UBER Model Could Wreak Uber Upheaval In Supply Chain Logistics

According to a December 2014 article in the Wall Street Journal, Uber Technologies was valued at a staggering $41 billion. That’s an amazing statistic, especially considering the freelance taxi service owns no inventory to speak of. And, according to Ken Jones, the Director of Education and Applied Solutions at the Western Michigan University Center for Integrated Supply Management, if Uber plays its cards right, it could interrupt supply chain logistics in ways not previously contemplated.

 

“If you look at the Uber model, it’s similar to what third-party logistic companies have been using since the 90’s,” he says. Uber, an example of a non-asset based entity, uses brokers who connect with private drivers to move an item point from Point A to Point B. To be more precise, once Uber is notified of a person via smartphone that a needs a ride, it sends out a notice to drivers in the customer’s vicinity to see if anyone wants to accept the fare.
“Uber has tapped into a smartphone-based version” of a company without tangible assets, Jones says. While the company does not use any of its own assets to move items, such as passengers, it serves as the conduit linking the passenger to the driver. “Software allows Uber to know where the driver is and where the person is that needs a ride,” he says.
It seems Uber isn’t content with simply facilitating the movement of people from one point to the next. The company recently launched UberEats, a food delivery service in cities such as New York and Chicago. Its initial offering in California and Spain were overwhelmingly successful, sparking the expansion to the two metropolises.
What’s next?
Now that Uber has moved into the food delivery business, which market might it choose to disrupt next? Jones foresees a world where Uber disrupts the industry that moves a majority of products available across the country: the trucking industry.
“If Uber can convince truck drivers to buy into their model, like car drivers have done,” trucking companies could be in serious trouble, says Jones. If Uber does that, the move would be “brilliant. The company has very few assets but has the potential of creating a multi-billion dollar freelance market,” says Jones.
All Uber would have to do is create a derivative of the software it uses to manage its freelance crew of private taxi drivers “to empower truck drivers to see where there is a need to have something moved,” Jones says.
Jones, who himself has hired Uber drivers to transport him places, calls the company’s foray into the trucking industry “the next logical step.”
The pros and cons of an Uber World
According to Richard Wilding, Professor of Supply Chain Strategy at the Cranfield School of Management in the United Kingdom, the Uber model offers both pros and cons.