I’ve discussed the Social Supply Chain regularly in the past so I’m sure you realize the importance that I place on these capabilities.  There are two areas that these capabilities can impact the extended supply chain; internally with labor and execution, and externally through event management.  I believe that external event management capabilities will shortly become a ‘cost of doing business’ and these capabilities are becoming critical success factors.  In these times of instant communication and sharing progress and events across an extended and worldwide network, taking advantage of these capabilities in your extended supply chain are a natural progression.

 

Critical to the success of implementing these capabilities is identification of your key community members and gaining acceptance of these practices.  Another key success factor is a high level of trust across your key community partners; you must feel safe in sharing critical information across your extended network.  The aspect of shared success must replace the aspect of ‘selfish’ success!  In these days and especially moving forward I suggest that success in the future will be defined by the success of the community. 

 

I understand that this feels at odds with generally accepted practices in the past and I understand that it will be hard to maintain the faith and I understand it will be hard to share your critical information in order for the community to succeed but I also strongly believe that without these new practices that your risk of failure will multiply geometrically.  The value of the community is the specialties and extended capabilities that the community shares across all members.  These extended capabilities will bring much greater value to your organization than you would be able to achieve by yourself.

 

So, my advice is that you should begin to identify your ‘inner circle’ of trusted partners and start the conversation with them.  Develop your partnerships and the key members of the community to start the process.  Starting with an ‘inner circle’ will allow you to speak openly and develop the critical beginnings of the community.  Starting with a small group allows you to experiment and change quickly if something doesn’t work, or expand capabilities for the things that do work.  A critical practice in this beginning phase will be building trust; remember to assume innocence in your relationships.  Also, remember that the community will not be successful and grow if you do not focus on mutually beneficial relationships. 

 

This will be very hard because the general practice is the short term view; achievements in 90 days.  What I am suggesting requires a long term view; three to five years for instance.  The long term view allows you to focus on investments and focus on the activities that will build the success of the community for all partners.

 

Share your information; share your success and share your challenges!  The community can help you adjust to the challenges and setbacks through share commitments and sacrifice to support the community.  You must remember however that everyone must give in order to achieve success; you cannot be selfish!  The social tools developed for Twitter, Facebook and Foursquare can also help to build and support your partner community.  Give it a try and open yourself up to success!

 

Now for the audience participation portion of this program……

 

How do you feel about the changes I mention above?

 

What do you feel is the likelihood of these changes coming to fruition?

 

What additional changes and repercussions do you see as a result of these trends?

This time out I wanted to discuss the Social Supply Chain because of the potential impact of the social media on the labor conditions within the Supply Chain.  In my last article I brought up a trend regarding the labor involved in the manufacturing, the extended supply and the potential impact on the market and the extended Supply Chain.  I think that this trend has the potential to bring about  great significant changes in the extended supply chain through the effective utilization of social media tools.  This is one aspect of the impact of social media on the Supply Chain that I think most definitely has the potential for a major impact. 

 

Recently I have read stories and posting in various blogs regarding two key labor trends in the developing nations that are highlighted in China.  One is the work conditions (these are new age versions of the 19th century conditions it the industrial nations) and the compensation for developing nations labor.  I think the most volatile example involves FoxxConn and the Apple manufacturing supply chain.  The stories explain how the work conditions are improving after the series of suicides over the last year and there have been a series of pay increases for significant amounts (16% - 24%).  These conditions are highlighted to the developed world through social media tools and are putting quite a bit of pressure on the U.S. companies to ‘encourage’ improvements in the conditions.  We’ve also all heard the stories of the suicides of workers from the manufacturing plants caused by the atrocious work and living conditions.  We’ve also heard the stories about child labor and the Nike shoe factories or the child labor involved in manufacturing the high fashion apparel.

