Procurement and social media: does it have a future?

In a recent SM100 poll, buyers were asked whether they or their department used social media to help them with their day job. The results were evenly matched.

The boom in the use of Twitter, Facebook and LinkedIn is a revolution in instant communication and advocates swear by its effectiveness in connecting to wider communities of shared interests. For small businesses – particularly of professionals – it has become integrated into their daily life, and most now wouldn’t be without it (despite the occasional time-consuming over-indulgence).

In the last year or so there has been increasing chatter around whether buyers (and their internal stakeholders) could use social media to connect with strategic suppliers as part of their overall SRM deployment. The idea of rapid communication between a wide range of participants on both sides of the customer-supplier relationship is a tempting proposition. Problems could be resolved quickly, improvement and innovation could be shared more easily and the conversation itself could help deepen relationships. But I’m yet to be convinced of the business case. All that conversation still seems a long way from securing tangible, incremental value from the effort involved.

There are, nevertheless, a few pioneers out there. Andy Davies, director of London Universities Purchasing Consortium (LUPC), has recently introduced Twitter, Facebook and a blog to its website in an attempt to create a sense of community across LUPC and suppliers. I’ll be watching Davies’ experiment with interest over the coming months.

It appears the biggest hurdle to social media in the large corporate context is that access is blocked by employers – mindful of both the potential for time wasting on personal social media accounts and the leaks of information to undesired participants such as the media, other suppliers and even eaves-dropping mischief-makers.

I’ve heard it argued most profit in business is the result of ‘information asymmetry’ – one party knows something of value that the other party doesn’t. If you’re a buyer, how desperate or needy do you wish to sound when sourcing urgent supplies? Or, if a seller, would you want to risk one of your team members sharing sensitive cost information with someone on the buying team. For example, you’ve quoted for a piece of work and since contracting you’ve secured a cost saving from an important supplier of your own. Do you “bag” that saving as additional profit or do you tell your customer and risk having to pass on a share to them?

Sharing information between parties looking to collaborate in the best interests of both is a good thing in a genuinely interdependent relationship, and is one of the building blocks of SRM. But even then there’s a risk that commercially sensitive information will leak, to the detriment of one party or the other. Remember, executives have a fiduciary responsibility is to look after the financial interests of their respective shareholders, and so there’ll always be pressure to steal an advantage.

My suspicion is that ‘closed’ customer-supplier web portals will continue to grow in use but with strict guidelines for information sharing. Widespread use of the popular social media platforms for information exchange in the large corporate environment has a less rosy future.

By David Atkinson

This is an updated version of a blog that was published by Supply Management magazine.

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