Is Facebook destroying your supply chain?

Asia - Social networking sites like Facebook and TripAdvisor.com may be unravelling your supply chain, especially if you're in the travel services industry.

According to Eric Conrad, travel and transportation industry leader at IBM global business services at the ACTE Asia Pacific education conference in Singapore, younger, savvier and more sophisticated corporate travelers are changing the face of how the travel industry manages its supply chain.

"80% of young adults in the US regularly use social networking sites and are able to deconstruct your supply chain before they make the travel purchase decision," Conrad said.

The travel supply chain is mainly a services-centred one, and part of this supply chain are suppliers who provide information on pricing, preferences and travel tips. These suppliers have also been contracted on negotiations with an organisation's procurement department who may be providing rates that were pre-contracted and do not reflect current market trends and pricings.

With the onset of social networking sites and forums like Facebook, TripAdvisor and Twitter however, consumers are attaining knowledge about travel outside the organisation's contracted travel suppliers and can sometimes find better cost alternatives, Conrad said.

Instead of fighting the phenomenon, Conrad believes corporations should realise the sands of travel procurement are shifting, and should instead redefine its supply chain to remain competitive.

One of the ways to remain competitive is to align the value chain with the customers, he said. To do this, it is important for supply chain professionals to understand their customers' sourcing style, their preferences and their partners in their ecosystem - or which social networking sites they prefer to get their information from.

"You need to align your value chain with their value chain," he said.

Supply chain managers should also remember that when redefining their travel supply chain to capture opportunities with a new type of web-savvy consumer, to maintain a services orientated interface and have standardised data, he added.

"The value lies in the supply chain," he said. "It is time to deconstruct it, analyse it and extract the core advantages from it," he said.