APICS CEO Abe Eshkenazi CSCP, CPA, CAE -
March 09, 2012
We are connected everywhere we turn. From our cell phones and television sets to our car dashboards and e-readers, there's no denying that we are living in the social era. Using Facebook alone, we are able to check in with former classmates from elementary school, peruse the online lives of potential job candidates, and "like" just about anything, including retailers.
"Two key functions__
marketing and service__
are regularly discussed as shaped by social era dynamics," writes Nilofer Merchant on the Harvard Business Review Blog Network
. "But the social era can__
be more than that. It will help us decide what we make, how much we make, and how we finance that production. While social media doesn't shift Porter's model, the social era surely does."
Porter is Michael Porter, and in 1985, he identified the primary activities of a value chain as inbound logistics, operations, outbound logistics, marketing and sales, and service. Further, Porter named secondary activities in his model as procurement, human resource management, technological development, and infrastructure.
Merchant says most large organizations still employ Porter's main ideas. And, while Merchant says Porter played a large role in influencing modern-day strategy, she argues that the social era has__
render his model outdated.
What's the new model? Merchant suggests something pretty revolutionary. "Both macroeconomic forces and technological advances mean that customized products aren't just for the one percent. Instead, customized products and experiences can be for everybody, at least some of the time."
For example, customers could indicate what they needed from a home entertainment system, and the store could configure it based on those needs. Or a clothing manufacturer could enable consumers to respond to items featured on a fashion runway video. Viewers could indicate what they liked, what they didn't, and click to order.
"When companies figure out how to shape their design, production, and manufacturing cycle from rigid planning and production systems to unique customer-driving experiences, they'll design a way to respond to smaller bursts of more profitable cycles," Merchant writes. Using your business sense
Consider how these social media ideas influence the idea of pull-through distribution, which is defined as follows in the APICS Dictionary, 13th edition: "Supply chain activities that are started by the consumer. Instead of the manufacturer 'pushing' products to stores, in a pull-through distribution, consumers purchase items, which signal the manufacturer to produce more of that product. This is effectively the consumer 'pulling' products to the store."
Is the social era reality Merchant describes really a possibility? This past weekend my son showed me a product development company, Quirky.com, which appears to follow Merchant's premise. Taking your company from Porter's model of value chain to a pull system triggered by social community will require a very different mind-set; are you prepared to lead the charge?
If I'm going to ask supply chain and operations management experts to ponder how social media is changing their profession, I think it best to employ some of the very same tools. See below for more details.
Additionally, APICS will participate in a live chat on Twitter with US News and World Report
March 14 at 1:30 p.m. (ET). We invite you to join in the conversation @USNewsCareers. Be sure to use the hashtag #BestJobs and include @Tweet_APICS
to have your words featured on the APICS homepage.
Now, you can take the APICS Operations Management Now discussion to your social networks on LinkedIn, Facebook, Twitter, and the APICS Supply Chain Channel. Be sure to use the hashtag #OMNow and include @Tweet_APICS in any tweets to have your words featured on the APICS homepage.
- Is Michael Porter's value chain model obsolete?
- Have social media and networking changed the way your supply chain works?
- Does pull-through distribution make sense at your company? Why or why not?
- In what ways can customer input affect all aspects of a business?
In other news
Related APICS education
- Feedback from the Field
By Philip E. Quigley, CFPIM, PMP
November/December 2011, APICS magazine
- How to Crack the Sales-Versus-Operations Egg
By John P. Collins, CFPIM, CSCP, and Eric P. Jack, PhD, CFPIM, CSCP
September/October 2011, APICS magazine
- Perception and Planning
By Lloyd M. Clive, CFPIM
September/October 2010, APICS magazine