Advantages and Disadvantages of Ecommerce in Supply Chain

With ecommerce becoming a new trend for companies around the world to manage their supply networks and delivery products to their target customers, retail stores now face the possibility of being gradually replaced in the process. Compared to normal retailing, ecommerce generally offers customers more convenience and better prices. At the same time, companies are able to reach more customers and produce and sell their products at lower costs. However, for every one of these aforementioned advantage, there is at least one disadvantage accompanying it, and companies should seriously consider both when deciding whether or not ecommerce is a good strategy.

Geographical Limitation vs. Product Selection Limitation

With the absence of a physical location, ecommerce allows companies to sell goods to practically anywhere around the world and greatly expands its reach to customers. In addition, it can help attract customers by eliminating the need for them to travel to a store, thus making shopping easier and more convenient. However, these advantages of online stores also place limitations on what companies can sell online. For instance, the fact that anyone can access an online store does not mean that a company can sell and ship its products in a feasible way. Many products can be damaged during shipping, and perishable items will spoil if delivery takes too long over too much distance. Furthermore, the convenience of not having to leave one’s home when ordering a product can also be offset by the time it takes for that product to be delivered.  Even with the fastest delivery speed available, many products very often take longer to arrive via ecommerce when compared to shopping at a physical store.

Product Information Transparency vs. Increased Competition

Ecommerce gives customers easier access to a lot of information for the products they are interesting in buying. Compared to regular stores, where the amount of information one can obtain pertaining to a product is often limited to the availability of sales representatives in these stores, online stores can provide much wider range of product information in the forms of customer reviews and price comparisons. Because of this, customers become much more informed when making purchasing decisions. However, this empowerment of knowledge can also result in much tougher competition in ecommerce as compared regular retail. Product information transparency means that companies must offer more competitive prices and higher quality than the competition in order to be able to sell their products at profit and stay in business. Product reviews by customers also means less control in product marketing for companies; some negative reviews may seriously affect sales.

Less Need for Labor vs. Lack of Human Touch

Online stores can stay open all the time, and accept and process orders automatically with less need for human labor. This, when combined with the fact that no physical store is needed, can save a company a lot of operating expenses and increase margin. However, this cost-saving feature of ecommerce can also become a weakness in some situations. For example, many customers actually value the services that they get when shopping at a store just as much as – if not more than – the price and quality of a product. To these people, the act of adding products to the shopping cart and proceeding to checkout in an online store lacks personal touch and is therefore less appealing. Companies need to seriously consider their target customers when deciding whether or not more automation is a good strategy.

Conclusion

As show above, each advantage of ecommerce is accompanied by at least one disadvantage. Yet, some companies have managed to successfully leverage the former and avoid the latter, while others have had less success. Can you think of a few companies that overcame the disadvantages? How did they accomplish it?

 

Sources:

1.      http://ecommerce.about.com/od/eCommerce-Basics/tp/Advantages-Of-Ecommerce.htm

2.      http://ecommerce.about.com/od/eCommerce-Basics/a/Disadvantages-Of-Ecommerce.htm

 

Challenges in Supply Chain

Deloitte recently conducted a survey of 600 executives at manufacturing and retail companies to understand their perception of the risks and challenges they are facing and the strategies they are deploying. The survey was collected from various large and small companies in a variety of industries, and from countries around the globe, with the majority located in North America, Europe and China.

“The survey’s key findings include:

• Supply chain risk is a strategic issue.
• Margin erosion and sudden demand changes often cause larger impacts.
• Concern about extended value chain.
• Supply chain risk management not normally considered effective.
• Companies face a wide variety of challenges.
• Many companies lack latest tools.”[1]

Diversity in the chains and markets

One of the major challenges for executives is to understand the nuances of the industries. What works for Amazon may not work for Amazon Fresh, there is huge difference between the inventory management for perishables versus managing other goods in the market. Even the markets where we are trading has a large impact on the profits and trends of supply chain. Executives have to keep a close watch on what the competitors in the same industry are doing and see how they can improve their processes and stay ahead of the competition. [2]

Government Regulations

It is said culture eats strategy for lunch, it would appropriate to say policies and regulations each innovations for lunch. No matter how far ahead of competition technological innovations can take us, government policies and regulations restrict a lot of these.

