The Sharing Economy Boom: What It Means for the Supply Chain

Smart transportation concept: The sharing economy.

A new economy is here — the sharing economy — and it will change the supply chain forever. 

The entire supply chain has had to undergo a massive shift to keep up with the shared economy, and unless the transportation industry adapts to the new way of exchanging goods and services, it will find itself stagnating.

What Is the Sharing Economy?

You probably already know about consumer sharing services such as Uber and Airbnb. These services involve the peer-to-peer acquiring or providing of goods and services, which are selected by users via an online platform or app.

This system is mutually beneficial, since the people who rent out their cars or houses on these marketplaces and platforms can earn money and develop a positive reputation, and the people purchasing have a viable, often much more affordable and personalized alternative to traditional services.

The sharing economy is also stretching beyond consumer goods and services, to industry itself.

How and Why Is the Sharing Economy Growing Now?

When the greater economy subsides, the sharing economy rises. In these situations, people generally have less individual wealth to devote to temporary goods or services, prompting them to search for shared resources. The sharing economy is also growing as the supply chain shifts. Consumers now expect fast deliveries, from anywhere in the world. As a result, shared fulfillment centers and trucking are gradually becoming the new reality.

For smaller companies, pooling resources can significantly reduce overhead costs. And with programs like Uber Freight, truck carrying capacity can increase as well. Similar programs could have a dramatic impact on the supply chain, which uses trucks for transporting 70% of goods.

The Supply Chain and the Sharing Economy

The supply chain will become even more critical with the rise of omnichannel sales. These systems require deliveries in response to orders that consumers place online — whether from mobile phones or tablets — for home delivery and pickup from stores.

The sharing economy taps into unused resources to reduce waste. For the transportation industry, this means making use of empty trucks on return trips. And with shared shipping, trucks never need to be empty again, as they can ship both to and from.

Boosting Technology to Embrace the Sharing Economy

The hallmark of the sharing economy has been its use of technology to share requests and offers of goods and services. Without the appropriate technology, the sharing economy simply won’t work.

Today, 70% of supply chain executives report getting data in less than a week. Operators must respond to this information, sometimes in real time. This will not only paint the supply chain service in a good light, it will also allow it to remain relevant in today’s shifting world.

Real-time connectivity with tracking devices in trucks can connect shippers with drivers, bringing the transportation industry into the sharing economy. Here’s how this system works: After dropping off a shipment, a driver can find another company nearby that needs to ship something to the driver’s destination. If the shipment doesn’t fill the truck, the driver can then pick up multiple shipments.

Looking to Hyperlocality

Amazon is doing it, and many other companies are following suit, embracing hyperlocality with local distribution centers that allow for next-day and same-day shipping. Getting supplies to and from these distribution centers drastically changes the supply chain.

One method of doing so involves using individual stores in a chain to store products for other area stores. Sears does this by using local Uber drivers or couriers to send goods to nearby stores when needed. This changes the distribution process; rather than sending goods out from a central warehouse, multiple locations are utilized as storage and shipment points. Shorter distances and smaller loads may become the future of transportation for these businesses.

The Future of the Supply Chain

The economy is constantly changing. Once, trains reigned in transportation, and today, it’s trucks. Tomorrow, the supply chain could use smaller-scale shippers to fulfill orders from multiple locations more rapidly.

Implementing new technologies can help supply chain operators embrace the new economy, but it’s also necessary to change the way people think about the supply chain as a whole. Omnichannel sales will shape the future of the transportation industry. Are you ready for it?

 

Image Credit: Montri Nipitvittaya/Shutterstock.com

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