Market disruptions

Evolve to survive: Adapting logistics business models

Technology drives change: taxi networks, drone deliveries, 3D print production. Are your logistics business models ready for the future?

Author: Markus Meissner
Markus Meissner
09.12.2015

Have you ever given Uber a try? So far, mainly the legal discussions in Germany and other countries have kept me from it. Now just the other day in Singapore, I was actually invited to join two such journeys. First and foremost, of course, it’s all about transportation from A to B. But quite unexpectedly, it felt rather different to me:

The cars were in top shape, the drivers were super courteous, and in both cases, the selected routes were by far the shortest (and fastest). And even more impressive: both services were available very quickly, and the payment process was completely moved to the background. I experienced efficiency and customer-orientation at a very high standard – that was my personal conclusion.

Consumer demands and technology adoption levels

Such threats to established business models are growing rapidly and drastically. Main drivers are the changed – and continuously changing – environmental conditions, both in terms of technology and society. Take a look at this interesting infographic showing adoption rates of consumer technology in the US for select devices from 1900 to date.

US consumer technology adoption
US consumer technology adoption

The taxi industry will change dramatically – regardless of current discussions and what new legal frameworks may involve. First we will see monopolies fall and at some point, eventually, autonomous vehicles will render human drivers largely redundant.

Logistics business model adaption: evolve to survive

Nowadays, excellent products and mere process optimizations clearly move to the background as part of end-to-end business model innovations. This turns established rules of the game of a multitude of industry sectors completely on their head. Resulting consequences are well demonstrated by the market capitalization of Google and co in comparison to the 30 German DAX companies as shown in the following infographic. 

Market capitalization in comparison
Market capitalization in comparison

Logistics operations of these companies also stand out: Apple nearly perfected its supply chain to support the company’s gigantic eco system, Google is running tests on autonomous driving, and Amazon’s strong backbone is based on highly efficient logistics.

Amazon also just introduced its 2nd generation drone model, by the way, and Wal-Mart requested an official authorization for drone testing in the US, too. It’s not hard to imagine the consequences that aviation-supported delivery service by the minute bears for new business models.

Thinking further ahead: advancing the shared economy

Why should anyone burden themselves with the possession of goods they rarely use – if such items are available within a radius of 20 kilometers by drone service and ready at hand in just a few minutes? And why should businesses still manage major inventories and regional spare parts distribution – if such items can be produced by the batch nearly anywhere and within the shortest time through cost-effective 3D printing methods?

Those few areas alone provide excellent examples for the drastic changes that we all may expect for global supply chains and logistics processes. Automation and resource efficiency will play major roles in this context. At the same time, today’s purchasing models will convert into quite different types of service models.

In many instances, this will result in shorter supply chains and increased demands for further flexibility. Some supply chain partners may lose previously established roles and at the same time, completely new roles will emerge in the market.

Dynamic developments to keep an eye on!

This ties in quite well with reports by SupplyChain247 (in English) and LOGISTIK HEUTE (in German) published in October about Uber’s logistics delivery service called “UberRush” that is now available in three US metropolises following its initial, one year trial. Deliveries within shortest timeframes are being offered in New York, Chicago, and San Francisco based on existing and expanded driver networks from the company’s taxi app.

Observing how quickly trends can integrate into existing marketplaces and set new standards certainly keeps all of us on our toes. We will ensure to follow these developments and share our views with you.

How do you experience these changes in your business, which areas are of particular interest to you, and how are you planning ahead? I am interested in your view on this, and look forward to your comments on LinkedIn or XING.

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