The sharing economy is set to have a major impact on organisations in the coming years, with PWC estimating its value will reach £335 billion by 2025. As costs associated with developing new products and services continue to rise, the sharing economy can play a role in helping organisations to share excess resources, tools and skills to collectively maximise efficiency.
Today, we’re already seeing elements of this taking place, with companies sharing knowledge, outsourcing innovation and crowdsourcing projects to a much broader group of suppliers. In the future, these suppliers could range from traditional competitors to contractors, or even freelancers, creating a much more dispersed landscape of suppliers and buyers, further complicating today’s supply chains. With a much broader range of suppliers, organisations need to make sure they are prepared to cope with the complexities the sharing economy will introduce. Those who can’t will fail to keep up with the supply chain of the future, missing key opportunities to save and innovate.
The sharing opportunity
The sharing economy as most people know it has traditionally been associated with the likes of AirBnB and Uber. However, there is a world beyond the consumer applications, which businesses have begun implementing to ensure they spread resources to help cut costs. Airline alliances, for example, have been doing this for years, sharing planes and chartered flights when space goes to waste. More recently, Marriott converted empty conference rooms into rentable work spaces through the online platform LiquidSpace, giving cheap square-footage while ensuring that empty space is providing value.
At our Ivalua NOW event in Paris earlier this year, University of Grenoble Alpes professor, Natacha Trehan outlined how the sharing economy will impact the cutting edge of innovation too, giving the example of NASA crowdsourcing technology to manage human waste in space. The bid, named the “NASA Poop Challenge”, offers anyone the chance to pitch for the contract. We will also see more “co-opetition”, as competitors share resources and equipment to maximise efficiency, or even rely on each other to provide specialised components. For example, mobile giant Apple relies on its competitor Samsung to provide most of its OLED screen tech.
Prepare to share
While many organisations may not be planning to enter the sharing economy today, more and more will look at ways to share resources and unlock innovation. It’s inevitable that it will become an important part of the future supply chain. The sharing economy will force organisations to be much more aware of the supply chain, and how they identify opportunities, mitigate risks and ensure that business leaders can make informed decisions when purchasing.
Supplier visibility will be absolutely vital in keeping up with the complex sharing economy, whether it’s identifying new suppliers or finding opportunities to share resources. Companies need to start preparing for a world where suppliers aren’t just chosen from a roster of vendors, and where organisations must compete to woo the most innovative suppliers so that they can collaborate and share resources. This means no longer looking at suppliers solely as providers of goods.
Community management teams will be needed to understand the ecosystem and engage with potential suppliers to identify areas where parts, materials, employees and devices can be utilised to benefit both parties. This in turn can demonstrate that you are worth supplying to and can offer something in return; whether it’s shared equipment, an innovative final product or a lucrative incentive scheme for partners.
Laying the foundations with smart procurement
Procurement will be vital in providing the level of visibility needed to enable the shift to the sharing economy. Over the last few years, it has evolved from a department focused solely on driving down supplier costs, to a core part of the business function. Today, it’s responsible for monitoring the supplier landscape, managing risk, identifying opportunities and continuously assessing the supply chain to find value-adds in areas such as sustainability and even R&D.
As such, procurement is ideally placed to help manage the sharing economy. Smart procurement technology provides organisations with the tools and insights required to adapt to the growing influence of the sharing economy. Adopting it will enable greater collaboration with suppliers, allowing them to easily pitch for contracts, whilst also providing a much clearer view of the supplier landscape that’s updated almost instantly, so that opportunities and risks can be assessed effectively and accurately.
By taking a smart approach to procurement, not only will organisations will be much better prepared to navigate an increasingly fluid supplier landscape, they will be one step ahead of competitors when the sharing economy comes calling. This will give organisations the advantage, allowing them to effectively collaborate with peers and share resources, ensuring the sharing economy can be embedded within supplier management from the offset.
By Alex Saric, Smart Procurement Expert at Ivalua