A classic example of this is the Amazon drones for delivery. [3] The Federal Aviation Administration grounded Amazon and did not allow them to test drones for delivery of products in a faster and efficient manner. Although Amazon has the infrastructure and capability to support the Prime Air services that would ensure higher customer satisfaction, it is going to be a few years before this can become reality due to the air safety regulations that are to be considered. There are several considerations that need to analysed before we can see this in reality.

Despite the advancements we can clearly see that, industry specific challenges and government regulations pose a great challenge to the executives to formulate strategies. Evidently, there is no one size fits all formula for success in supply chain. It takes the experience and keen eye for application of latest innovations to obtain these small edge over competitors and make them reflect as wins in profit.

If the world is shifting towards becoming better at supply chain and expanding horizons to serve global audience, it is only logical to assume we will see more innovations in supply chain logistics that reduce wait time, reduce delivery time and ensure bigger gains for consumer and manufacturer.

---

[1] http://www2.deloitte.com/us/en/pages/operations/articles/supply-chain-risk-ripple-effect.html  - "The ripple effect: How manufacturers and retail executives view the growing challenge of supply chain risk."

[2] http://www.wto.org/english/res_e/booksp_e/aid4tradeglobalvalue13_part3_e.pdf

[3] http://arstechnica.com/tech-policy/2014/06/faa-grounds-amazons-drone-delivery-plans/

The next big thing: Drone Delivery Network

Introduction

Amazon has unveiled the PrimeAir. The goal of this new delivery system is to get packages into customers' hands in 30 minutes or less using unmanned aerial vehicles like drones and mini helicopters. We believe that It is the next big thing in delivery technologies.

How it works

After a customer places an order on Amazon's site and selects Prime Air as the delivery method, which promises 30-minute service, the PrimeAir begins.

From there, that order gets a special mark indicating PrimeAir treatment, moving down a special conveyor line at the end of which sits a small drone, maybe 2-feet wide plus some wing span that carriers helicopter-type blades on each side. The drone holds a special small container into which the picked product had been placed, and off it flies, arriving some minutes later at the back patio of a consumer.

The drone drops off the package, and quickly heads back to its DC base. It does not appear to be interested in a tip, nor require a signature. 

Demo

Here is a live demo of drone delivery network.

Safety Issues

The FAA is actively working on rules and an approach for unmanned aerial vehicles like drons and helicopters that will prioritize public safety. Safety will be the top priority, and all drones will be built with multiple redundancies and designed to commercial aviation standards.

Question:

Suppose the drone delivery technology will be ubiquitous in the near future and nearly every supplier can easily deploy it in delivery, is building its own drone delivery network better than outsourcing it to a specialized drone delivery service company?

References:

http://techcrunch.com/2014/08/28/google-challenges-amazon-for-drone-supremacy/

http://www.industryweek.com/supply-chain/amazon-unveils-futuristic-drone-delivery-plan

3D Printer and the future of Supply Chain

3D printing has come a long way in an extremely short span of time. Initially built by Charles Hull in the 1980s as a tool for making basic polymer objects [1]. Today, the technology has made impact on several manufacturing areas; from building aircraft and race car components, to human organs and prostheses.

Now, the world is beginning to understand the potential of 3D printing for cost-effective, efficient and environmentally-friendly manufacturing. It is little wonder that analyst firm, Canalys see the global market for 3D printers reaching $16.2bn (£10.3bn) by 2018 [2]. With increasing adoption, the technology will revolutionize manufacturing as well as the supply chain and logistics processes which surrounds it.

Though manufacturing in certain locations, for example in China and India, can be low-cost, managing a global supply chain network isn’t, especially considering the transportation costs involved. 3D printing can reduce these costs by enabling businesses to station local manufacturing centers closer to every regional markets, reducing the length of the supply chain and helping towards a green world. Regional manufacturing centers can also improve inventory problems, especially for the industrial spare parts and consumer sectors selling highly-customized products. 3D printing technology will enable manufacturers to easily produce goods to order, helping save money and minimize waste.

