What’s a TikTok Supply Chain?

Matt Davis: I’m very excited to be here at our Forum event and to talk about TikTok, climate change, and what’s happening. I’m joined by my colleague, Mike Silverman. Hi, Mike, how you doing?

Mike Silverman: Hey, I’m doing good. How are you?

Matt Davis: Do you want to say hi to the audience and who you are?

Mike Silverman: I’m Mike Silverman. I’m a Research Director here at Zero100, and I’m really excited to be here.

Matt Davis: I think we’re going to have one of your friends on in a bit as well?

Mike Silverman: Yes, Nicole Loher. I’m so excited she’s here.

Matt Davis: I’m so excited as well. So, Mike, we’re here to talk about TikTok. And just yesterday, you were helping me with some slides and reminding me that there’s no space between Tik and Tok. That sort of explains how much I know about social media. So why are we talking about social media and supply chain?

Mike Silverman: Because social media is already talking about supply chain. If you look at hashtag manufacturing or hashtag supply chain on TikTok, they already have millions and billions of views. People are talking about it, and I think we really need to view it as a tool – as a powerful tool that can be used for a lot of good to improve our work, but also recognize that it has a lot of risks. So I think we just need to make sure we’re not ignoring it, getting smart on it, and coming up with a plan.

Matt Davis: Yeah, I agree. It just popped into my head that you’re getting ready for this event. Lots of speakers, and you’re talking about titling your session.

Mike Silverman: Yes.

Matt Davis: Let’s bring people inside the genius of Mike and Matt, trying to figure out how to title talking about TikTok and supply chain.

Mike Silverman: Yeah. Well, I actually think the title Olly came up with…

Matt Davis: Yeah.

Mike Silverman: … of ‘TikTok supply chain’ is great.

Matt Davis: That Olly guy.

Mike Silverman: Yeah, I know. Smart CEO of ours. Give him some props.

Matt Davis: Embarrassing for us in the research team to be handed that by him.

Mike Silverman: I know, right? That he thought of that first.

Matt Davis: Yeah.

Mike Silverman: But we ran with it. Kevin fleshed it out in a newsletter piece, and it really caught some attention. That’s why we developed it and invested in the idea and research to support it. Titling matters, and we love the idea of the TikTok supply chain. I think there’s something that both sounds very now and also sounds a little risky, which could be good or bad. On one hand, it’s a bit of a lightning rod, which is exciting for folks. On the other hand, we don’t want it to be dismissed by folks who are reading this – folks in the C-suite who don’t want to touch it with a ten-foot pole. There are talks about TikTok bans in the EU, and President Biden is talking about it here, in the US, as well. Even if it does get banned, this social media communication work is not going to go away.

Matt Davis: Yeah.

Mike Silverman: So I think whether we call it that today, or we call it something else, or rebrand it, the concept will still have legs.

Matt Davis: The good news is that we’ve got the Insta supply chain in the backup.

Mike Silverman: Yes.

Matt Davis: What we actually landed on for your session title was ‘Bullwhipped.’

Mike Silverman: Yes.

Matt Davis: So why don’t we reflect on why we chose ‘Bullwhipped’? What is that meant to represent?

Mike Silverman: The Bullwhip Effect is well-known within supply chains, and it’s where a small effect in the supply chain can have a ripple effect in a very, you know, Indiana Jones way.

Matt Davis: That’s a really good whip.

Mike Silverman: Thank you. I really didn’t even practice that, but I’m glad it worked out.

Matt Davis: Yes.

Mike Silverman: I didn’t pull a Chandler wha-pah or anything like that, so.

Matt Davis: Friends fans.

Mike Silverman: God, we’re nerds. Or just old. Or both. So ‘Bullwhipped’ was actually your idea. But it was really about the supply side and the demand side. Normally, ideally, it’s a balance, but so much has been invested in that demand side and how we sell and use things. Think about social media, digital marketing… and this is looking at the past two decades. And then there’s everything from e-commerce and omnichannel to how we talk about products with five-star reviews and YouTube reviews. Everything has been digitized and superpowered, and that expands the Loop towards imbalance, putting extra pressure on the supply chain.