 

The point that I find most interesting with these recent stories is the speed that these stories spread and the amount of pressure that these stories can apply to U.S. companies to demand improvements.  This shows the depth and power of the social network and the impact that a small group of dedicated people can have on large industrial powers!  The point is that this information can now be spread faster, and more widely, than would have been possible just a few short years ago.  This information can be spread faster than a company can adjust and provide a positive spin.  The point is that the social networks are forcing groups and even governments to engage more openly and honestly.

 

So, how does this affect and impact the extended supply chain?  One way is the speed the information can spread in these open social network frameworks.  The two-way asynchronous communication capabilities support through the social network framework allows for efficient and wide-spread event management to allow the supply chain to quickly identify and adjust to changes and problems. 

 

In addition to the ability to more efficiently and effectively manage and support the extended supply chain, the social network will bring repercussions that reverberate across and through the extended supply chain.  The improvement demands in work conditions and compensation will echo across the supply chain to bring fundamental changes in the structure and capabilities of the supply chain.  Overall the changes will bring positive changes to both the developing nations and the developed nations; in this case all boats will rise and improve the conditions for everyone.  We must embrace the changes and work to get ahead to understand and accept the impact of the changes.  These changes will bring new powerhouse companies and industries and will more than likely destroy some powerhouse companies and industries. 

 

Now for the audience participation portion of this program……

 

How do you feel about the changes I mention above?

 

What do you feel is the likelihood of these changes coming to fruition?

 

What additional changes and repercussions do you see as a result of these trends?

I thought today that I would take a break from my series of articles on 3PL benefits and trends to discuss some recent trends in the news that will most likely have both short term and far reaching impact on the supply chain.  These trends involve increases, increases in the complexity and cost of transportation throughout your extended supply chain, and increases in the labor costs in the off-shore manufacturing supply.  Both of these trends, added on to the other costs of manufacturing will, I believe, drive far reaching changes into the extended supply chain.  I also believe that these changes will benefit the world economy, maybe not in the near term, but in the long term I believe these changes will deliver major benefits.

 

So lets discuss first the trends, and then I will get into the repercussions that I see coming about.  First is an increase in both the cost and the complexity of the extended transportation supply chain.  This is coming together from many points… 

 

First and foremost is the cost of transportation through the extended, world-wide, supply chain.  The first, and most obvious point, is the cost of fuel.  In the current world political and economic affairs I think its fair to say that the days of cheap fuel are over!  Between the mid-east political turmoil, the increases in consumption from the developing nations and the lack of a will in the U.S. to conserve usage we are coming to a point where the increases in fuel costs will continue and not abate.   Add to this the discontinuous fluctuations in demand and we come to a point where it will be harder and harder to hedge against the future demands of the extended transportation supply chain.

 

The second key trend is the increase in labor costs, both from a salary or hourly rate perspective and from a workplace environment and safety perspective.  These changes have been a long time in coming about and the pressure has been building from many directions.  This too has been a long time coming and we are starting to see some of the results.  Foxconn announced increases to the factory workers in China of 16% - 25% and this is on top of the increases they’ve been making over the last year or so.  In addition manufacturers are being forced into improving the work environment conditions over the last couple of years from internal labor pressure and also external, world outrage.

 

These trends are closely related; the labor demands in the developing countries and especially China and India will be driving increases in manufacturing costs.  The increased standards of living coming about in the developing nations are driving additional consumption of both fuel and food.  These conditions drive increases in fuel costs because of the additional consumption, in addition to reducing the overall level available and dramatically increasing the cost in the developed nations!

 

These trends are driving impacts to the local economies which then impact the world economy, which will then drive additional and new impacts.  The concept of business continuity and disaster recovery takes on additional levels of complexity under these conditions as well.

 

So, that brings up the question of where do I think these trends are driving the supply chain?  How can we forecast the impact of these trends?  What can we do to limit or at least acknowledge the impact of these trends?

 

I will be covering these questions in my next series of articles.  I encourage your response to these trends to develop a robust conversation.

 

Now for the audience participation portion of this program……

 

How do you feel about the changes I mention above?

 

What do you feel is the likelihood of these changes coming to fruition?

 

What additional changes and repercussions do you see as a result of these trends?

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