Using sentiment analysis to improve decisions in

demand-driven supply chains

Lincoln C. WOOD 1, 2, *, Torsten REINERS2, Hari S. SRIVASTAVA 3,

DUONG Nguyen Khanh Linh1

Short abstract
We outline the process and use of sentiment analysis to interpret consumer-based social
media posts in a way that can provide advantage for supply chain managers. The
development of a body of consumers that are interested in, and comment on, products is
important to understand and model the process. The sentiment analysis process is
examined, along with the opportunities it offers supply chain professionals and the
potential for malice and threat to firms that do opt to use ‘wild data’. We examine the
potential that exists for sentiment analysis to unshackle supply management decisions
from collaborative supply-chain-relationships, although we highlight some risks of this
approach and express several areas where further research is required.

Keywords: Demand-driven supply chain, supply management, sentiment analysis,

consumer demand, forecasting

Topics: Supply chains, other

Methodology: Theory and/or research framework

The rise of supply chain management has enabled firms to manipulate the flow of
materials, information, and finances to allow a sequence of firms to consecutively add
value in a way that serves the needs of customers. Importantly, these supply chains
serve two purposes: first, the physical transportation of materials from extraction and
harvest, through manufacture, to the distribution to consumers; and, second, the
mediation function whereby the requirements of the market are accurately translated
into the appropriate mix of the right products. Contemporary supply chain approaches
highlight the need for information sharing as a key component of collaboration and
cooperation (Cheng & Wu, 2005; Li, Yan, Wang, & Xia, 2005), where information
including point-of-sale (POS) or consumer preference information can be more readily
shared amongst supply chain members, informing their decision making processes.
Thus, most contemporary approaches focus on this concept of ‘collaboration’ to enable
a firm, distant from the market and consumers, to understand what is occurring. In this
paper, we outline mechanisms that allow a firm to more closely understand demand
1
Department of Business Information Systems, Auckland University of Technology, Auckland, New
Zealand.
2
School of Information Systems, Curtin University, Perth, Australia.
3
Department of Mechanical Engineering, PNG University of Technology, Papua New Guinea.
*
Corresponding author. Email: Lincoln.Wood@aut.ac.nz ; Tel: +64 9 9219999 ext 6912
1
changes without the need to rely on collaborative approaches. This is an important
approach as it allows informed decisions to be made within a firm acting independent of
the chain.
The growth in user-created media and information has led to the rise of social media
and Web 2.0 (and 3.0), creating a significant and relatively untapped publicly available
data resource. While consumers become more vocal about products and services, firms
have attempted to manage their supply chains to improve flexibility and responsiveness
to demand. While each of these trends have been examined in great depth, few studies
have been conducted at their intersection: the analysis of consumer postings on the web
to understand how supply chains should be best adapted/adjusted. It is in this area that
we seek to make a contribution by formulating an analytical approach using system
dynamics principles and stock and flow modelling, to understand how key factors can
influence such sentiment analysis when undertaken to support supply chain
professionals.
Our focus is solely on the analysis of consumer postings about products or services
and how these can be interpreted automatically; this process is often referred to as
‘sentiment analysis’ or ‘opinion mining’ (Baccianella, Esuli, & Sebastiani, 2010). These
postings and opinions created by users of products, relating to their experiences and
thoughts about products, consist of reviews, online discussions, and ‘likes’ of products,
recorded online. Together, these social media and Web 2.0 postings represent a fertile
data source that has yet to be sufficiently addressed by supply chain professionals,
despite the fact the data are freely available. Moreover, these data represent the
aggregated marketplace opinion and sentiment about the product, and could thus be
valuable in support of understanding market dynamics without requiring direct access or
relationships with consumers (Wood, Reiners, & Srivastava, 2013). This ‘demand
sensing’ technology therefore enables a “demand-driven approach ensures that supply
and demand align as closely as possible, compensating for forecasts that are often
incorrect without incurring excess costs […] a Demand Sensing solution is a key
backbone to becoming demand-driven, and the benefits in doing so are quite
significant” (Folinas & Rabi, 2012, p. 260). Therefore, in this paper we do not address
analysis of all available ‘big data’ (e.g., often discussed in general terms) and nor do we
examine the use of quantitative data; instead, our focus is on the textual, user-created
data which is analysed using specifically selected subsets rather than analysing all
available data. We aim to demonstrate the value to a supply chain professional of the
analysis and use of such a subset of big data.
A key concern is whether such data can be used in a way that is valuable for
operations or supply chain management professionals. If the analysis of these data can
help such professionals to more effectively manage their tasks and discharge their
corporate responsibilities, then the answer is clearly ‘yes’. Existing empirical research
has shown that such data can be used to evaluate demand for a product/service offering
(in this situation, a new movie release) and used to predict actual sales with a high
degree of accuracy. We later discuss the mechanics of how this occurs and the
implications for supply chain managers.
Our paper is first presents a discussion on the sentiment analysis process. This is then
connected to consumer demand within marketplaces; this discussion provides the
foundation for further discussions. Based on the relationships, we develop several
hypotheses and research questions concerning the efficacy of sentiment analysis in
supply chain management, focusing on some key factors commonly cited as being of
concern when sentiment analysis is used, in an attempt to determine the sensitivity of
the approach to these factors. We examine some of the challenges associated with of
2
sentiment analysis in real environments, including the potential malicious attacks that
may occur on a firm that opts to use sentiment analysis as part of their supply
management decision making process.

