The truth behind the cliché no.1 – Uberization

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Buck Chintamani, GT Nexus

A teenager I know saw a headline on the internet about the “Uberization of Logistics.” As the only person he knows that does anything with logistics and supply chains, he asked me what it meant. My initial response was the usual jargon-laced gobbledygook about the sharing economy, and how it will spread to the corporate world.

But then I got thinking a bit more about what this phrase really meant. What are the real problems that Uber solves? I decided to apply basic design thinking principles to find out, and see what could it actually mean for the world of business.

In my hotel lobby, I met an older lady waiting for her car to show up. I asked her what Uber meant to her, and what she did before Uber came along. Then, when my own ride showed up, I asked the smart Bangladeshi driver of the Uber Black what Uber meant for him. I asked a colleague of mine as we were grabbing dinner that evening what Uber did for him. And I had the final experience when I returned to Boston the next afternoon and found that my regular car service had not shown up for some reason, and so, I had to hail an Uber.

Here are 4 key problems I observed that Uber solves:

  • For the lady, it was sheer convenience and peace of mind. She did not need to stand by the curbside any more, flailing away in the rain at taxis as they drove by without stopping for her. And she knew exactly when the Uber would show up and thus did not have the anxiety that comes with the uncertainty of taxis or even pre-arranged cars reporting to pick her up. This wasn’t very different from the stress a shipping supervisor or transportation coordinator might go through in the business world, hoping that a trailer shows up on time to pick up a load. What we dyed-in-the-wool professionals might call better supply chain visibility.
  • For the Uber driver, it was the fact that that he was now a highly rated Uber Black driver, and that the company (Uber) took care of him. He got rides promptly and rarely had to come back empty from a destination. It’s what we in the logistics world would call minimizing dead-heading. Which made a whole lot more sense now.
  • My colleague liked the fact that he did not have to reach for his wallet to pay the driver at the end of a ride, trying to determine what the appropriate gratuity would be and so on. And the convenience of getting a clear receipt by email made his expense reporting process so much easier. In the world of supply chain, this corresponds to easy settlement and easier accounting.
  • And from my own experience, I found that for this specific instance, the Uber ride cost just $54 against the car service tab of $88. Now, fares are somewhat unpredictable because the cost of a ride could vary from trip to trip. Also, since there are not many Uber operators in the small suburb I live in, getting a car at all, let alone at a decent rate, is not something I can bank on. But in this case, the shared ride service was cheaper. Such a scenario has been the holy grail for logistics startups the past 20 years, trying to optimize usage of trucks to bring down the costs while providing improved usage to the truck operators.

The cliché of the “Uberization of Logistics” made more sense to me now. I know that this slate of four problems that Uber addresses may, in fact, have many other possible solutions. But knowing the true nature of the problem, and working with folks to determine the relative ranking of these problems for their own businesses, allows us to focus on solving the right problem.

The final epiphany for me was that the marketing genius who came up with the catchy phrase – Uberization of logistics – had achieved her/his purpose. It grabbed the attention of that teen who asked me the question.

In future posts, I will explore other catchphrases in the world of supply chain, and try and deconstruct them into their underlying problems to see what can really be done to find effective solutions.

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crawford@firstnamecommunications.com'

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