As the cost of 3D printing decreases, we will see a lot of manufacturing businesses emerge, responsible for providing cheap products such as small replacement parts. 3D printing will eventually replace traditional manufacturers to only producing highly technical and specialist products. Less specialist products will be manufactured by 3D shops, while cheap one-off manufacturing will eventually be printed by consumers themselves. In the future, simple spare parts, plastic toys or cases for smartphones for example, will primarily be sold globally by downloading a 3D printing file.

In a world where consumers want products fast, 3D printing will make it possible for businesses to consistently deliver goods in tighter timescales. It will also help to meet customers’ growing demands for personalized products. Personalization is already happening in the clothing and footwear market; consumers can walk into a store, for example Nike, customize items and take them home on the same day. In the future, 3D printing might even be used to build personalized furniture or complex goods like vehicles for same-day collection too.

Much of what’s been outlined is still some time away but it’s clear that the potential increased pace of trade brought on by 3D printing and the new industry models that are created will require businesses to re-evaluate their supply chain processes. Manufacturers will need to make their supply chains far more agile and able to operate in real-time to cope with faster product design and production cycles.

There is a concern that this form of manufacturing, in particular with regards to consumer goods, will fuel greater consumption and waste. But the materials used for 3D-printing these goods are mostly heat processed recyclable plastics, making it possible to create a reverse supply chain approach. Customers can recycle used, damaged or unwanted goods by taking them back to their local 3D print shops, so that they can be melted back down and made into something new and useable once more.

My question about 3D printer is that is this techniques would be restricted to only customized product? Because batch manufacturing will still be more effective and low-cost. How to balance the reduced transportation cost by regional manufacturing and the increased cost of goods by 3D printer?

Reference:

[1] http://cerasis.com/2014/02/10/3d-printing-supply-chain/

[2] http://www.theguardian.com/sustainable-business/2014/nov/25/how-3d-printing-is-set-to-shake-up-manufacturing-supply-chains

[3] http://www.industryweek.com/emerging-technologies/how-3-d-printing-could-redefine-supply-chain

[4] http://supplychainminded.com/3d-printing-and-the-supply-chains-of-the-future/

I believe the children are the future: Harnessing Human Capital and Encouraging Technological Advancement

Supply Chain Management in the 21^st century is inclusive of increasing exposure to innovation and manufacturing processes. This exposure is to be given to children and communities who are not likely to gain this experience otherwise. Kitchen-Table Industrialists (The New York Times, 2011) explains how various technological companies maintain this idea and work towards making exposure to technology a reality.

As the title states, taken from a popular Whitney Houston song, “I believe the children are the future, teach them well and let them lead the way.” Investing in exposing children to technology and innovation will give America a jump-start on keeping up with manufacturing trends. Currently, children in low-income families do not have access to Internet. Specifically, only 33% of children in homes with an income of $15,000 own computers.[1] The National Center for Children in Poverty states that 22% of ALL children live in families with incomes below the federal poverty level ($23,550).[2] As we become a much more technological integrated society, stemming from our workforce, many children are at risk of being left behind.

Today, one of the biggest priorities for America is remaining on top of the manufacturing industry through innovative means. However, it is noted that Germany and China tend to have more supportive environments for incubating manufacturing companies at every stage[3]. In 2009, the White House began to remedy this with the creation of the Office of Social Innovation and Civic Participation. The stated approach of this department is, “The Office of Social Innovation and Civic Participation is focused on developing policies and programs to accelerate economic recovery and create stronger communities. We do this by harnessing human capital and facilitating financial capital.[4]” I believe harnessing human capital begins with youth education and exposure.

I will profile a variety of technology-based companies whose sole intention is to get technology into the hands of children and those who may be technologically challenged.

Here goes. . .

LittleBits Electronics

LittleBits Electronics provides kits that enable individuals to prototype and learn with electronics. “It’s an ever-growing library of electronic modules that snap together with magnets so you can invent anything.[5]”

Tech4Kids Inc.

