The “Uberization” of Warehousing

This is an excerpt of the original article. It was written for the November 2016 edition of Supply Chain Management Review. The full article is available to current subscribers.

November 2016

Is supply chain management strategic or tactical? Are the best supply chains collaborative? Should the goal be an integrated supply chain or an integrative supply chain? The answers are a mixed bag, according to this month’s contributors.

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No doubt many of this journal’s readers already tap their mobile phones to get an Uber to the airport. Or they use the Airbnb app to find a nice place to stay for that long weekend. So it shouldn’t be a big surprise for them to learn that warehouse services can now be acquired in similar ways.

Dynamic warehousing is emerging as a viable way of purchasing warehousing services on demand—paying only for what is used instead of owning distribution centers or signing contracts with third-party logistics providers (3PLs).* As with Uber, Airbnb and a host of other shared-economy services, the actual pay-per-use transactions occur in an electronic marketplace. The approach can extend to a company’s entire warehousing strategy, or it may supplement an existing logistics network built on long-term contracts. In either case, it allows the company to adapt quickly to variable demand and cost conditions.

Dynamic warehousing can be particularly useful for e-commerce, where retailers typically face high demand uncertainty and often have significant capital constraints. Additionally, dynamic warehousing allows e-commerce retailers to rent small units of capacity in many parts of the country, enabling quick delivery to wider pools of customers.

This article introduces the idea and demonstrates its value with a brief case study.

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