Literature review
To understand how consumer sentiment can be used to support supply management
approaches by firms we must review literature relating to the concept of ‘sentiment
analysis’ to better understand the process. Following from this, we explain more how
the process can be used adjunct to or in place of ‘collaborative supply chain practices’,
which often rest on alternative information-based manufacturing and logistics
technologies (Wood, Reiners, & Pahl, in press). We outline some of the questions that
need answers before this approach can be profitably used and we also outline how this
approach could potentially open a firm to new threats.

Sentiment analysis
The use of sentiment analysis in practice rests on several relationships that are assumed
to hold. First, the consumers can evaluate a product and are then motivated to discuss it
online. It is not sufficient for consumers to talk about it on the phone, they must be
motivated to share their experiences in writing online in a social space. 4 Second, these
shared experiences and opinions must have some relevance or connection to consumer
behaviour; i.e., they must reflect consumer behaviours or influence consumer
behaviours. Third, the consumer behaviour must be connected to actual sales; i.e.,
behaviour must translate into revenue. We will separately examine each of these
postulated relationships and provide evidence from past research that each holds true.
Together, then, we seek to establish that this chain of causality means that sentiment
analysis has validity for use in predicting or estimating sales to consumers.

Consumer interest leading to discussion

Consumers must evaluate and discuss products online. This relationship holds that
products must lead to discussion. Clearly, industrial or commercial sales in business-to-
business (B2B) markets are not going to generate significant social media posts where
corporate representatives vent about a particularly product. Even if they do, the volumes
will remain low. Therefore, this shows relevance in business-to-consumer (B2C)
markets only. Consumers are happy to evaluate and share opinions about products.
They are also happy to comment on others’ opinions where they believe they are wrong
or missing some important points. Furthermore, consumers often post questions about
particular products’ performance or whether they live up to the hype/marketing
promises; such questions often attract comments and answers from others that use the
product currently, providing discussion about the product.
From this, we can see that such opinion is most likely expressed in the B2C market.
Where consumers want more information, or will take the time to comment on a
product, it is likely to be more valuable or represent a greater share of their purchasing
power (i.e., it is likely to be more expensive) or it may be relating to a change in a well-
established product that is greatly loved (e.g., a change in recipe on a food product, such

4
Interestingly, there is no reason at all why a video review of a product cannot serve as valuable data.
Recent advances in voice analysis may make it possible to automatically convert verbal reviews to written
reviews, thus providing textual data for the analysis. However, this remains speculative, and the present
reliance on only written feedback only remains a key limitation of this approach of using sentiment
analysis to understand consumer feelings about products.
3
as replacing the more expensive and traditional cocoa butter with palm oil in Cadbury’s
chocolates in New Zealand; in this case, with palm oil use seen by many consumers not
only as a valid cost-cutting exercise, but also as a contributor to rainforest destruction in
south east Asia (Adams, 2012) ).

