The Sharing Economy, Technology, Sustainability and the Supply Chain of tomorrow…
You’re planning a trip from Philadelphia to Chicago. You’ll be there for several nights, but you want to live relatively cheap. To cut costs, you plan on eating a few of your meals at home. What lodging service comes to mind?
Upon arrival at the airport, you realize you need to take a 30-minute ride to your living arrangements, but haven’t booked a taxi. What transportation service comes to mind?
I would bet a handsome sum the majority of individuals reading this post thought of two particular brands in answer to the two questions above: Airbnb and Uber.
These services, and their brands, have become synonymous with their industries and continue to challenge the boundaries of traditional business models.
But what is it that makes these companies so unique?
Simply put… you.
Uber and Airbnb are two of the largest successes to bear sharing economy business models. And, they wouldn’t even exist if it weren’t for you: the user, the partner, the collaborator, the ‘employee’, and/or the customer.
“The Sharing Economy is a socio-economic ecosystem built around the sharing of human, physical and intellectual resources. It includes the shared creation, production, distribution, trade and consumption of goods and services by different people and organisations” (thepeoplewhoshare.com 2016).
The very existence and success of the shared economy is completely reliant on sharing-based technology, platforms, communities, creation, sales, purchases, and ownership; the very thing that makes the marketplace so volatile.
A business model once considered irrelevant to several business sectors, (as highlighted in the graphic below) the sharing economy, was recently valued at $15 billion market value in 2014.
Experts have projected that number to grow to a $335 billion value in 2025 (Wadlow 2017).
There exists potential for application of the sharing economy model in supply chain management activities. Unlocking that potential lies within the creativity of businesses, the willingness to accept disruptive technology and the development of new supply chain applications and innovations.
This post exists to disprove the naysayers, accept the evolution of emerging business models, and to try to make sense of the potential the sharing economy holds for supply chain optimization.
Who’s already making it happen?
To set a framework of how far the application of a sharing economy business model can take a company, I figured I’d share some factual examples of companies that are already making it work.
I won’t be including Airbnb and Uber in the list below considering their wide spread notoriety as sharing economy-modeled corporations. Something that is worth mentioning however, is that some individuals refer to the sharing economy as ‘Uberization’. How’s that for brand association…
· Goshare has developed a digital logistics platform where companies can collaborate, fulfill mutual delivery needs and improve overall logistics efficiency by sharing legs of journeys. ‘Dead leg’ trips are an industry term used to label trucks that have already made a delivery and are driving back to their origin of departure. Goshare has developed their application with shared economy as a central value, enabling companies to collaborate utilizing the full-range of a transport’s capacity by filling the trucks up on their return trips home, reducing fuel costs, reducing wasted CO2 emissions and creating a more efficient utilization of delivery trips made.
· WeWork is turning the traditional paradigm of real estate on its head. “In the manufacturing space, companies can access and ‘share’ a range of untapped production facilities that would otherwise lie dormant. This is the beauty of the shared economy: It uses technology to connect supply with demand irrespective of sector, industry or even past business relationships” (Webb 2017).
· Lyft is a smaller competitor to Uber, bearing a similar business concept, but differs in the fact that it was built on the idea of carpooling. In the same way Uber was a disruption of taxis, Lyft has began as an advocate for sustainable travel practices (carpooling instead of driving alone) that has developed into a disruptive transportation service. It holds a 10th of the market’s share in comparison to Uber ($7billion vs. $70 billion), but has continued to see growth despite initial doubts in the company’s future.
· Uber Freight is another example of a logistics-focused sharing economy application. On-demand logistics is an emerging concept in the sharing economy marketplace that has caught on like wild-fire, giving truckers freedom within routes, and businesses more opportunities for reducing lead times on deliveries. Truckers can deliver products to their destination, much in the same fashion as delivering people to their destination in the original Uber model.
· Convoy is another competitor in the on-demand logistics field, which is worthy mentioning. While it doesn’t have the same internal financial backing that Uber can cough up, it was able to rake in $62 million in VC funding, in July alone…
What makes it all possible?
Simply put, disruptive technology and the acceptance of its existence/user base. Tech and the users of tech have served as a platform for transcending the sharing economy.
Without technologically advanced platforms, sharing-economy business models wouldn’t be the business models they are today.
Airbnb would be a your run-of-the-mill bed & breakfast chain, Uber would be right alongside yellow cabs of the world, GoShare would be bought up by DHL, and WeWork would be no different from your suit-and-tie commercial real estate firm.
According to SCM World’s “Disruptive Technologies” poll of technologies planning to disrupt supply chain strategy, the sharing economy (Uberization) ranks towards the bottom, even last year.
Of the respondents in the study, 46% labeled the technology and strategy as “Interesting but unclear usefulness” and 28% labeled the sharing economy irrelevant (SCM World 2016).
My response to those who are skeptic of the sharing economy’s application to their supply chain activities would be: we’re in a digital transformation. Supply chain management of today is living in a constant transition of capabilities/strategies, because of the technology that surrounds the market.
Supply chain professionals shouldn’t look upon shared economy models with skepticism, but accept their unorthodox nature as a work tool for challenging and transitioning supply chain optimization.
How can this create positive impact?
The largest potential I see the sharing economy having on supply chain management is the enhancement of sustainability.
When I say sustainability I mean it in the traditional application of sustainability: actions taken by an entity to enhance the development of people, planet and profit.
· People: Utilizing platforms that function on the ideology of ‘sharing first’ would create a situation with incredibly engaged stakeholders. This adds community value in a whole other dimension to supply chain activities. Sharing-economy methodology could, too, be utilized to solve some of the world’s toughest issues such as world hunger, or the distribution of clean water.
· Planet: Take a company like GoShare for example, reducing C02 emissions and cutting down the expenditure of natural resources- all by sharing truckloads. This small action could be scaled, shifting the traditional model of logistics. Imagine if larger-enterprise organizations get on board, there could be sharing economy-based logistic solutions for air, sea and land. Potential carbon neutralization would be staggering, as companies would share the responsibility of our sustainable future.
· Profit: The sharing economy has shown to be a profitable market itself, but how can one be certain that it could show profitability when utilized for supply chain management? It’s not certain. Profitability is never certain. But the sharing economy, as a model, carries the potential for unorthodox cross-organizational collaboration. Sure, this requires the relinquishing of absolute power, and sharing the formula for success, but the utilization of a sharing economy could create really exciting partnerships, collaborations, innovations and shared value.
Are you a believer in the sharing economy?
Until next week.