When resources are shelved or sitting idle, they’re wasted. Retailers know this and fight back with ‘just in time’ inventory management. The idea is to only have in-stock what you’re selling right now, cutting down on excess inventory that costs money to produce, money to transport, and money to warehouse.
Uber has taken the just-in-time model and effectively applied it to transportation. You generate wheels on demand, cutting all the time and energy costs associated with hailing a cab or owning a vehicle. The success of the Uber model is now being applied to the larger world of transportation and logistics, and it could change the way we think about supply chain management.
The failures of traditional logistics
Let’s look at the US trucking industry as an example of a logistical problem. As described by the Wall Street Journal, the industry still relies on actual middlemen to get things done. If an owner-operator wants to find a load for delivery, they usually have to go to a freight broker. What’s a freight broker?
It’s a person who fulfills the role of a bulletin board. They contact businesses that need items shipped, keep a list of those items, and then dish those items out to operators. It means drivers spend hours calling around to find their next load, instead of driving that load.
In short, it’s the perfect place for software to step in. For instance, Keychain Logistics has designed an app to replace brokers, hoping to bring drivers in with easy connections and lower fees.
Getting back to the point, though, having a quick way to find loads allows drivers to cut down on waste. Downtime, where drivers and trucks are sitting idle, can be reduced. By offering loads for delivery on demand, Keychain and others are bringing the Uber model to trucking.
Moving beyond trucking
The problems in trucking are indicative of the problems across the world of logistics, the breadth of which has spawned plenty of companies trying to fill in the gaps. One, Flexport, covers a huge chunk of the logistics spectrum, offering on demand freight forwarding, customs brokerage, warehousing, and insurance, to name just a few options.
Flexport’s CEO, Ryan Petersen, told Bloomberg Business, “The world wants software to manage their business. They’re used to using software to do everything and then all of a sudden they’ve got to move their freight.”
While Petersen frames his business as removing the human element from the logistics chain, what he’s really working to do is provide an automated route to solve logistics problems. That automation comes with speed and just-in-time fulfillment.
Taking advantage of the tech shift
For small businesses, the shift from relationship based services to on-demand services means two things. First, small businesses that can’t normally afford to retain the many and varied services along the logistics chain can now either get those services as one-offs or through a one-stop shop, like Flexport.
Second, small businesses along the supply chain can now use their resources more efficiently. Instead of waiting for a new shipment to come in and fill the whole warehouse, storage owners can rent out portions of space on a short term basis, for instance.
Uber has even gotten in on the action with UberRUSH, a courier service using the Uber platform. At every point in the chain, logistics businesses and the businesses they service are turning to software to cut costs and take full advantage of the resources they already have.
Capterra’s logistics software directory includes a number of packages designed to keep all the assets of a business engaged at all times. These programs are just a part of the huge shift happening in logistics to make the world a more efficient place. It’s going to be a fun transition.