So I think that’s what’s behind this bullwhipped concept. The forces are actually coming from the demand side, and we have to react to that additional pressure. And with things like social media, we’re expanding past traditional impact. It’s not like clothing seasons happen four times a year; now, drops are happening every week. Trends are happening faster and happening louder. So again, TikTok isn’t changing things – there are always trends and fashion and things that determine our product strategies and what we think people are going to buy and what they’re interested in, it’s just it’s happening in an amplified way now.

Matt Davis: Yeah.

Mike Silverman: And so much faster. And with stuff where we’re actually moving physical goods or creating physical goods, responding to that is a lot of work and investment. And that’s where things are kind of out of whack today.

Matt Davis: Totally. We’re going to bring in Nicole in a second, but I want to talk about the data because you recently just ran a really cool research study. Before I do, I have to reflect; you mentioned Chandler, right? So I just saw recently a TikTok where a mom interviews her Gen Z son, and she’s asking him different questions about a fax machine and everything else, and she asks him who Rachel Green is, and he doesn’t know.

Mike Silverman: Oh.

Matt Davis: He didn’t know who Rachel Karen Green was.

Mike Silverman: Oh. That’s sad.

Matt Davis: I was very disappointed. Okay. So, back. Social data, what did we learn from the study we just ran?

Mike Silverman: I think if they don’t know Rachel Green, they’re definitely not going to know what a fax machine sounds like. There are two pieces of data I want to share. One is quantifying the power of TikTok, and the second is a little bit of our Zero100 research, if that’s cool?

Matt Davis: Yeah.

Mike Silverman: We all know it’s out there and know it’s symbol, but it’s pretty amazing. It’s now the second most-used app on the planet, second only to Facebook. Data shows people around the world are using the app, on average, 23.5 hours every month.

Matt Davis: Yeah, we just talked to Scott Galloway on his Prof G podcast, and he was talking about the parent company. It’s one of his big predictions. If you’re not familiar as a listener, go check out the size and power of TikTok, it’s crazy.

Mike Silverman: Yeah. So it’s really powerful. People open the app, on average, 17 times a day, scrolling through these 20-30 second videos. And it’s different than sitting back and watching a TV show because you’re constantly engaging with it. So it’s really impactful and really sticky, which is why people spend so much time on it, and it has value and danger in that way. We really want to think about what is happening with social messaging and where supply chains fit.

We know sustainability is trending on social media, but it’s something all of our partners and Community members deeply care about and are actively working to figure out. But the gap is really wondering when will they care about the work that we’re doing? So we surveyed about 700 consumers and created 18 different sustainability claims that supply chains can deliver, either now or in the near-future. We really wanted to look and see how they understand these and then ask, are they willing to pay more for them?

We also organized this by generation to really see which groups were doing stuff differently. And across the generations – Gen Z, millennials, Gen X, and boomers – around 80-85% said they care about the sustainability of their products. But when we asked them if they were willing to pay more for them, that’s where we started to see everything shift. The younger generations are willing to pay a lot more. Gen Z responded to 71% of our claims, saying that they would be willing to pay more, and millennials about 64%, while for Gen X and boomers that was in the 50s. So again, we start to see marked differences in where consumers are responding to claims, which is exciting.

Matt Davis: Yeah, this study was fascinating, like really blew my mind. It also like gave me hope for the future. Our consumers understand a lot more about supply chain than I perhaps knew.

Mike Silverman: I agree. I think they understand more, and they’re interested in more. There are really two buckets of this stuff. One is where we asked participants if they understood our claims, what they were willing to pay more for, and how much more they were willing to pay. Secondly, we ranked these claims based on their carbon impact, which was our assessment of how they can help reduce carbon footprint.

