When a Technology Platform Becomes a Transportation Company

Map use on Mobile Device

On 11 May 2017, Uber officially became a transportation company. Or it did in the eyes of the European Court of Justice (ECJ), which wrote in an opinion that, “It is undoubtedly transport (namely the service not provided by electronic means) which is the main supply and which gives the service meaning in economic terms.” With that explanation the court hit upon one of the clearest benefits of the sharing economy to date: the ability to nearly instantly balance supply and demand.

The court’s examination of the case looked at exactly how this new source of supply — created by Uber’s arrival — impacted competition for consumer demand. Traditional taxis clearly saw Uber as a transportation competitor attempting to skirt regulations, but Uber’s argument focused on its role as “part of a wave of technology which radically changes the way we shop, obtain information.”

The ECJ’s opinion doesn’t appear to directly dispute that argument, but it further confirms that the sharing economy is testing traditional markets with its inextricable blend of physical and digital capabilities. Likewise, supply chain is increasingly tasked with becoming a competitive advantage in these tested markets. And, at heart, the technology-versus-transportation conversation is really a supply chain argument.

In our Value Chain 2020 study, which was conducted in mid-2016, we asked the supply chain community what efforts they have made to monetize the sharing economy. Nearly a third of respondents reported that they were already monetizing the sharing economy, with 9% calling themselves first movers and 23% self-identifying as fast followers.

SCM World Value Chan Study Results
That level of usage for a relatively new concept is impressive. But given the sharing economy’s rapid rise to prominence, as well as the urgency being placed on today’s supply chains, it feels like this relationship is only just beginning; in that same study, our community saw the sharing economy as having an appealing balance of low risk and high reward across multiple asset types. Factoring in consumer-servicing companies, such as Uber and Lyft, as well as freight-focused offerings, such as Convoy, transportation is the most common application of the sharing economy. For both transportation and physical facilities, such as warehouses and distribution centers, sharing is viewed as relatively safe and beneficial. And while respondents considered manufacturing assets to be relatively risky, they had a favorable view of its potential benefits, as well.

Comparison of Risk & Reward Across Sharing Economy
At a recent C-level peer forum, participants explored these opportunities even further, with one chief supply chain officer stating, “experimentation with shared assets has been around…but we have the technology now to better match supply and demand.” Seven of the eight executives in attendance told us that they planned to begin pilots in the next 12-18 months.

While nearly half of executive respondents to our 2016 Future of Supply Chain study are uncertain about the long-term usefulness of the sharing economy, it is clear that a number of leaders are already seeing the impact of the sharing economy today, in ways that you may not have heard of. For example:

When it became evident that the Port of Hamburg needed to expand capacity without physically growing, it turned to the sharing economy. By leveraging both physical and digital capabilities, the port authority created a collaborative sharing network that drives efficiency across road, rail, and sea to connect “950 ports in some 178 countries around the world.”

The Fair Factories Clearinghouse provides a sharing platform to its members to “promote transparency in accordance with antitrust and anti-competition guidelines.” Its network of members, including apparel producers Adidas and Patagonia, work together to identify collaboration opportunities to improve working conditions, increase leverage and enhance overall performance.

Project Last Mile relies on The Coca-Cola Company’s supply chain capabilities to improve healthcare systems in Africa. The initiative’s partners include USAID and The Bill & Melinda Gates Foundation, with the goals of raising awareness for healthcare solutions and improving the storage and delivery of medicines and supplies.

From these examples, and many more like them, the impact of the sharing economy is undeniable. If you haven’t yet explored this concept, and don’t know where to start, ask existing partners — or even partners-of-partners — to help give you a sense of where opportunities in this new paradigm are emerging, and how you can take part.

By taking the first steps to monetize the sharing economy for your company, you can be a catalyst for growth.

Author Patrick Van Hull

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