Transformation Strategy

The Intelligent Supply Chain, Starting with the Basics

Robert A. F. Reisner

Let’s Start with Tik Tok

I was going to post a note anticipating the rise of the Intelligent Supply Chain where artificial intelligence tracks changing customer preferences and evolving supplier capabilities real-time to permit customers and suppliers to interact.  In a recent post I discussed the way that the artificial intelligence revolution that is already bringing these changes will give stakeholders like customers and suppliers even more active voices and that will ultimately change what happens in the Boardroom.

In sum, one of the best illustrations of the change that is coming with the AI revolution will be seen in the way that it will transform supply chains.  Anticipating the potential changes that the Intelligent Supply Chains will bring to operations, highlights the fact that the implications will be extensive and strategic and managerial changes will come from these changes in operations. 

The coming changes that the supply chains will bring to governance is without doubt a big idea.  But first, it’s important to stay grounded. Before this wide-ranging anticipation of what’s going to be important to strategy and enterprise management in the future is set aside for being too speculative. Today it’s important to start by bringing it down to the level of asking “what changes are important today?”

So how do you take an abstract thought like the transformation of supply chain operations and make it concrete?  A good place to start is with the customer.  And here the controversy over TikTok provides a ready-made opportunity to consider how technology and the changing media landscape is the first step for everything that is coming. 

The Tic Tok Debate

Tic Tok’s core value proposition is that its algorithms have been able to get closer to changing customer preferences than anything that has come before.  By following what’s going on with Tik Tok’s customers, it’s possible to see changes faster and anticipate trends in new ways.

The policy controversy and the debate about Tic Tok that took place in the final days of the Biden Administration, and the opening hours of the Trump Administration is worth understanding.  In the Spring of 2024, Congress passed legislation saying that the social media mega platform that had been created by Tik Tok was such an important potential vehicle for a Chinese cyber threat that it could no longer be essentially controlled by the Chinese government. The company would have to be sold and restructured to operate in the US. But a deal couldn’t be put together fast enough, a court case couldn’t be resolved before the Supreme Court upheld the law and the Biden Administration directed that the law be enforced. Within hours of taking office, President Trump changed this and gave the company 75 days to work out a deal. No doubt there is much more to come. But putting these policy considerations aside, it’s important to ask why is TikTok so important?

How Does It Work?

During the debate, the number of 75 million American consumers was cited frequently. (This compares with a big television show like the Oscars that gets 9-20 million viewers and the Super Bowl that gets 90-110 million viewers on a one-time event.  While Facebook gets more active daily users than Tik Tok in the US, or 100 million versus 50-75, by any measure these are massive platforms).  Many people testify to the popularity of the online platform and its addictive qualities. Even technology gurus like Kara Swisher and Scott Galloway say that they don’t get on Tik Tok because they already know that its algorithm is so good that it will quickly learn what they like, and they will spend hours watching the videos.  So Tik Tok’s 75 million viewers are intense. They watch videos, are entertained by them, “like” them, “share” them with friends and Tik Tok keeps improving their feed so that they will watch it even more.

So on a daily, minute to minute basis, a social media platform is creating a user profile with real time data on consumer likes. By measuring how long the consumer watches specific content, and then measuring whether action is taken (to like the content, forward the content or purchase goods) very specific data can be gathered about what certain kinds of customers like and don’t like, and even more importantly, what actions they take.

Because there are so many consumers, it’s possible for the platform to refine its analysis and define micro market segments. Because all of this data is real time, it’s possible to see how consumer preferences are changing and even to act on those changing preferences rapidly.

By varying the content and the presentation of products and moods in accordance with trends, the platform can not only measure consumer preferences, it’s possible to anticipate changes and measure the comparative effectiveness of “influencers” and to recognize the persuasiveness of comparative themes.

So when there is discussion of customer, intimacy and changing customer, preferences, it’s important to recognize the way in which social media has broken new ground. Talking about the need for a digital marketing strategy can sound abstract, and for certain generations, it may even be ignored. 

But before talking about the way in which AI, with its capacity to manage massive sets of consumer data real-time, has already changed the ability of marketers to track and anticipate changing customer preferences, it’s useful to take advantage of the current news about Tik Tok to see the art of the possible. 

Today you have to ask, is the marketing strategy keeping up with what the content providers are already doing on-line? You have to start with the basics and ask "Do we understand our customers the way that Tik Toc would?

Next: What will “customer intimacy” mean for supply chains and the future of business?

The author is a strategy consultant in Washington DC who was recruited in 1993 to join the Postal Service leadership team,  became Chief Strategy Officer of the USPS and later wrote “When a Turnaround Stalls” about his experience for the Harvard Business Review.