On claims that have the power to reduce carbon footprint and are things consumers care about, that’s things like products lasting longer and being able to be repaired. These things just make sense as a consumer in terms of value, you end up not having to buy more things or things ending up in a landfill.

I initially was thinking of a lot of clothing work, especially given Nicole’s work in fashion and conversations that we’ve been having, but we just heard Ana Corrales from Google talking about their Pixel phones and how all of this is critical in how they are designing and investing these phones. People used to have their phones for about a year, but they’re now keeping their smartphones for two to three years. So Google has to think differently about how they build them and how they are able to be repaired and supported through that time. That applies to a variety of stuff. And those are great messages – that consumers care about it and they’re going to pay for it. It’s two thumbs up; let’s do that.

On the other side, we have elements that are high carbon impact, but customers don’t value these as much.

Matt Davis: Right.

Mike Silverman: These are things that they don’t understand as much, and therefore, they don’t think they have value. So, something like low-carbon intensity materials. This is something, way back in sourcing, that we know has a ton of value, but consumers don’t understand that, so why are they going to pay more for it? There’s an opportunity here to translate this to consumers, and we’re hearing that people want to learn more, they want to hear about the hard stuff, and they want to hear where we’re making progress within supply chain. I think that’s really exciting, the fact that we have to find ways to bring this in so that consumers value it.

Matt Davis: Definitely, yeah, you know, actually, I remember growing up in supply chain, when people ask, what is that? And you would be sitting, for me at least, in an airport bar, and I would point out something and be like, well, let me just tell you the story about how this bottle of vodka got here, about the glass-blowing process and where it comes from. And after they woke up from my very boring speech about the vodka, they would move on, but the conversation has completely changed now. People care. My family asks so we can all dork out.

I think that’s a good jumping-off point for us dorks to stop talking. Let’s bring in our cool friend, Nicole. Nicole, Climate Communicator, Researcher, and Professor at NYU. I now have life goals.

So, Mike, Nicole, the world wants to know, how did you meet each other?

Mike Silverman: Now this does sound like we’re on the-rom-com press junket!

Nicole Loher: So happy you asked. We actually worked together on a pretty big client pitch at the beginning of the pandemic. We actually had so much fun on it that we’ve been collaborators since, and we’ve even been teaching at FIT together, which has been a lot of fun.

Mike Silverman: Yeah. It’s been great.

Matt Davis: That’s cool. You know, actually, Nicole, one time Mike told me he had a class at FIT, and I misheard it and thought he was teaching a high-intensity training class, that he’d become a trainer…and then I came to learn it was all about fashion.

Nicole Loher: That’s amazing.

Matt Davis: So what brings you here to the event? What brings you into the supply chain community, Nicole?

Nicole Loher: Yeah. So, first and foremost, I love what Zero100 is doing. I think it’s phenomenal. It takes a lot of research and gives C-suite the actions that they can enforce with their own teams. For me, it’s not C-suite, but it’s a little bit different in that I’m pretty passionate about elevating climate communications and sustainability communications for executives so they can better empower their teams.

Matt Davis: And how did you find your way into the climate conversation?

Nicole Loher: I actually started in luxury fashion and beauty and saw this gap, or I guess it was a gap then, but now it’s what everyone’s talking about, where consumers have this growing interest to understand brands – what they’re actually doing to help better their supply chain and also better the environment that we all live in.

You know, the state of climate is pretty bleak right now. The IPCC released their AR6, which was a devastating playbook about how we can get out of the climate crisis that we’re in right now and have very actionable insights and takeaways, not just for corporations but businesses and regulators alike. All of this, combined with my communications background, led me into the space of: how do we take all of that and actually create action? And with my students at hand, they’re Gen Z, and they’re the ones that care the most about this.

Matt Davis: Talk to me about that. Love to hear how Gen Z is different than the rest.