Discussion associated with sales

Social media postings must influence or be related to actual sales to consumers.
There has been a range of existing research that has postulated and empirically validated
these relationships and provided evidence that such data can be used to predict social
behaviours (Abbasi, Chai, Liu, & Sagoo, 2012).
This relationship has been examined in several contexts. Sentiment analysis tools
have been applied to examine the relationship between releases of products, the
‘discussion’ online, and actual sales of products with the outcome being that such data
can be used to predict sales volumes (O’Leary, 2011; Qin, 2011; S. Yu & Kak, 2012; X.
Yu, Liu, Huang, & An, 2012) .
Is this causal? Are the comments generating sales, or are the sales merely correlated
to the comments? For the purposes of this study, it is largely irrelevant; if the comments
are publicly available and can be used to predict sales to the consumers, they are
valuable. However, there is evidence that blog comments are indeed causally connected
to revenue Qin (2011).
Based on this evidence, we assert that social media postings about a product can be
analysed in a way that helps a firm establish or predict actual sales for that particular
product. Therefore, tools to support management use of these data should support a shift
towards improvement of contemporary business operations (Woodward, 2012; Zitnik,
2012).

The sentiment analysis process

The analysis of a corpus of written work clearly relies on different capabilities than
many marketing or supply chain managers may possess, as it requires an understanding
of elements of machine learning, natural language processing (NLP) (Nadkarni, Ohno-
Machado, & Chapman, 2011), or a combination of these approaches (Prabowo &
Thelwall 2009). The actual meaning of words and the underlying concepts must all be
understood and these can be supported by methods including
• Latent semantic analysis (Landauer, McNamara, Dennis, & Kintsch, 2007).
• Concept-based indexing (Baziz, Boughanem, & Traboulsi, 2005; Boese, Reiners,
& Wood, 2014).
• Formal concept analysis (Wille, 2009).

Sentiment analysis approaches require a number of items of data to be known; from

these items, useful information can be gleaned. Thus, extraction processes (whether
manually conducted or automated) should extract a ‘quintuple’ of data:
1. What is the object or item we are concerned with (i.e., our product)?
2. What is a particular feature or attribute of the item? (This can help
connect the information about consumer sentiment to particular features,
finding value for market analysts (Kumar & Sebastian 2012).)
3. Who is the opinion holder?
4. When is the given time that the opinion is expressed?
5. How strong is the sentiment value of this opinion holder on this product
at this point in time?

4
 Classification of a given string of text is best made into fewer categories. As a
greater number of categories are used then nuances of meaning become increasingly
important, making automated sentiment analysis difficult to achieve. Thus, in many
cases it is most advantageous to only classify as positive, negative, and neutral.
There are a variety of classification approaches (Pang & Lee, 2008), including:
• Maximum entropy, using probability distributions to classify based on partial
knowledge;
• Naïve Bayes, a probabilistic classification approach based on Bayes Theorem;
and,
• Support vector machines, representing data as separate vectors in multi-
dimensional space enabling effective classification.

When all of the comments have been classified, we have a series of separate ‘stocks’
of classified comments that we have found. When compared, these stocks can be used to
analyse whether consumer sentiment towards the item is overall positive, negative, or
neutral. The change in these stocks over time, the dynamic changes or rate of changes,
can also provide valuable data.
Would consumers buy if sentiment was negative? Actually, yes, they might;
consumers may be compelled to consume a product or service even where they may
otherwise wish not to do so, based on existing (negative) sentiment. This opinion-
inelasticity would be a feature of an item whereby demand does not decrease with
negative opinions expressed about it. It would primarily be associated with
products/services delivered by a monopoly supplier, such as a government department,
or where there are no clear substitutes available from rival suppliers. Thus, a
government service (e.g., visa applications) has opinion-inelastic demand; jewellery (a
luxury item) is opinion-elastic demand. Sentiment about opinion-inelastic products may
prove useful in regards to improving products (e.g., by highlighting elements that
customers value or dislike). In contrast, however, as the relationship between sentiment
and actual demand decreases with opinion-inelasticity products the improvement of
supply management (e.g., based on actual volumes or level of demand) may not occur.