The stated mission is to create innovative products that put smiles on the faces of children while providing a quality business opportunity for our customers, team and partners. To achieve this Tech4Kids infuses classic play with exciting brands and fresh innovation.[6]

Black Girls CODE

Black Girls CODE is a non-profit organization with a focus on introducing girls (ages 7-17) of color to technology and creating the next generation of tech leaders and creators. Currently there are over 2,500 students with 7 domestic chapters and 1 international chapter in Johannesburg, South Africa. [7]

Computers4kids

Strives to improve low-income youth’s computer and learning skills through caring mentorship, structured training, a vibrant learning environment, and access to a computer at home. The program uses computers as a catalyst for youth to challenge themselves, become engages in their own learning, and realized greater possibilities academically, professionally, and for their community. [8]

Well-known companies that should be mentioned[9]

Best Buy

Provides funds for schools to bring interactive technology into the classroom. So far Best Buy has donated over $13 Million through the Best Buy Teach Awards

Apple Inc.

Created a program called 1 to 1 that works with grades K-12 to provide each student with access to wireless laptop for school and home.

AT&T

Committed $1.8 billion to philanthropic programs supporting education: community development; the arts, health and human services, and technology access in communities across the country.

Finally, I wish these organizations much success. Additionally, I hope my classmates take the time to invest in these organizations or develop human capital centered firms of their own. With the understanding of the importance of technology and America’s desire for innovative improvement for supply chain networks, how can we create more incentives, policy based or otherwise, for larger companies to invest in youth education and technological exposure?

---

[1] http://files.eric.ed.gov/fulltext/ED467133.pdf

[2] http://www.nccp.org/topics/childpoverty.html

[3] http://www.fastcoexist.com/3018131/the-4-technology-trends-that-could-bring-back-us-manufacturing-and-innovation

[4] http://www.whitehouse.gov/administration/eop/sicp

[5] http://littlebits.cc/intro

[6] http://www.tech4kids.com/10464/content/content_id/195117/Mission-and-Purpose

[7] http://www.whitehouse.gov/blog/2014/02/28/connecting-kids-diverse-backgrounds-tech-skills

[8] http://www.computers4kids.net/

[9] http://www.scholastic.com/parents/resources/article/parent-child/companies-care-about-kids

What Is Holding The Internet of Things Back

The Internet of Things (IoT) is a fast growing field that could become the one thing to revolutionize the world of business operations, including supply chain management. Imagine how much more efficient and profitable a company would be if it had technological capabilities to do such things as: track demand and supply in real-time, make more accurate forecasts, reduce lead times, manage inventory in a more just-in-time fashion, and achieve greater production efficiency and customer satisfaction. This may not be a dream anymore, as rapid advances in technology have enabled companies around the globe to achieve greater operational efficiency than ever before. But despite the promises that such technologies bring, there still exist challenges that must be overcome first. Below is a brief list and description of four main issues that are holding IoT back from achieving its true potential.

Data quality and integration

Some of the biggest challenges facing data collection include ensuring that enough good data is collected as well as having the ability to integrate data from multiple sources. Data collection devices such as sensors cost companies but just the devices themselves, but also expenses associated with installation, maintenance, connectivity, and power. With the total costs quickly adding up, implementing good data collection systems can become a huge financial barrier for many companies. Additionally, some data are just out of the reach due to existing technologies’ limitations and environmental constraints. Furthermore, many companies still use legacy systems that do not have Internet connectivity, making it difficult for data integration.

GE Power & Water is one example of a company that is facing data quality issues. It is investing heavily into monitoring and alerting systems that use data collected from various sources and in different forms, such as those generated from customers’ operational data and their inventories. Although these data are enough for operational improvements, GE is not satisfied yet with their level of timeliness, completeness, and accuracy. In order to improve this issue, GE is looking for ways to automate the data collection processes that are currently still being done manually, and to offer management better visibility of company data through the use of a data quality portal that tracks the most pressing problems that the company needs to solve.

Network limitations

Most data are collected, transmitted, and stored via cellular networks that continue to expand an ever increasing coverage area over the years. However, these networks are mostly still concentrated in and near big metropolitan areas. There are still many places where networks – and data – cannot reach. As a result of this, companies are limited in their ability to gather data from areas not covered by these networks.

