Breaking up the crowd: Are manufacturers really using crowd sourcing?

Following a recent blog submission TM talks to Karsten Horn, director international sales of the Inventory and Supply Chain Division at industry software provider, Inform, about the reality of crowd sourcing data in manufacturing enterprises.

TM: Are manufacturer’s really using crowd sourcing now?

Karsten Horn, director international sales of the Inventory and Supply Chain Division, Inform

Crowd sourcing is a very new approach and for many traditional companies it might not yet be on the business agenda.

But I believe crowd sourcing demonstrates how social tools can be used in business, and I predict adoption will become even more widespread in 2012. A recent survey has shown that three quarters of senior executives believe social media is of major importance to their business right now, though only 27 per cent see it as a top strategic priority.

Manufacturers must now assess who is in their ‘crowd’ and gather information from these sources to improve overall business performance. The crowd can be collated from businesses, employees, customers or suppliers. Crowd sourcing provides an easy method to gain information from essential stakeholders to the business.

For example, a manufacturer could use external crowd sourced data from wholesalers or suppliers to support or influence the information generated by demand planning and forecasting technologies. This in turn will shape how changes are managed in the supply chain.

A recent example of a manufacturer that has taken up crowd sourcing as a means for feeding real time information into existing supply chain management is Teva Pharmaceuticals. The organisation has seen a manufacturing cycle time reduction of 40 per cent as well as reducing supplier lead time by up to 60 per cent by applying crowd sourcing and social software to communication challenges.

TM: Is leveraging social media in business only really relevant to consumer facing manufacturers?

Supply chain managers can use crowd sourcing to identify and resolve issues with their supply chain operation regardless of whether it’s consumer facing or not.

Again, it’s important for a business to identify who is in its crowd – the people and businesses which are relevant to the organisation – and reach out to this audience through social tools.

Some organisations are encouraging employees to share their work issues more widely through internal crowd sourcing and social media. By giving people a way of posting unexpected issues and allowing others to reply with suggested answers, problems can be resolved much more quickly.

TM: In your blog on crowd sourcing you mention that crowd sourced data might interact with information manufacturing ERP systems. Can you explain this in more detail? 

Manufacturers could use crowd sourcing to set up social communities with key suppliers. This could provide crucial information on demand fluctuations, price changes and logistic updates which can be used to support the data produced by demand planning and forecasting technologies.

TM: What might it cost a manufacturer to set up the IT infrastructure necessary to leverage crowd sourced information?

This will vary depending on the size and scope of the manufacturer.

The IT infrastructure isn’t the main challenge facing manufacturers, as crowd sourcing tools are low cost and relatively easy to implement. The challenge is introducing the crowd sourcing culture, getting buy-in from across the organisation, and having an infrastructure in place to support this.

Crowd sourcing means a big change in business processes as the organisation must become outwardly facing, becoming more aware of social communications and leveraging these to the benefit of the company. Crowd sourcing can change the way a business operates and how it interacts with its partners throughout the supply chain. However, for crowd sourcing to be implemented successfully, barriers of control, trust and risk –  which may impede transformation of the organisation to new modes of operation – must be overcome.

Manufacturers that don’t embrace new technologies, such as crowd sourcing, may find they face higher long-term costs. Traditional channels are declining rapidly in effectiveness as people, businesses and their customers change the way they engage with each other. If a manufacturer isn’t in the online space in some capacity they may be placing themselves at a disadvantage.

Today’s business landscape is complex, nuanced, and filled with a great many critical activities that must be addressed to remain relevant in the marketplace. This is why tools such as forecasting systems which provide accurate statistical information to give a clearer picture of likely demand are key to survival and prosperity. These solutions become even more pivotal when teamed with crowd sourcing technologies.

But like any mass technology adoption, crowd sourcing requires a high level of cooperation and collaboration between supply chain partners to be truly successful. It again comes back to identifying ‘who is in my crowd’, and using social tools to set up new communication channels with these groups to provide and reciprocate information and to help manage relationships effectively.