Hypothesis One: sentiment analysis will fail to improve the supply management of
‘opinion-inelastic products’.

Effective sentiment analysis can support marketing and supply management.

Identifying important product features can enable analysts to determine which features
are most important to consumers, influencing future product designs based on the
identified features (Archak, Ghose, & Ipeirotis, 2007; Liu, Jin, Ji, Harding, & Fung,
2013).
The categorisation process also creates a significant opportunity for problems to
occur. A misinterpreted posting may occur because of one of two reasons:
• A miscategorised post due to difficulties in identifying and dealing with irony
or sarcasm (Wawer, 2011).
• An inherently and maliciously false post that creates a ‘fake review’; we return
to this concept below in the section on “Threats from unauthenticated data”
where we discuss this emerging concept of ‘opinion spam’ (Jindal & Liu, 2008;
Morales, Sun, & Yan, 2013).

5
 In each of these situations, the miscategorisation can be problematic, for various
reasons. Not all categorisations are created equal and they may involve false
interpretations of comments that are either negative or positive in nature (Table 1).
Sarcasm is often used to deride a failing of a product by claiming that it is good; e.g.,
“the colours on the screen are so bright and brilliant” may be said sarcastically about a
mobile phone with a screen that is dull and lifeless. Such a categorisation would create a
false-positive review. The comment, “you don’t need such a large screen” could be
construed as being a negative comment about an attribute and may relate to the battery
performance, where larger screen sizes are inversely correlated with battery life (in this
case, the attribute is the size of the screen, whereby a large screen is often considered to
be positive attribute). Such a classification would be a false-negative on an attribute of
the screen size and may be therefore a false-negative for the product as a whole.

Table 1 – Categorisation errors in Sentiment Analysis

Sentiment indicates demand is strong
for the product
Negative Positive
Interpretation False False-Negative False-Positive
matches reality True True-Negative True-Positive

Using sentiment analysis to support supply chain management

Within the universe of possible purchases of a product or service, there will be some
that are blithely unaware of the product but could potentially purchase, through to
strong advocates that own the product. Warren (2008, pp. 345-356) provides an
examination of how this range of customers can be modelled, focusing on how
marketing efforts can create a ‘pipeline’ of developing customers, from an undeveloped
(and thus, unlikely to purchase) customer to one that is a customer and makes an
acquisition. A range of marketing efforts can be made to each of these sections of the
pipeline and firms must be cognisant of how large each stock of customers is and what
role they will play in creating discussions about a product.

Understanding markets
A firm that focuses on B2B markets may have a pipeline of corporate clients, but a
relatively small number of overall clients in comparison to a B2C firm. Such a B2B
firm may be able to allocate a higher value per client over this smaller number, and
ensure that there are staff available that are able to estimate the numbers of firms at each
phase of development.
Firms that focus on B2C segments may have a more difficult time, with a much
larger number of lower-value clients. How, then, can this type of B2C firm manage the
same process when there is a multitude of retail consumers? The use of sentiment
analysis, based on the underlying social media postings of each segment, may provide a
relatively fast and easy method for a firm to identify approximate volumes of customers
in each segment.
First, we can identify the overall impact or impression that the product is making in
the marketplace. This can be evaluated by the sheer volume (and changes in volume) of
discussions by identifying those that contain reference to the specific product or brand.
Moreover, customers at different phases of the pipeline will have different things to say
about the product. Those people that are ‘interested potential consumers’ may ask
questions about an attribute; those that are ‘owners’ may answer questions or make
6
positive comments about a product), or nothing to say at all (e.g., ‘unaware potential
consumers’). Thus, the volume of comments that may be attributable to each segment
could be used to provide an indication of the size of the segment (Figure 1).