Moreover, network capacity also plays a limiting role on what a company can achieve operationally regardless of its technology. For instance, ConocoPhillips spread its radio towers across Texas to transmit sensor data for the purpose of optimizing gas and oil well production. However, the issue is that the network transmitting all this data cannot handle the amount of data needed for the company to conduct real-time analysis. As a result, this lack of supporting infrastructure impedes the implementation of newer technologies.

Another issue that many companies need to face, when attempting to incorporate the Internet of Things into their product designs, is that the network becomes a crucial part of the customer experience and perception of these products. Yet, networks are outside of these companies’ controls, effectively turning this into an issue of outsourcing of company brand from the customer perspective. Unsuccessful use of network can cost a company more than just the network expenses as a result.

Data integration versus analysis

Data analysis certainly does require expertise from data-savvy people in order to generate useful insights for decision making support. However, all of these analyzed data generate limited value if they are isolated and stored in silos, instead of being integrated to provide a bigger picture for an organization to use. This situation is exactly what a lot of healthcare organizations are struggling with and trying to fix. For instance, hospitals often use different types of data in different departments, but when these are not used together to provide a complete picture of patients’ health, a lot of resources are wasted in healthcare delivery inefficiencies such as duplicate tests and medical errors.

Data security inadequacy

Although the information technology (IT) industry has had nearly two decades of experience in data security, this experience does not translate as well to the Internet of Things world of operational technology (OT). Simply adding more IT security does not solve OT problems. Compared to IT datacenter security, OT involves much more frequent physical maintenance and repairs of machines, which necessitate that the amount and type of security measures needed be different. An example of this is the monitoring system used on large power plant turbines that can continuously keep track of the activities of maintenance crews and decide whether or not these activities pose security threats.

 

Questions: Do you feel that the Internet of Things has enough potential to generate good ROI for companies despite all of the existing challenges mentioned above? If not, how long do you feel it will take for all of the necessary supporting infrastructures to be in place before IoT can start showing its true promise?

Source: http://www.informationweek.com/strategic-cio/it-strategy/internet-of-things-whats-holding-us-back/d/d-id/1235043?page_number=1

 

Privacy, the Internet of Things, and Blenders

Privacy, the Internet of Things, and Blenders

From this:
 
To this:


One of the course readings for this week was proclaiming the virtues and business advantages of the internet of things.  How more and more devices are going to be connected to the internet, giving manufacturers more information to design and produce better products.  While there certainly are some advantages to be had (for both producers and consumers) there are also some potential issues, specifically privacy.  What if I dont want my brand new Blendtec blender to message Blendtec headquarters to tell them about how I use my blender?  Sure they could use that information to learn that I never use anything besides the pulse buttons which is something they could then incorporate into future designs, but at what cost?

The article gave the notion of privacy mere lip service before going on about all the advantages the internet of things provides.  One sentence in a whole article that said something to the effect of (paraphrased) "while there would be privacy implications its no big deal".  To some it might not be, but to others it certainly is.  During Thanksgiving I was presented the opportunity to ask my very opinionated family what they thought.  For the example I used the blender telling Blendtec headquarters about your blending usage/habits.  This is probably one of the least intrusive privacy violations out here, especially compared to communicating toilets, communicating pill dispensers, or communicating bathroom scale. 

My mother had the strongest opinions about the blender.  She simply did not want a blender knowing anything about her, and used the word "creepy" atleast six different times as she explained why she didn't want her blender on the internet.  In her view that is totally private (whether important or not).  Even though she acknowledged it would help Blendtec design better blenders at less cost, should would rather pay slightly more and have them find some other way to determine customer preferences for blender usage. 

Conversely my cousins really didn't care at all.  This could partially be a generational thing, as me and my cousins my age have all grown up with connected technology.  Our definition of privacy may be totally different, as noted by my aunt who cited the stuff we post to Facebook.  It would seem we want privacy in our lives, but we also want the ability to share whatever we want via un-private channels, even if that concept seems entirely foreign to our parents.  I would rather have a better blender (higher quality at the same price) than a private blender.  Personally I don't care who knows about my blending habits.

