Impact of Web 2.0 on supply chain

This Blog provides with a cursory overview of 2.0 ideals and focuses these to provide relevance for companies who are involved in and delivering technology to a supply chain.

What is Web 2.0 [two dot zero]

2.0 as a movement is about the network effect, collective intelligence, wisdom of crowds, tribes, clans, clubs and all other manner of long tail matters. Web 2.0 is the passing phase from1.0, which centered on cost reduction, to the intelligent web. Moving from 1.0 to 2.0 is the same as moving from separation, isolation and solitude to relationship, engagement and conversation. 2.0 companies are being built on a number of principals, which are different and have a significant impact on back office systems, supply chain and channel.

The Web 2.0 movement collected the name in 2005 and has at its heart an ideology of ‘harnessing collective intelligence’. The intelligence arises from consumers; as users interact they provide the data of what is liked, wanted, demanded or worth sharing. The same user also provides the collective, the collective being many users, businesses and government who contribute to this data. 'Harnessing collective intelligence' has an underlying principle which is the ‘wisdom of crowds’. The wisdom of crowds is where a collective of users are seen to display a better choice or result than a single individual, even a specialist.

Web 2.0 was originally described by Tim O’Reilly in October 2005 http://www.oreillynet.com/pub/a/oreilly/tim/news/2005/09/30/what-is-web-20.html

There are four elements required to form a 'wise' crowd these are: a) Diversity of opinion, b) Independence: Peoples’ opinions aren't determined by the opinions of those around them, c) Decentralisation: People are able to specialise and draw on local knowledge, and; d) Aggregation: Some mechanism exists for turning private judgments into a collective decision.
Conversely, the wisdom of crowds fails when: a) Decision making is too centralised:. b) Decision making is too divided: c) Decision making is imitative - choices are visible and there are a few strong decision makers who in effect, influence the crowd.	However, to harness collective intelligence requires information:- a) to flow freely’ b) to be harnessed/processed in some way - else it remains a collection of opinions and not knowledge to be monetized along the 'long tail'

Web 2.0 – is more than just ‘Harnessing collective intelligence'.

2.0 has a number of important characteristics that are described below, and it is only when these are put into context does it become evident that there will be significant implications for the supply chain.

The Web as a Platform	Data is the Next Intel Inside
The Web is the only true link that unites us all together whoever or wherever we are in the world. Hence, to harness collective intelligence and to create the intelligent web, we need to include as many people as we can. The only way we can do this is to treat the Web as a platform and use open standards. You can't harness collective intelligence using the IBM ESA/390, no matter how powerful it is!	By definition, to harness collective intelligence, we must have the capacity to process massive amounts of data. Hence, data is the 'intelligence' (Intel)
End of the Software Release Cycle	Lightweight Programming Models
This pertains to 'Software as a Service'. [SaaS] Software as a 'product' can never keep up to date with all the changing information. A Web 2.0 service includes code as well as data. Thus, SaaS keeps the data relevant (and the harnessed decision accurate) by accessing as many sources as possible	The heavy weight programming models catered for the few. In contrast, using lightweight programming models, we can reach many more people. Hence, we are working with many more sources of information, leading to an intelligent web.
Software above the Level of a Single Device	Rich User Experiences
More devices to capture information and better flow of information between these devices leads to a higher degree of collective intelligence.	A rich user experience is necessary to enable better web applications leading to more web usage and better information flow on the Web: leading to a more 'Intelligent' Web.

Impact on supply chain

At first sight it would appear that the Web 2.0 movement is focused on the user or consumer. Its ideals are most easily understood as consumer services and applications, many of these centralize on user generated content and business models justified by advertising revenues such as YouTude and MySpace.

However to limit Web 2.0 to this consumer oriented view is an injustice to the Web. Along with Web 2.0 there has been an emergence of topics such as CRM 2.0, Enterprise 2.0, TV 2.0 and the Mashup Corporation.

It is possible to consider the impact of web 2.0 on the supply chain by focusing on two aspects of a normal supply chain, these being:

o the consumer demand that fills the supply chain with components and eventually products, and;

o the efficiency of the chain.

Web 2.0	consumer demand	efficiency
	The focus in this column is on the user who creates the demand that fills the supply chain and how feedback and integration into this aspect provides mechanism for change.	The focus in this column is on how efficiency could be gained.
The Web as a Platform	The user is capable of creating a unique proposition or product for themselves.	The key aspect here is about integration of systems. Single platform and avoidance of proprietary solutions and interface/ translation problems so that when demand is created, the solution can be fulfilled either entirely without human intervention (software) or controlled to ensure quality.
Data is the Next Intel Inside	The focus is on the ability to gather all information from the user. The information can come for the users web attention, clicks or created content from the browser on a PC, TV or mobile platform. The mobile platform could add location and time, which may be critical for delivery.	There are many aspects of efficiency to be gained, however user metadata provides the ability to draw data out and to forecast and plan will provide substantial gains as does knowing where the user is and when the need the services. This allows priorities to be set, therefore not all orders are equal.
End of the Software Release Cycle	Continuous improvement of user application that provides the ‘shop’ functions which will both match demand and supply by pricing but also to promote unpopular items at attractive prices, or increase pricing as demand grows.	Continuous improvement within the back office functions, even in the core of mission critical systems. Probably the most controversial area, but it is about systems that are designed for incremental change along the chain. Be that the communication, bar code, RFID, database, POS, EPOS or other, ensuring stability but no legacy.
Lightweight Programming Models	Users have the ability to adopt your solution so that they understand it in their way, but does not effect your processes.	Small and flexible models that use standards created by your ecosystem of developers rather than a committee. The provision of agile development methods that means that your ecosystem is able to adapt as new services or products are needed
Software above the Level of a Single Device	Allowing the user to have the same experience of your service on any platform TV, Web and Mobile.	Integration in supply chain through the use of any available communication devices, irrespective of OS. Mobility become central and not an after thought.
Rich User Experiences	The user (wisdom of crowds) is able to input recommendations and changes to the solution processes and delivery models. Helps with retention of customers	The user being the person in the supply chain whom is now able to provide input on the process in which they work. The user is now able to drive the process not the process drive the user. Helps with retention of customers

Applying Web 2.0 ideals will become a central enabler of radical organizational transformation. The interested parties for this change includes customers, partners, suppliers, innovators and developers, many who are on the outside separated by a myriad of corporate firewalls and outdated business models. Even the technology jargon is evolving with SaaS, SOA, XML, blogs, wikis, and mashups, etc. This generation of terms is about relationship, engagement and conversation.

Web 2.0 ideals in the supply chain and front office can remove technological barriers and bring about business process transformation. These changes bring up age-old business questions. How does one best resolve the tension between process—the slow, expensive, and occasionally quite painful march toward optimization and achieving results, even if the path is potentially messy and ad hoc?

It is impossible be precise in a short article and bring about a specific conclusion or recommendation, as the impact of implementing Web 2.0 ultimately has less to do with the underlying technologies or a new fancy set of business processes than it does with real and lasting cultural change, the direction of demand, regulation and the competitive pressure.