Figure 1 – Development of Customer Choice Pipeline (Warren, 2008, pp. 345-356) coupled
with the concomitant volume of discussion that will enable sentiment analysis to help determine
the size of each category in the pipeline.

Second, the content of the discussions can be analysed and evaluated as to whether
the overall sentiment or feeling about the product is positive or negative. As we
discussed previously, research has shown that this phase can be used to forecast actual
sales with a high degree of accuracy. Therefore, the content of the discussions can be
used to gauge or measure the customer requirements that are going to be placed on the
supply chain in the near future. This represents the common use of sentiment analysis
where it can be correlated with demand or actual sales.
Yet, not all categories of products are created equal, and the attributes of different
products, or services, may also influence what is said about them and how it is
expressed. As an example, with ‘feature-based goods’ (e.g., electronics), reviews
featuring objective information are valued [particularly, where utility is crucial; e.g., see
Cheema and Papatla (2010)]; in contrast, with ‘experience goods’, some objectivity
must be balanced by a greater amount of subjective opinion (Ghose & Ipeirotis, 2006).
There may also be differences for durables and consumables and products where there
is a single vs. repeated purchase (where a single purchase, durable good may require
more information-seeking behaviours); however, there is little work on the moderating
role of the product category on reviews (Maeyer, 2012).
Several key questions remain. In reference to Table 1; if there are an increasing
number of false reviews (either false-positive or false-negative reviews), the usefulness
of sentiment analysis may be reduced (Figure 2). More false reviews would give false
readings, creating inappropriate input to supply management decision makers.

Research Question 1: How sensitive is the sentiment analysis process to bad data
from false reviews?

Research Question 2: How can the sentiment analysis process be modelled and used
as a proxy to POS data?

7
 Figure 2 – Connection between customer interest (leading to sales into the supply chain) and
the analysis of customer-generated comments and reviews about the product that form the
material for sentiment analysis

As a volume of ‘discussion’ or text about a product is created, sentiment analysts are

able to categorise these discussions. During the process the comments are categorised
into one of two categories that are readily apparent to the analyst: either ‘positive’ or
‘negative’ or ‘neutral’; introducing a greater level of finesse in separating the opinions
appears seductive but this also reduces the power in making accurate categorisations;
therefore, in modelling and practice it may be wise to use only three categories.
It is important to note that while the analyst believes these categories are accurate,
miscategorisation can occur. As an example, an owner of a product may declare that
“the battery life [on this phone] is really excellent”. Taken in isolation, this text may be
perceived as a positive statement about the phone; however, if it were to be preceded by
the comment “phone becomes unusable after only four hours” a human may perceive
the second statement to ‘sarcasm’ rather than positive, while an automated
categorisation process may have categorised this as a ‘positive statement’; therefore, we
call this a ‘false-positive’.
One of the perceived limitations of sentiment analysis approaches is the need to get
such accurate classification. At some point, we believe, a ratio would emerge where the
value of such sentiment analysis is reduced by the inaccuracy.

Hypothesis Two: Such a ratio could be evaluated or modelled by examining the ratio
of comments that are true positives with true negatives, with the more general ratio
that also accounting for the ‘false’ readings of each.

