From ownership to sharing in the supply chain/ logistics sector
In a shared economy the users gain temporary access to underutilized assets owned by another at a low cost. Greater utilization of the assets/resources maximizes the return on investment and produce a new revenue stream in the form of rental fees for the providers. In addition to financial gains, the shared economy also reduces the environmental impacts due to the fewer need to produce new assets and the maximum utilization of the existing assets.
Embracing digital platforms and new business models built around collaboration and sharing presents a significant opportunity for the supply chain/ logistic providers. Sharing of warehouse space, transport vehicles, workforce and other assets are some examples of effectively employing shared economy in logistics.
The major obstacles faced by companies transitioning to circular economy are high logistic costs, missing services along the supply chain and less collaboration between companies. Supply chain and logistic providers thus have a significant role in making the transition smoother from linear to circular economy.
Almost 80% of the warehouse spaces are usually empty and underutilized during the non-peak demand period. The cost borne by the company on such long-term contractual basis for space allocation in warehouse is quite huge.
This novel concept creates an open marketplace for excess warehouse space to new customer enabling pay per use billing of space in the warehouse. From an environmental point of view, shared multi customer warehouse reduces the need to build new warehouse thereby reducing the land use and the avoiding the emissions from constructing new storage facilities.
Highly customized and integrated solutions for warehouse space sharing are provided to the customers by combining it with transport capabilities and other value-added services.
Most of the logistic providers often have delivery trucks, forklifts, pallet movers and other material handling equipment’s that are idle after the working hours and especially during weekends. Access to share these idle assets using a digital platform would not only benefit other businesses but a lot of urban dwellers with weekend moves, other private events etc. Leasing these idle assets would create new revenue streams for the logistic providers.
Large emissions and related environmental impacts are avoided from the reduced need to manufacture new assets.
Researches have shown that 1 in 4 trucks on the roads in US and Europe is driving empty and the ones loaded are only 50% loaded. Real time digital freight brokerage platforms have evolved to match shippers and carriers to maximize truck load utilization thereby reducing the number of vehicles on road. The emissions from the transport fuel usage and manufacturing of new vehicles are reduced through shared vehicles.
A shared warehouse, assets, transport capabilities and workforce of a logistic provider bring about benefits to both the providers and the customers. The benefits of shared logistics are summarized and categorized into different pillars of sustainability i.e. economic, social and environment in the figure below.
The opportunity for new business creation promoting shared and collaborative economy does not come without challenges. Risk liability, insurance, transparency and workforce protection are some of the issues that still need to be addressed.