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Why We Love Sharing Economy (And You Should, Too!)

Dec 8, 2017

Companies have started worked tirelessly and have adopted innovations to increase the efficiency of their supply chains. After a point, most of them have started to hit a brick wall in terms of making the supply chain efficient. In a bid to further enhance their productivity and operations, companies have started to look beyond their four walls to build a global supply chain. The most lucrative alternative available to them outside their own supply chain is sharing economy. For a long period, organizations have had a fragmented supply chain with complex structures, with each step in the chain adding more complexity and costs to the overall operations. However, sharing economy arrives as a solution, which provides the ability to use untapped assets and resources. So what is giving rise to this sharing economy?SE_Demo2

Rising Consumer Expectation

Consumer expectation has increased to a level where it’s threatening the survival of even the established companies. Consumers are increasingly demanding instant error-free deliveries, which is forcing the retailers to develop their fulfillment centers in order to quickly respond to customer orders and simultaneously re-stock at a faster rate. Such actions significantly increase the costs for the retailers. As a result, they can turn towards sharing economy by sharing warehouse space and logistics mode to maintain optimum inventory levels and push towards full resource utilization. For instance, Uber Freight is using software to help drivers avoid traveling without a full load which will automatically reduce the transportation cost per shipment along the environmental costs.

The Rise of Autonomous Vehicles

The American Trucking Association has continuously predicted a growing shortage of drivers in the near future provoking logistical players to invest in autonomous vehicles. Self-driving cars can to operate at a higher frequency, and calculate the best shipping routes saving fuel costs. Logistical players like Uber have offered services like rent-a-van in Hong Kong which allows same vehicle to be used by multiple companies at different times to serve their logistical needs. This service hugely reduces the logistics costs of companies who would otherwise have to invest large sums in their own supply chain.

More Deliveries at the Same Cost

Unpredictable consumer demands urged retailers to restock the items on a regular interval. Such actions consequently led to manufacturers increase the frequency of deliveries which meant delivering trucks which were not entirely full. The same problem was faced by Kimberly-Clark professionals who wanted to shorten the replenishment cycle and deliver full truckloads without incurring additional transportation costs. The professionals resorted to sharing economy by teaming up with another company making shipments to similar retail stores. As Kimberly-Clark and its partner shared half space each in the truck, they could increase their delivery frequency without incurring additional costs.


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