As companies go forward they should do more than just brush off privacy concerns.  While there are certainly advantages for producers, manufacturers, and suppliers, these should be weighed with the value of privacy to consumers.  It is clear there are many out there that consider their privacy a priority, and the will let companies know that by how they spend their money.

My question to you is what devices in your home or that you use frequently would you be comfortable having connected to the internet?  Where would you draw the privacy line?  Is it with communicating blenders?  Communicating lamps?  Communicating toilets?  Communicating chairs?  Would it bother you if companies knew how much time you spent sitting around or how many times you flushed during your last visit to the loo?  As we go forward we may have to actually answer these questions as we look to purchase products, so start thinking about it now!



In case you haven't seen it yet, check out Blendtec's "Will it blend" series.  His grin at 1:56 is just about the most perfect thing ever:

The Biggest Innovation for Global Supply Chains: Reducing that MPG

Global supply chains move goods all across the globe many times over. A truly global supply chain will likely incorporate various modes of transportation: plane, train, ship, truck, and car. Transportation costs are often times a massive cost for organizations running global supply chains. Therefore, innovation in cheaper transportation methods will be a necessary future step for all supply chains interested in cutting costs.

With new services like Uber and Lyft looking into the delivery space, and Amazon's Drone delivery service, we see various stakeholders stepping up to meet the demand for cheaper delivery. Companies like Tesla and SpaceX are pushing other boundaries - one leading the charge into alternative fuels for mass market automobiles and the other toying with outer atmospheric travel for a quicker delivery method around the globe. One interesting source of data to support this claim is the trend of vehicle miles per gallon.

         ...

As seen above, MPG from 1975 - 1979 (5yrs) improved 2.8 MPG's. MPG from 2009 - 2013 (5yrs) improved only 1.6 MPG's. This data seems to show that transportation efficiency improvement is slowing in its traditional form. For truly innovative supply chain approaches to change transportation costs must be reduced via alternative and creative means, such as using services like Uber,  drone delivery, or outer space travel. 

http://www.fueleconomy.gov/feg/pdfs/420r13011_EPA_LD_FE_2013_TRENDS.pdf>.

The Uber Concept - Supply Chain Management in the 21st Century

Last weekend, I went to San Francisco for a small conference organized by my German scholarship organization. As many of us (including myself) had traveled across the whole continent for this purpose, we were given some time to explore the city and its surrounding areas. My group had decided to hike on Land's End trail, but in order to do so, we first had to get to "Lands End Lookout", the starting point of our tour.

The only possible way of transportation was by car - neither subway nor bus would have brought us there. As taking a cab was considered too expensive, some local students suggested to use Uber instead. This was the first time I did not only read about this new business model, but actually saw it operate in real life.

For those of you who are not familiar with Uber, I will briefly describe the idea behind this company.

Source

• Key concept: connect P2P (people to people) for a ride via a smartphone app, i.e. a driver and a passenger
• Unique features: 
• First P2P search engine in the world
• Drivers use their own cars
• Automatic payment via app (and no tip necessary)
• Procedure:
• A person wants to get from A to B and opens the Uber smartphone app
• Optional: rough calculation (range) of trip costs with "Fare Quote" (integrated in the app)
• She chooses the appropriate car service (a capital "U" indicates a relatively more expensive service)
• uberX = low cost Uber (e.g. Toyota Camry)
• UberBLACK = original (expensive) Uber (e.g. limo)
• uberXL = low cost Uber for groups (e.g. Toyota Highlander)
• UberSUV = premium Uber for groups (e.g. Cadillac Escalade)
• uberT = normal taxi (mainly in NYC) - grab a cab via the Uber app, but pay the taxi driver without the Uber app
• Then, she sets her pickup location (thanks to GPS and GoogleMaps, this is very easy).
• According to the type of service she has chosen, the closest (unoccupied) car will be matched and confirmed; the respective number plate and the driver's name pop up on her smartphone screen along with the estimated time of arrival and the most efficient (and therefore most likely) route.
• The car arrives. She gets in and tells the driver where to go.
• As soon as the car reaches the desired destination, the passenger's credit card will be automatically charged and the receipt sent to her via e-mail.

