Executive Briefings

Opinion: The Shared Economy Could Kill Global Supply Chains

After the second World War, companies looked outside their walls and built global supply chains to create the scale they alone could not produce. Now, we are in a next phase of manufacturing, where managers are beginning to explore outside their supply chains to unlock the power of the shared economy.

This change is occurring faster than we can fully understand the implications of the last business shift. For the past fifty years, businesses have fragmented their supply bases into increasingly more complex structures. The rapid increase in corporate production was enormous and this shift to supply chain-based manufacturing has in part driven the vast increase in the consumer lifestyles enjoyed by the world's middle classes. Each step of the chain adds a few more dollars worth of value before moving goods along to the next company. Each company knows its place in an industry which busily produced the consumer goods in a neat, hierarchical pattern.

But now the new productive philosophies stemming from the shared economy challenge all these notions. New entrants are tapping into unused assets, they are forging new contacts across sectors and, in some cases, entirely re-configuring mature industries.

The question is: Will these new ideas replace our old notions of a structured supply chain?

For the past twenty or so years, the world has grown accustomed to the global supply chain. An increasing number of graduates are specializing in the field, industry analysts are studying corporate supplier relationships and even the press is beginning to unpack complex value chains.

But just as we are growing familiar with these business activities, they are facing another revolution. The shared economy has reshaped the lives of consumers. Uber and AirBnb have become integral parts of the technology landscape, just as smartphones ingratiated themselves into our daily lives.

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This change is occurring faster than we can fully understand the implications of the last business shift. For the past fifty years, businesses have fragmented their supply bases into increasingly more complex structures. The rapid increase in corporate production was enormous and this shift to supply chain-based manufacturing has in part driven the vast increase in the consumer lifestyles enjoyed by the world's middle classes. Each step of the chain adds a few more dollars worth of value before moving goods along to the next company. Each company knows its place in an industry which busily produced the consumer goods in a neat, hierarchical pattern.

But now the new productive philosophies stemming from the shared economy challenge all these notions. New entrants are tapping into unused assets, they are forging new contacts across sectors and, in some cases, entirely re-configuring mature industries.

The question is: Will these new ideas replace our old notions of a structured supply chain?

For the past twenty or so years, the world has grown accustomed to the global supply chain. An increasing number of graduates are specializing in the field, industry analysts are studying corporate supplier relationships and even the press is beginning to unpack complex value chains.

But just as we are growing familiar with these business activities, they are facing another revolution. The shared economy has reshaped the lives of consumers. Uber and AirBnb have become integral parts of the technology landscape, just as smartphones ingratiated themselves into our daily lives.

Read Full Article