The term crowdsourcing—the process of obtaining ideas, services or information by soliciting feedback from a large group of people—has existed since 2005. But its fundamental concept predates the name by centuries. In 1714, the British government offered the public a monetary prize to the person who created the best solution for measuring a ship’s longitude.
As has been this case with so many concepts, the internet has given crowdsourcing phenomenal reach and influence. We’ve already seen the significant impact that crowdsourcing has on modern business product development, production and delivery, and that effect will undoubtedly only grow over time. Here are three ways that crowdsourcing is revolutionizing supply chain management today—and in the future.
Crowdsourcing increases on-time, cost-effective delivery.
Amazon consistently ranks on or near the top of lists touting the best supply chains—and for good reason. It drives an innovative fulfillment strategy through its vast distribution center network and independent delivery fleet that enables it to guarantee two-day delivery. Amazon’s achievements in supply chain management have led consumers to establish an incredibly high bar for timely and accurate product delivery. The Amazon customer satisfaction standard has changed the game for every retailer of every size.
Crowdsourcing transportation presents a solution for smaller enterprises to compete in this environment. One such service provider is Cargomatic, who connects local shippers with carrier companies who have extra space in their trucks. The “last-mile” phase of the traditional fulfillment process is often the most expensive (accounting for as much as 50 percent of a company’s logistics costs), but crowdsourced transportation can sometimes enable same-day delivery at the cost of standard shipping. And crowdsourced traffic apps like Waze are helping a multitude of delivery drivers find the most efficient routes with real-time help from other drivers.
Crowdsourcing supports risk management strategies.
Supply chain risks like natural disasters, geopolitical turmoil, epidemics, and extreme weather events are unpredictable—and relatively infrequent. But supply chain professionals responsible for risk management can’t afford to take a “if something goes wrong” approach. Truly successful supply chain risk management incorporates a “when things go wrong” methodology, because inevitably, things will go wrong. And when they do, supply chain disruptions like halted manufacturing and transportation breakdowns rattle even the largest, most prepared enterprises.
Crowdsourcing has emerged as a way to both gain better visibility into where risk events may occur, and understand their financial implications. One example is zeean, a project based in Potsdam, Germany that enlists public feedback to collect data on global economic responses to extreme weather. The organization’s goal is to use this data to improve supply chain resiliency, though it’s still early in its development. Information compiled in zeean, combined with climate risk assessments, would assess the relative risk or safety of a country as a production site.
The impact of crowdsourcing on mitigating supply chain risk is also apparent in technology that enables companies to communicate and collaborate with their suppliers is real time. Social networks for the extended supply chain provide a platform for trading partners to share their internal data and contribute information that affects the supply chain, such as transportation timelines, severe weather, and manufacturing interruptions. This creates increased visibility that empowers key stakeholders to quickly mitigate risks as they emerge.
Crowdsourcing improves product innovation.
Just a few years ago, it would have seemed far-fetched to imagine a world in which consumers would have innumerable opportunities to tell companies the merchandise they want to buy—and companies would actually respond in kind. Today, both traditional and emerging companies have deployed crowdsourcing to transform the way they design and develop new products. As a result, customers contribute real insight to enable companies to meet needs they may have otherwise dismissed or never even thought of.
Dell’s IdeaStorm crowdsourcing site enables customers to talk directly to the company to submit ideas for new products and services. Dell has received more than 16,000 ideas through the site since 2007, and has implemented nearly 500 of those. Samsung maintains a crowdsourcing facility in Palo Alto, CA, that pursues innovative solutions for many of its products, like cameras and screens. And online retailer ModCloth employs a “Be the Buyer” program that solicits customer feedback on popular products it should order and re-order. Items with high popularity ratings will receive higher production runs.
So while customers may be happier with products that are designed and made available based on their feedback, the implications for the supply chain are significant. A company who asks consumers to help it develop new product ideas must be ready to quickly bring new products to market. And companies who aren’t interacting with their customers at this intimate level need to understand the competitive implications of manufacturing products that may not as accurately reflect demand.
Where else do you see crowdsourcing having an impact on supply chain management? What are the risks and rewards in the current landscape? We’d love to hear your thoughts in the comments.