this Pew Internet sample, 79% of American adults said they used the internet and nearly half of adults (47%), or 59% of internet users, say they use at least one of SNS. This is close to double the 26% of adults (34% of internet users) who used a SNS in 2008. Among other things, this means the average age of adult-SNS users has shifted from 33 in 2008 to 38 in 2010. Over half of all adult SNS users are now over the age of 35. Some 56% of SNS users now are female. According to the Pew Research Center’s Internet and American Life Project Survey, characteristics of the Facebook users are (Goo, 2012):  Facebook users are more trusting than others. A Facebook user who uses the site multiple times per day is 43% more likely than other internet users and more than three times as likely as non-internet users to feel that most people can be trusted.  Facebook users have more close relationships. Someone who uses Facebook several times per day averages 9% more close, core ties in their overall social network compared with other internet users.