Nicole Loher: Oh, wow. They are very different. They’re terrifying. They’re also great. They’re changing not just demand but also brand communications all round. How they’re shopping is much different than ever before. We see them using social media more than Google to research products. They’re more likely to be activists than any other generation before that. And I’m not talking out-on-the-street activism, I’m talking about how they spend their money. They’re willing to put their money behind products and brands that they actually believe in, and if they don’t believe in you, or they feel like they’re being greenwashed, they’re going to call you out.

Matt Davis: Very interesting. In supply chain, it’s sort of the risk of greenwashing versus the advantage of going after revenue. We find ourselves in a new spot.

Mike Silverman: McKinsey and Nielsen just came out with a report about looking for this interest in ESG products and seeing if it was actually translating to product sales. We have people say they care, say they’re going to pay more, and the question is, do they actually do it? And they looked at a bunch of products in the CPG space and found higher revenue for products with ESG claims versus without. They found higher brand loyalty. So again, all good things and this also applies down even to generic goods being put out by retailers. So it’s not even just at the high end, these claims are really helping and moving stuff and showing revenue.

And it applies to messaging too, which is really cool, where the more granular and specific the message is, the better. Can you say that a product is carbon-zero or vegan versus just saying it’s sustainable or environmentally friendly? That increases revenue for a product. Stacking up multiple claims. One, two, three, four claims together had a higher impact than less claims. So lots of interesting stuff there.

Matt Davis: From a climate perspective, what do you find makes good communication versus bad communication?

Nicole Loher: I’ll start on the good side of things. Good is transparency. It’s being really honest about where you are in your journey, and it’s using the right platforms to reach targets the way they want to be reached. The thing that brands typically get wrong, or companies normally get wrong, is that they feel that communications is very much like a broadcast, but it’s actually a dialogue. And that’s the main point that a lot of these brands are missing.

And there is this aspect of it, too, where brands are scared. No one wants to be the first to say, I don’t know. But that’s what Gen Z wants to hear. They want to hear that authenticity. They want to hear the realness of that. So I think that’s something that needs to change in that brand communications dialogue.

Matt Davis: You know, I am a new fanboy of communications. I grew up in supply chain and ended up at Amazon, in their global corporate comms PR organization, and when I arrived, I was like, yeah, supply chain’s here, let me help out. And I got schooled hard in how important comms is. And so, it’s interesting, we just had some data released from Zero100 where we asked chief supply chain officers, what are the top three skills that you think shape the way forward? Number one on our list is communications. And so it’s an interesting space where supply chain has this opportunity basically to make it real to, as you’re saying, create transparency. And so, Mike, what’s the opportunity when you start thinking about connecting comms, sustainability, and digitization, especially considering socials, Insta, TikTok – what are some of the risks and challenges? How do you look at that space?

Mike Silverman: Yeah. And we’re not telling chief supply chain officers to get on TikTok and start doing dances or anything like that.

Matt Davis: Can I if they want to?

Mike Silverman: But honestly, maybe we should tell them to do that. After a few margaritas, maybe we could convince them. But really, what we’re asking them to do is to use this as a tool. And we’re showing that this is really a powerful tool, and there’s a bunch of different ways they can use it. Number one is: use the data you’re seeing there. Really understand the feedback you’re getting from consumers about the products that you’re putting out there. Can you understand where interest is happening and move inventory closer there? There are some really cool opportunities to think about how you respond and do things smarter.

Secondly, I really want to encourage folks to rethink some aspects of manufacturing to respond to that as well. Where can we be more nimble? Where can we have shorter supply chains? Are there things that we can make more flexible or modular to respond to a scent or a color that’s trending (so that we can get customers what they want, eliminating waste or the need to discount or destroy unsold products)?

And finally, we want them to flex their communication skills. We think the way to do this is with their comms partners. It’s really about being an advocate for honest and precise reporting on what they’re doing in sustainability. And like Nicole said, I think a little bit of vulnerability there and transparency is really critical and something that’s scary, but it’s where things need to go. And also, let your comms folks know the successes within your supply chain and where you’re on the road there because that’s also something consumers are really hungry for, knowing things aren’t just a broadcast.