Links between sentiment analysis and supply chain characteristics

The value of sentiment analysis to a given firm may also be influenced by two
additional factors: the length of the overall chain and the amount of diversion of
materials into different markets.
First, the overall length of a supply chain may be important. For a firm that is distant
(either temporally or geographically) from their market, sentiment analysis may prove
valuable as a bellwether of change, enabling the firm to proactively manage their supply.
However, a long supply chain has that nature due to more firms between the focal firm
8
and the market; more firms indicate more actors making independent decisions, which
may mitigate the impact of the market-based changes on the focal firm.
Second, longer supply chains may become fragmented, with a dispersion of the
output from a given firm between different consumer marketplaces (Figure 3). Assume
a firm has 100,000 units of output and 0.9 of output being passed to each customer
down the chain to a Market A. A two-company supply chain (Z-Y-Consumer) has a 0.9
of the products going to the next customer firm. A four-company supply chain (Z-Y-X-
W-Consumer) has 73% (0.9*0.9*0.9) of product in the integrated supply chain. A 10-
company supply chain has only 39% of output for firm Z reaching Market A. This
means that the direct value of using sentiment analysis to firm Z in a 10-firm supply
chain is lessened; a doubling of consumer-demand for a product that 39% of their
output goes into is not as significant (increasing from 39,000 units a year to 78,000 per
year) as a doubling of consumer-demand for a product that constitutes 73% of their
output (increasing from 73,000 per year to 146,000 per year). The concomitant
managerial impact is that more markets that the firm Z serves, the more resource-
consumption will occur as each of these requires the attention of sentiment analysts; and
the less benefit will be gained from sentiment analysis in any one market.

Hypothesis Three: In a longer supply chain, the utility of sentiment analysis is

lessened (as input to supply management decisions).

Hypothesis Four: The more markets that a firm’s output is sold into, the more
sentiment analyst work needs to be conducted (as input to supply management
decisions).

Hypothesis Five: The greater the dispersion, or fragmentation, of supply along each
tier of the supply chain, the less the utility of sentiment analysis (as input to supply
management decisions).

Figure 3 – the dispersion of output from a focal firm, as firms in the supply chain use output to
serve other markets, influences the total volume of the output that reaches a given market which
could influence the usefulness of sentiment analysis in predicting sales in that market

9
Improvements in supply chain collaboration
A frequently cited objective of supply chain management approaches is to increase
visibility over the supply chain (Kärkkäinen, 2003). This is often achieved by sharing
information, supported by a range of approaches and technologies including:
• collaborative planning forecasting and replenishment (CPFR), offering
enhanced visibility between two tiers of the supply chain (Nyman, 2012).
Expertise and knowledge of multiple actors are combined to enable the firms to
better coordinate activities to meet supply.
• Consignment stocks, stock replenishment programmes, and vendor-
managed inventory (VMI) systems all allow an upstream supplier to work
closely with a downstream partner to improve the flow of materials ,often with
the intention of the upstream partner taking on increasingly more responsibility
over time (Çetinkaya & Lee, 2000)
• Barcoding and use of radio frequency identification (RFID) tags, enabling
better understanding of where stock is at any time (Kärkkäinen, 2003).
• Electronic data interchange enables partners to quickly and accurately transmit
data (Attaran & Attaran, 2007).

As Wood et al. (2014) point out, a cursory examination of these concepts reveal that
they all require, in one form or another, good relationships and shared responsibility for
improved supply chain management by multiple parties in the supply chain. In contrast,
sentiment analysis enables a firm to decouple themselves from partnerships within the
supply chain and engage in their own, meaningful analysis of the marketplace changes,
and use the gathered intelligence as input into their decision making (Wood et al., 2013).
The approach can also exist as an adjunct to other, more established, forms of supply
chain collaboration.

Hypothesis Six: Sentiment analysis enables a firm to improve supply

management practices while acting independently of other collaborative supply
chain practices.

Evaluation of consumer appreciation of sustainability initiatives

Many firms would be cautious about supporting new initiatives, when the impact on
consumer buying patterns is considered. Sentiment analysis may enable a firm to seek
out greater details about consumer response to supply chain sustainability initiatives
(SCSI) that they seek to undertake. Research indicates that SCSIs of a buying firm can
even influence the shareholder perception of value of the supplier firms (Wang, Petkova,
& Wood, 2014). SCSIs from firms upstream from the market can be evaluated easily.
If consumers in a particular market are uninterested in sustainability initiatives, then
it may be financially inadvisable for a firm to introduce a given SCSI. Firms upstream
could therefore gauge the likely consumer interest in a given SCSI by evaluating
consumer sentiment and feeling about such initiatives in the past. This would enable
firms to determine whether proposed changes would add value, and, therefore, whether
it would be financially viable for them to progress through to a more mature level of
sustainability in their supply chain management (Reefke, Sundaram, & Ahmed, 2010).