As the topic of this week's class is supply chain management in the 21st century, my intention was to write about something new and innovative, something that probably most of us do not even think of in this context. When I reflected on my Uber experience, I realized out of a sudden that the Uber concept actually could be interpreted as a new kind of supply chain. Let us go back to the definition of supply chain management we were provided with in class:

Supply chain management is the profitable 

organization of the flow and storage of 

materials, in-process inventory, finished goods, 

financial resources, and related information 

from point of origin to point of consumption and 

disposal to satisfy customer requirements. 

Obviously, we do not have a tangible product but a service, which is the car ride (and maybe a nice chat with the driver, a cool bottle of water and some sweet snacks). Inventory management is not even necessary anymore - as the service is available at any time and in any place (of course only in the cities where Uber operates) thanks to the real-time matching performed by the smartphone app. The same is true for forecasting (the emphasis here is on the "real-time" aspect). 

Information about the estimated price of the product can be accessed by the potential passenger using "Fare Quote", and the information on the actual price of the ride is delivered via e-mail after its completion. And, what is more, the implied financial transaction (payment) is fully automated. 

Here, we have a great example for a supply chain network - extremely complex in its entirety, but astonishingly simple due to its direct connections between two points - the driver and the passenger. 

This leads to another interesting feature - the company itself. So far, I have been talking about the drivers and passengers only. The question is - how does Uber come into play, apart from the fact that it provides the technology required for the operation of these numerous individual services? Well, there is a commission drivers have to pay to the company. Usually, it is 20% (for San Francisco it was just raised to 25%). This means that you might not even make money as a driver. The reason why still so many people drive for Uber is the following: When they offer their services during peak times, the price for a ride is a little higher and therefore, at least a small incentive exists. 

It is now time to summarize what we have discovered so far: the P2P business concept (and presumably not only in the realm of services) offers a new understanding and way of supply chains and SCM. By integrating individuals into the business strategy (if the company is big enough), a market is being created that basically regulates itself (and generates money). 

The concept reminds me of Adam Smith's theory of the invisible hand - only that in this case the hand is not invisible but visibly collects the profits (parts of the aforementioned generated money).

As always, there are several questions that still need to be answered.

• A company's most important goal is usually to grow. Uber, however, does not seem to follow this simple rule. While its competitor "Lyft" (only operating in the U.S.) incentivizes its drivers to work rather more than less by reducing commission the longer they offer their services, Uber sends the opposite signal to its drivers: as the commission is 20% no matter how long they work, it is inefficient for them to drive outside of peak times. Why does Uber NOT change the incentive system as the whole strategy relies on a sufficient amount of people who are willing to sign up as drivers? As soon as the Uber hype comes to an end, the company will face serious "inventory" and "delivery" problems. 
• Apart from the commission the drivers have to pay to Uber - how does the interaction work? My research tells me that the company uses mainly automatically generated to answer questions or to deal with concerns/problems of its "direct customers" (the drivers). Apparently, this is not a good idea, as many issues cannot be solved in an automated way. Here, the mainly technological approach results in the dissatisfaction of Uber drivers. In SCM terms the question would be: why does information not flow smoothly in this context between the "producer" and the customer? Are there limits to the use of technology in SCM? Does customer service - or should it - always imply human interaction?
• And finally - who actually is, in such a complex supply chain network, the customer? At first, I thought the passengers are. But after having written this blog entry, I am convinced that I better revise this initial evaluation of the system. The drivers are customers as well - customers of the company with the (in)visible hand... The less an institution or company is visible, the less accessible and approachable it is. This feels a bit like the set up for a psychological experiment where people you never see let you figure out how to deal with a new system in your habitat without intervention. Only that they claim money from you if you decide to become part of it...

To end on a more positive note, let me show you a picture I took during our Land's End tour. I am so glad we made it there - thank you, Uber! :-)

_________________________________________________________________________________

Sources:

• http://consumerist.com/2014/09/18/how-do-uber-and-lyft-work-and-why-should-i-even-care/
• https://www.uber.com/en-US/features
• http://www.pbs.org/newshour/making-sense/what-its-really-like-to-be-an-uber-driver/