Matt Davis: Mike, you just hosted a round table with our board of directors yesterday on this topic of TikTok supply chain. What’s your top takeaway from that conversation?

Mike Silverman: I have two. One is really a vision of organization. We talk a lot about the loop, about the supply side and the demand side as kind of separate. And they spoke about the fact that in order to get these things done, you need people who are empowered to do things across the entire loop. And I think that’s a really exciting thing that we’re doing here, bringing in someone like Nicole here is like bringing people in to collaborate across this work.

The second comes down to money and the cost of investment and doing these things. There are things that you can do in your manufacturing to increase flexibility, but for some of that stuff, you have to invest and wait for the upstream. So where are you defending that and making sure that you have common goals that bring that value to life? And then, also, is that value translating to other organizations outside your supply chain?

So it’s about opportunity costs if you’re not communicating this stuff well, if you’re not providing this flexibility and quickly responding to social data and the virality of products.

Matt Davis: That’s cool. You mentioned the loop; I’m going to do my best to describe what that actually looks like. It’s a really important point for this conversation. So we talk about the supply side of a value chain as source, make, move, and then the connection into sell, use, and regenerate. There’s this linkage in the loop itself, which looks like an infinity symbol that goes from regeneration into the sourcing process.

With supply chain, it’s right there in the name. It was a chain, and it had an end. When I grew up in supply chain, I just handed a box off, and then I was like, bye, have fun. I never had to worry about what happened after that. So I think it’s a great point – social sits right at that center point of conversation. With that in mind, I’d love to know from you, Nicole, what brand do you admire most in the way that they do storytelling? What kind of stories are out there being told? What could people learn from somebody that you admire out there?

Nicole Loher: I think Nike is doing a really great job. They know that they don’t have it perfect, but they know who their consumer is, and they know their brand mission more than anything. They recently had this zero waste campaign come out, which was really this idea of reinventing their shoes to help tell the story of how they were getting to net zero.

It really does take consumers on this journey that they didn’t even know that they needed to know about, to really understand the product, but also, through that, they understand the brand ethos and why they exist and how they’re going to exist in this new era.

We talk a lot about socials and influencers, and it’s fun, but the reality is that the future of climate is really bleak, and for brands to be able to withstand that, they’re going to have to adapt. And it’s not just adapting to Gen Z, it’s adapting to how the landscape is shifting. I really admire Nike for being so transparent in that and being willing to take risks.

Matt Davis: Yeah, that’s cool. With a typical supply chain, if we look at the super practical side of it, last year we had the Estée Lauder team here, and Jane Lauder mentioned using QR codes for storytelling. And you could see all the light bulbs of the operations people think like, oh, I could actually tell them about my zero waste to landfill just by having that there, on a QR code.

So I think there are all sorts of ways to connect this together. I think that’s perhaps where I want to wrap this. First of all, thank you, Nicole and Mike, for bringing your perspective here. It’s great to sit on a couch and hear from people who are coming at supply chain from outside of supply chain. And Mike, I look forward to taking one of your HIIT classes sometime in the future.

Mike Silverman: Nicole is actually the triathlete here, so she’s the one who can whoop our asses and give us a better workout.

Matt Davis: Let’s all do it. All right. Thanks, everybody. Thanks, Nicole, thanks, Mike.

Mike Silverman: Thank you.

Nicole Loher: Thank you.

Victoria Marin: Research presented in this episode is forthcoming. Subscribe to our newsletter for alerts when new reports are released. This episode of Radical Reinvention was produced by Brian Egan, Diane Hope, Nick Heinimann, Duda Rodrigues, and me, Victoria Marin. Mike Silverman and Nicole Loher contributed research findings and insights to the episode, and Ko Takasugi-Czernowin is our editor and sound engineer and also composed our theme music. To find out more about Zero100 and to check out our content library, go to Zero100.com. If you’re interested in joining our community of contributors, send us a note at hello@zero100.com.