Crowd around: Crowd sourcing and manufacturing supply chains

Karsten Horn, director international sales of the Inventory and Supply Chain Division at industry software provider, Inform, discusses why crowd sourcing will shake up business processes in 2012.

Innovation and managing talent are clear strategic focal points for
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.

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 an opportunity for CEOs and leaders to champion a collaborative digital approach that will reap the benefits of today’s community-centric culture.

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, including investments in traditional ERP platforms that allow companies to gain quick end-to-end visibility of the supply chain.

But these systems do not offer much support in evaluating the impact of risk on the supply chain. This often leaves managers making decisions supported by monthly reports – looking backwards at problems that have occurred rather than planning ahead 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 leaves a business open to 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.

Instant feedback

Crowd sourcing is a solution which offers a proactive real-time approach to supply chain management. It enables a business to react instantly to demand changes or problems, minimise the risk and potentially even 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. It could help deal with unexpected logistics issues’ such as motorway closures, air freight delays, disasters and extreme weather.

As we approach the 2012 Olympics, organisations across the country will be thinking about how to take advantage. However, they should also be thinking practically about the impact the games will have across operations – including 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 flexibility and dynamism in supply chains and enable quick 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 to capture critical conversations that can drive process decisions. Managers must filter these messages and identify those with the greatest relevance. For example, picking up on extreme weather alerts can help an organisation to react instantly and source alternative transport routes.

Past investments in forecasting systems are by no means redundant. Businesses today still need forecasting systems which provide accurate statistical information based upon historical sales and dynamic parameters. But additional information can be layered on top of this base information to provide a clearer picture of real time developments and demand.

I believe that data assimilated though crowd sourcing can 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; increasing the availability of products, improving the effectiveness of purchasing and stock levels and supporting 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.