Threats from unauthenticated data

Assuming that competition is chain vs chain, this approach offers a new method to
confound another chain’s efforts: ‘opinion warfare’. Firms are able to create fake
10
reviews that may mislead analysts at rival firms (Lappas, 2012). Traditional data for
supply management approaches have been sourced either internally (in larger,
vertically-integrated firms) or externally, from trusted partners (either collaborators
within the supply chain, for from reputable firms such as those offering marketing
services or market research services). In contrast, sentiment analysis relies on ‘wild’
data that is generated externally to the firm but cannot be validated or authenticated as
being genuine.
It has long been realised that the ability to correctly attribute an author to a piece of
text would be a valuable capability; see for example, the use of a stylistic ‘fingerprint’
by Holmes (1994). Such methods may be more difficult to apply to the determination of
the authenticity of a corpus of product reviews. While a human analyst may generally
outperform automated classification of authentic opinions, Morales et al. (2013) note
that humans may struggle to correctly identify a review as fake during manual analysis
and many automated algorithms also perform poorly. In contrast, identifying such fake
reviews is the purview of automated solutions; the identification of peculiar patterns of
reviews can be used to identify possible false reviewers (Jindal, Liu, & Lim, 2010).
As the problem of fake reviews and other social media postings has been recognised,
then if sentiment analysis were to play a role in supply management, we envisage the
possibility for corporate supply chain attacks between firms: sentiment sabotage, as part
of wider supply chain malice. As an example, consider two firms (Firm A and Firm B)
competing in the same marketplace. Within Firm A, sentiment analysis is pivotal to
their supply management decisions; that is, the assumption is that shown in Figure 4.
Firm B would be well-served if Firm A were to make too many of the wrong product
(an expensive mistake!). Using traditional, authenticated data, Firm B could not change
data to influence Firm A to make a poor decision (at least, not without undue
reputational or legal risk!). However, if Firm B were to create false or misleading social
media data, they may be able to create a sense that a particular product is very popular
(when it is not), influencing a poor decision by Firm A (Figure 5).

Figure 4 – The perceived situation where Sentiment Analysis can support Supply Management

11
 Figure 5 – Firm B creates a False-Positive outcome that misdirects the efforts of Firm A

Is this a feasible scenario? If Firm B were to maliciously create data with the intent
to mislead Firm A, before any remedy can be applied the staff of Firm A would need to
recognise that something is amiss. Recognition that ‘something is wrong’ may be
relatively simply for a human but when an analyst is investigating the summary of a
large body of data – greater than they could analyse manually – there must clearly be
some tools or software created that there are hidden patterns in the textual data,
indicating there something is occurring rather than ‘normal content created by real
consumers’. At that point, what remedy could be undertaken or sought by Firm A? We
feel that this is a valid concern because as NLP advances, the ability to create duplicate,
similar, and equally misleading social media posts will also increase, enabling Firm B to
undertake the type of malicious attack described. Much slower advancements would be
made in technology that allows Firm A to detect underlying patterns that such an
approach would inevitably create, and, by identifying that there was a consistent pattern,
discount those data.
Such approaches would also create a potential backlash against Firm B from another
source: consumers, users of these posts also, would resent the lies and deceit, and could
conceivably boycott or otherwise commercially punish Firm B under these
circumstances. Content created with malicious intent against Firm A would also cause
inconvenience to consumers and holds the potential to upset them.
This approach opens up new avenues that firms may exploit. The ability to
automatically generate a large number of fake reviews would excite managers of
‘content farms’ which specialise in creating volumes of false content to unduly
influence search engines. On the other side, firms already offer to remove unwanted
results from search engine results (e.g., see the De-indexing Plan from Brand.com;
http://www.brand.com/biz-deindexing.html); as such services become increasingly
automated they could be used to counter-balance the auto-created opinion spam. Similar
processes can be used to ‘sanitise’ or reduce the impact of consumer reviews on the
sentiment of other customers.
Therefore, we anticipate that a careful selection of partners of either type could help
either firms with malicious intent or cautious firms that desire to scrub wild data or
protect themselves against nefarious competitors. Specialist new content farms may
emerge with the nefarious intention of helping their clients ‘pollute’ the sentiment
associated with a competitor’s product; analytical firms may emerge with specialist
abilities to separate out the authentic posts from such opinion spam by authenticating
the wild data.

