Analyst Insight: The wildly successful social media campaign for Popeyes’ new chicken sandwich — which quickly led to critical supply shortages for the company — is a cautionary tale about the havoc that social media can wreak on supply chains. To avoid squandering opportunities afforded by unprecedented demand, supply chains need to run like well-oiled machines, with collaborative sales and operations planning (S&OP), a finger on the pulse of social media sentiment, best-practice scenario planning, and rock-solid supplier relationships.
Not every company will find itself with record-breaking demand for its products as the result of a high-profile Twitter feud, but every company will be well-served by building a supply chain ready for such a scenario. The following presents four important lessons from the Chicken Sandwich Wars of 2019.
Collaborative, cross-functional S&OP is not optional, but a necessity in a business environment where social media can upend supply chains in a matter of hours or even minutes. Collective intelligence from stakeholders in marketing, sales, procurement, finance, and other areas helps ensure that decision makers have access to timely information about what might lie ahead. Advances in technology such as predictive analytics and cognitive computing empower top companies to build forward-looking, dynamic planning systems that are nimble and can respond quickly to spikes in demand — or better yet, anticipate that they might be coming.
Although it’s just one input among many others, social media sentiment must be part of a company’s planning calculus, especially in consumer-facing industries. Demand-sensing tools, now widely available on the market, can help companies like Popeyes better track and account for spikes in demand caused by viral social media. Using artificial intelligence and machine learning, these tools can mine massive amounts of online data to determine social sentiment and model its impact on demand. Used alongside statistical forecasts, point-of-sale data, and other inputs, demand sensing can help fine-tune planning and forecasting by tracking customer sentiment in real time as it unfolds.
Popeyes could not have anticipated that it would, in the words of its CEO, “break the internet” and create a Black Friday-level craze over its product. It’s in every company’s best interest to imagine a scenario like this, and plan for what it would do should it occur. Best-practice scenario planning isn’t just about hedging against risk; it also means being poised to move quickly when opportunity presents itself. Supply-chain leaders should plan for a wide range of scenarios and marshal the resources they need to respond quickly should the need arise.
Supplier Relationship Management
Business battles and chicken wars are won or lost on the strength of a company’s supplier relationships. While Popeyes’ critical shortage seems hard to square with the oversupply of chicken available, the components of its sandwich are carefully engineered and take time to source from suppliers. To drive competitive advantage, companies need to work collaboratively with suppliers to develop responsive and nimble replenishment systems, and more fundamentally, ensure that suppliers are keyed in to trends that have the potential to upend the supply chain.
Outlook: More than a month after completely selling out of its product, Popeyes announced that its famed sandwich was finally back. Just a day after its return, however, angry customers began alerting Twitter that it was sold out once again in some places, suggesting an uneven recovery. Viral social media events like these are here to stay, and it’s in every company’s best interest to be ready for them, or risk losing key battles with competitors.