The Purchasing Department: The Next Frontier for Social Media?

purchasing department

By Mark Schaefer

Almost all of the attention on social media has come from the sales and marketing department, and deservedly so. That is certainly where the low-hanging fruit appears to be and there is an urgent need to respond to customer demands and communication preferences.

I have also written about enterprise applications of social media, where large companies are implementing internal versions of social networks to improve communications, creativity and collaboration across a far-flung base of employees. Studies show that this may return the biggest financial gains of social media to companies and I agree.

But there’s also a new area of buzz right now — application to the purchasing department and the complex supply chain. The topic is starting to pop up in conferences and there are no fewer than four new LinkedIn Groups dedicated to the topic. At first blush, this might seem a little far-fetched but let’s dig a little deeper into the opportunity.

There are three primary areas of relevance in this area for social technologies:

1) Supplier connection, collaboration, problem-solving

Every company has their own administrative systems and entrenched way of doing business through their own software systems. And systems across companies rarely talk to each other in reliable ways without some enormous IT efforts. That is not always practical.

What if we could apply a new layer of private social technologies that everyone can use to communicate and collaborate? Even your very smallest vendors could sign on and contribute searchable information or learn of new short-term supply needs and opportunities. It could significantly speed up knowledge transfer and problem-solving.

2) Supply chain monitoring

Let’s say two key strategic components for your company are sourced through companies in The Philippines and in Philadelphia.  Without warning, an earthquake hits Manila and traffic in Philadelphia is disrupted by a trucker’s strike. Real-time monitoring of events in those areas could give you the edge to respond and react in time to find alternatives and perhaps keep your company out of serious trouble. Adjusting and finding an emergency supply with an early warning system could provide a significant competitive advantage.

3) Demand sensing

There is nothing more challenging (or aggravating) than trying to predict demand. That’s why many companies are eager to look at social media signals for leading indicators of patterns and conversations that may translate into demand signals.  Look at this example of a brand I am working with and some conversation patterns revealed by the social research company Appinions:

purchasing department

This example shows that both the volume of conversation and the sentiment of that conversation changed dramatically within just a few days (a scan of more than 5 million online data sources).  Is this in response to our advertising and promotions? Or is there something more organic going on here that would indicate a spike in sales? Could this even portend a new long-term sales trend? By clicking on these individual daily data points, we can dive down into the specific conversations to discover whether we need to react or let it ride.

At this point, applying social media to the purchasing process is still in the very early stages but certainly the potential is there for some exciting applications to some age-old supply chain problems.

What do you think?  Is there a potential application in your company? Already experimenting? Any opportunity I’ve missed?

Keynote speaker Mark SchaeferMark Schaefer is the chief blogger for this site, executive director of Schaefer Marketing Solutions, and the author of several best-selling digital marketing books. He is an acclaimed keynote speaker, college educator, and business consultant.  The Marketing Companion podcast is among the top business podcasts in the world. Contact Mark to have him speak to your company event or conference soon.

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