12
Conclusions and future research
Throughout this paper we have attempted to analyse how sentiment analysis can be used
to take consumer opinions, freely and openly expressed in web 2.0 and3.0 environments,
and use these to feed into a system that uses them as a proxy for demand. This process
enables a firm, distant from a market, to understand that particular market more
effectively in a way that will allow them to make better supply decisions. We
demonstrate the potential to understand a corpus of consumers more effectively. This
includes targeting particular stocks of consumers, as well as using their comments to
interpret how many consumers exist in each stock. The content of the consumers’
comments also provide an indication and insight into the likely supply management
decisions that a firm will need to make, allowing supply management decisions to exist
independent of collaborative relationships along the supply chain. However, sentiment
analysis uses a ‘wild data’ that are unauthenticated; this opens up the analyst to
malicious attacks from competitors through the new vector of false consumer reviews
for products.
These topics are important as the increasing integration of contemporary forms of
analysis, including sentiment analysis, into enterprise systems is starting, with a view to
more strongly support decision-making (Mayeh, Scheepers, & Valos, 2012).
A key practical limitation of the adoption of this approach in existing supply chain
management teams will be the technical skills required and the change in mind-set.
Many Supply Chain Managers and their staff will be more intimately familiar with
management tools and methods that have been derived from engineering or production
management foundations. Such tools tend to focus on quantitative data and are often
used to understand elements of quality control; e.g., statistical process control (SPC).
Underlying sentiment analysis, however, is a different concept: NLP. Therefore, the
approach will fall outside the traditional educational programmes for the foreseeable
future and there would be a shortage of staff skilled in the use and analysis of NLP.
Thus, we would anticipate it to be difficult for many firms to house such capabilities in-
house. However, there is no reason that such skills need to be in-house and this is a
process that may be ideally outsourced to a third party of skilled specialists.
Theoretical questions still exist, primarily surrounding the validity of this approach
given the lack of accuracy. We have asserted that this may not be a significant barrier to
the use; yet, there will likely still be a threshold of accuracy that is required to use
sentiment analysis a profitable approach in the process that we have outlined. Therefore,
research should focus on establishing what an acceptable threshold of accuracy (in
classification of comments) is. This may be grounded in empirical work or through a
sensitivity analysis in a simulation model.
Consumer-generated data in the form of product reviews as we have discussed,
represents a change in supply management approach, thus, few firms or managers will
have ready access to appropriate tools or appropriately qualified staff. The use of
sentiment analysis offer tantalising new opportunities to supply chain managers but also
create added complexities. Furthermore, we have not addressed the use of the wider
category of ‘big data’ which may be either textual or quantitative nor have we examined
methods for analysing and using the entire set of data as we focused merely on
extracting a focused subset of textual data. As a result, there is still significant room for
further research examining the different forms of big data, how these may be analysed
by managers or professionals, and how these data and corresponding analyses may
relate to various elements of supply chain management.

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 Other questions with a stronger focus on the supply chain also emerge which must be
answered before sentiment analysis plays an important role. Sales of different product
categories may be naturally more amenable to prediction using sentiment analysis and
differences are yet to be identified. The distance from markets, and the impact of
dispersion or fragmentation of supply over various markets, may also reduce the
usefulness of sentiment analysis and these factors need further examination.

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