Why Agile Business Models Help in a Changing Ecosystem

Whether global giant or SME, the supply chain ecosystem provides opportunities for all organisations. Particularly those agile enough to adapt to the changing environment.

In our previous article, we looked at how the future of logistics may look from a technological perspective. Today, we’ll look at the potential changes in business models that will define the industry.

Many believe success relies simply on investing in new tech. However, the reality is that these changes are only the tip of the iceberg. The fluidity of working the online revolution has created means that blindly applying pre-Internet age business models is a recipe for stagnation and, ultimately, failure.

Big Data

By using Big Data, logistics providers can identify where to improve, what to invest in and how to grow. This allows them to improve processes and maximise customer service, through faster, cheaper and error-free supply chains.

With the massive potential for useful data offered by IoT, algorithms can predict customer demand and opportunities with increasing accuracy. Used in conjunction with traditional business modelling, they can enable faster and more effective strategic business decisions.

Using information from past transportation activities, can help develop better scheduling, load sequences and ETA predictions, all enhancing customer experience. Further to this, one can use customer segmentation to provide tailored customer service levels, maximising customer retention.

However, there is increasingly an acceptance that Big Data is no good on its own. The key challenge is in ensuring data is fit for purpose by merging all the information in a meaningful and statistically relevant way.

With Big Data, this has always been the biggest danger. And with the proliferation of data sources promised by IoT and further digital integration, it will only become more challenging.

Furthermore, not everyone in the industry will be able to compete with the global giants. Particularly not in terms of data analysis and process efficiency.

There will always be room for smaller operations. Their success will rely on being able to identify specific needs at an individual level, and respond quickly to them. These players will, increasingly, look to collaborative models to enhance their business propositions.

Collaboration

The existence of middle-men is not a new phenomenon. However, it is fair to say that the internet has provided a platform for an unprecedented growth in businesses that own no assets at all.

As an illustration of this, logistics services that add value through the aggregation of information are proliferating. There have always been brokers or consultants, but the ability to harness Big Data means that companies such as Freightex, Flexe and Zupplychain can accelerate competition by becoming market makers.

These market makers are evident in many verticals. AirB&B, Uber and MoneySupermarket are all aggregators of services that add value for customers by using their platform to leverage value from providers.

It’s this capacity for one stop solutions, facilitated by the immediacy of online communication and comparison, that is at the heart of collaborative models.

As the demands for speed and cost-efficiency grow, transparent and flexible logistics services ensure supply adapts to meet demand through increased variety and competition. Centralised marketplaces allow comparison of services and prices, allowing customers to build a bespoke supply chain. Moreover, they arm customers with the ability to switch elements of their supply chain without compromising the whole.

Streamlining Processes

In addition to driving up competition, this collaborative approach highlights how shared digital systems can lead to streamlining of processes.

With, for example, a website that matches available lorries to shipper needs, based on prices and location coverage, one would expect integration on delivery information. And with the future offering the same level of detail and control across each step in the supply chain, real-time information will be visible from initial supplier right through to customer delivery.

The potential for savings all along the logistics chain is frankly massive. From empty miles and storage capacity underuse/excess, to re-arranged courier delivery scheduling, huge opportunities exist.

This model allows niche companies to continue to compete against full-solution supply chain providers. In addition, with greater transparency, each player can manage their own credibility without being undermined by partners who may under-deliver. Just as end-customers can expect to move more easily, niche providers will be able to change partners with greater flexibility.

The challenges of the collaborative models are bound up in compliance and in consistency of approach across different providers. Trust – whether it’s implicit through brand management or gained explicitly through insurance – is a vital component for these models.

And as with all new technologies, industry standards will need to evolve and become entrenched. While this is already occurring, there may be inter-operability challenges.

Adapting to the Ecosystem

To succeed, logistics companies will need to react quickly (or, indeed, proactively) to ensure service levels and pricing match increasing customer expectations.

The reality is that the drive for greater efficiency cannot be achieved without companies embracing change. Alongside this will be adopting tools required to get there – be they technology, workplace management, planning, systems or mindset.

The bigger companies in the industry will look to achieve greater traction through the diverse data harvesting potential of IoT and the forecasting it can fuel through big data analysis. However, SMEs will always have the advantage of greater agility in the marketplace.

It may well be that the potential of the sharing economy, empowered by the immediacy of online tools, can give a disproportionate strength to smaller providers who act collaboratively to access a wide market whilst maintaining the flexibility inherent in their size.

Furthermore, quick thinking, and quick-acting, organisations can succeed through fresh workplace management (such as in recruitment and training), as well as accurate identification of what technological advances (such as 3D printing, augmented reality tools or automated last mile delivery) will work for them.

Lions will always be at the top of the food chain. But the ecosystem is constantly evolving to ensure every animal, if agile or crafty enough, has its niche.

Zupplychain employs algorithmic matching of customer’s search requirements to warehouse availability to show warehouse pricing, along with an automated and structured process to progress enquiries and a cloud based system to manage customer stock in provider’s warehouses.