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Case Study: the Uberisation of Supply Chain ISSN (Print) : 2249-1880 SAMVAD: SIBM Pune Research Journal, Vol X, 26-31, June 2016 ISSN (Online) : 2348-5329 Case Study: The Uberisation of Supply Chain Venkatesh Ganapathy* Associate Professor, Presidency School of Business, Bangalore, India; [email protected] Abstract Uber, a technology company, provides a platform for customers who wish to source a taxi ride on their smart phones. This case study analyses the impact of Uberisation on supply chains and addresses the risk Uberisation entails for traditional necessitated innovations across the supply chain. firms that are unable to leverage the smartphone app technology. This development based on app technology has Keywords: Innovations, Supply Chain, Technology, Uber, Uberisation 1. Introduction 2. Literature Review Uber is a well-known taxi aggregator that is famous across The objective of this review is to trace the evolution of the globe for its path-breaking service process innova- technology based apps. tion. Uber, a technology company, provides a platform for The World Bank’s “ICT for Greater Development customers who wish to source a taxi ride on their smart Impact” strategy seeks to transform delivery of public phones. Due to digital matching of demand and supply, services, generate innovation and improve competitive- capacity utilization of the vehicle is optimum and this ness2. leads to an affordable pricing mechanism for the services. Software development has flourished along with the This creates a win-win situation for the taxi aggregator development of smart phone technology. Transportation services, customers and drivers. industry has benefited from this new smart phone app The Uber model has become so popular that it has technology. In a smart phone the apps provide utilities spawned several imitations of app-based services of like built in maps, traffic and parking information, public various types. Demand uncertainty has always been an transportation, taxi services, airlines and data collection. Achilles’ heel for supply chains. The Uber model has, The app has revolutionized the interactions that people through real-time digital matching of demand and supply, have with each other. In transportation, apps have managed to address the problem of demand uncertainty streamlined the information we need to move ourselves in the supply chain. and our goods3. In an era of uncertainty, implementation of strategy The role of technology in socio-economic development should not follow a ‘command and control’ approach. is at the heart of ICTD [Information Communication Ground level people must be involved in the action and Technology Development]. History has justified the they must be encouraged to provide inputs that can help role of ICTs in socio-economic development. Digital greater level of visibility in information sharing. The interactions via smart phones have pervaded not only the objectives have to be clear to everyone only then strat- developed world but also the developing economies4. egies to reduce uncertainty in supply chain will lead to Mobile phones have played an important role in success. networking society. People are able to negotiate their day *Author for correspondence Venkatesh Ganapathy to day mobility with increasing fluidity. The contextual providing services to other people. This revolution in ser- awareness capabilities of smart phone technology are vices is expected to spread to other sectors in the future enhancing this ability. Smart phone app development has like consulting, on demand doctors and video making1. redefined travel across the globe5. Doctor on call services and a dentist on call services have already been introduced in Bangalore. 3. Uberisation of Supply Chain The size and scale of operations determines if technol- ogy adoption is going to increase profitability. Turnover, Supply chain is experiencing tremendous transformation margins and ownership determine if the technology due to digital technology. Today the competition is not spend is an investment or an expense. The Indian logistic between organisations but between supply chains. It is due landscape is all about faster time-to-market as competi- to digital influence that electronic invoicing, computer- tion between the E-commerce players intensifies. Many ized shipping and tracking and automation have become organisations operate on hybrid supply chain models that essential components of supply chain. Companies like combine paper-based and IT-supported processes. Federal Express, UPS and DHL have been successful in Technologies like Radio-Frequency Identification leveraging technology. (RFID), GPS and sensors have led to more flexible, open, The business model of Uber has now become so agile and collaborative digital supply chain models. Digital popular that many supply chain practitioners are talking supply chains help in automation of business processes about the Uberisation of supply chain. The Uberisation and lead to greater flexibility of organization. of services will become the norm in the future. The Companies need to internalize digital supply chain Internet-based matching platforms have reduced the models as an integral part of the overall business model transactions costs1. The People-to-People economy is and organizational structure9. This helps in resource one in which self-employed individuals offer services management and better capacity utilization. Fleet in transportation, accommodation, cleaning and dining management is more efficient. Warehouse throughput through platforms that connect demand and supply. This increases as there is quality information about demand. economy will increase the efficiency of the economy as Fill rates are better optimized. competition intensifies and there is optimal allocation The success of Uber supply chain can be attributed and use of resources. to the right service available at the right time at the right Monitoring of every link in the supply chain has quality and right price. How can Uberisation benefit become a distinct possibility as there are automated noti- supply chain? The Uber phenomenon not only improves fication systems that can send a single message to many asset utilization but also labour utilization12. The mobile players. App technology has made Email communication app captures the data and transmits it to interested par- somewhat redundant. Whats app is now available for ties in real-time. There is less paper work. GPS tracking free and so there is mass consumption however it will be has become the de-rigueur now. The information has interesting to see the consumer reaction if it becomes a to be used intelligently and the key is in creating smart chargeable service. networks that provide high quality accurate information. If we look at Uber, it does not provide the ride - it It has been predicted that smartphone apps will be used merely connects the driver and the customer as a plat- to connect the entire supply chain - including supplier, form6. The transaction cost is the sum total of cost of manufacturer, distributor and consumer in real time. seeking and sourcing information, cost of bargaining and The apps will help reverse logistics, warranty and order cost of enforcement. These technology-enabled services management. have empowered the customer who can write an unfa- Uberisation of supply chain is irresistible from the vorable review if the service was unsatisfactory. These standpoint of asset utilization. Research and innovation platforms are proving to be efficient because they enable policies have to be centered of socio economic change - in the reduction in information asymmetry between the demographics, resource consumption, consumer expec- different actors in the supply chain1. tations and technological disruption. In the future, focus How is the emerging economy different from the will be on value added manufacturing with technology one that preceded it?14 It is the sheer scale with which playing a significant role. Cost reduction will be achieved self-employed individuals (or micro entrepreneurs) are by reducing time to market by shortening supply chains. Vol XI | June 2016 SAMVAD: SIBM Pune Research Journal 27 Case Study: The Uberisation of Supply Chain Production volumes will be more synchronized with companies assume responsibility for assigning loads and market demand. Technological advances like 3D printing, monitoring driver operations and safe delivery of the artificial intelligence, and internet of things will make goods. Independent truck owners can contract directly their presence felt. with the shippers. However, due to the difficulty of obtaining loads at the right time, the independent truck 4. Uberisation of Logistics drivers have to depend on a broker who helps the small operators to find loads. As aggregation of demand is done Services by brokers, inefficiency often creeps in13. India’s logistics sector is highly fragmented and tech- In such cases, the apps can provide a low-cost search- nology adoption in these services is rather tardy. But able platform for loads and help the drivers to complete logistics service providers have now realized that technol- the booking process via smart phones. The apps put buy- ogy will help them win a competitive edge in the market. ers and sellers in direct contact with each other. Trucking Globalization has only made technology adoption all the apps will encourage freight brokers to become more more essential. competitive and improve the quality of their services. It The mobile platform in logistics services
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