Is the sharing economy changing the procurement landscape?

The digital era is creating new paradigms as it relates to commercial relationships between business and individuals. It’s not a new concept, but it is getting stronger each day and changing the way people contract services and products. The sharing economy is a system in which its users share and exchange goods and services through digital platforms.

Uber and Airbnb are some of the most popular examples that are revolutionizing the market, with their respective target markets in the transportation and accommodation industry. Could this new business model also change how organizations contract services and products? Could the new sharing economy open up opportunities for organizations to achieve their constant search for cost optimization?

The benefits that emerging businesses in this space can bring include the provision of cost-effective services and products with reduced lead times. Additionally, these technological applications help to identify available resources in a certain geographic proximity that meets the needs of a company. Another benefit is to directly contract services eliminating the brokerage relationships characteristic of the truckload and 3PL Industry. The Uber model could change and replace traditional freight brokers. Right now there are some companies preparing to support this new business model which gives small truckers the opportunity to offer their spare capacity and resources.

Companies that are looking to optimize their costs can take advantage of this concept and implement themselves. They can leverage the idea of a sharing economy and offer spare capacity and resources to other businesses. The challenge for some companies is determining how best to establish formal sharing arrangements that rule and govern the performance of the contracted service. Companies have to consider and evaluate what type of products or services would be suitable for this kind of model. It will depend on the core business of the organization and the internal rules or regulations that the company defines to contract services in this model, like taking care of the safety, quality and lead times. For example, in the accommodation market, Airbnb could be an outlet for the business travelers, nevertheless, due to concerns of security and safety of the employees, some companies are ruling out the use of this option. In the truckload industry, companies that utilize shared service providers have to evaluate how to make sure that the contracted provider meets security requirements for the loads. Technology is leading to increased connectivity among various consumers and providers in the area of contracted services and products. The shared economy model can be an innovative way for companies to assess new options to reduce costs or/and optimize the use of their current resources. Despite these opportunities, corporations will need to proceed with a degree of caution and work to define formal arrangements that help to regulate this kind of deal.

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