The Gaseous State

The question that I’ve been pondering this week: what if existing models of the supply chain are outdated, and a whole new dimension is required? We speak of workflow, liquidity, pooling of resources… but what if commerce no longer resembles a liquid, but a gas?

A liquid sloshes about, and finds its lowest possible level. We’ve seen that: work gravitates to the place where it’s cheapest (and where regulation and taxation are the least onerous)… but that’s only half the story. A gas expands until it fills every nook and cranny: and it keeps on pushing until the pressure is equal throughout the system.

This is the evolutionary change in the modern-day supply chain. From solid (we expect things to stay put, and we expect to do things the way we’ve always done them) to liquid (everything takes the path of least resistance and flows downhill) to gas, and the ‘new normal’ that everything is everywhere. Instant gratification, same-day delivery, and so on.

The future is... more energetic.

The future is… more energetic.

The change isn’t just a new challenge wrought by new expectations on the demand side, though: the fulfilment paradigm has also changed. New actors participate in the supply chain now, while old ones take on different and expanded roles.

The service sector is being shaken up by disruptive changes. People with a spare room in their home now use Airbnb to compete directly with the conventional providers of short-stay accommodation. People with a vehicle and time on their hands sign up with Uber, offering a service comparable to taxis, on a casual basis.

Manufacturing businesses aren’t safe from disruption of this kind. What’s to stop a manufacturer from selling idle machine time to anybody that can benefit from it? Twenty-five years ago, Prestige Garden Furniture of Bolton were making parts for the Jaguar cars that competed at Le Mans… with good data exchange formats and a growing list of successful collaborations, this sort of thing is only going to increase. Add in ‘the cloud’ and the notion that businesses can tender for work on a case-by-case basis, and the commercial landscape begins to look very different.

On the retail side, who’s to say that the next thing you buy will come from a conventional source? In some applications, a ‘previously enjoyed’ product might be just what the customer needs, simultaneously shielding them from tax and depreciation, and allowing them to feel better about their environmental impact… and in eBay citizens (and businesses) have an excellent marketplace in which to buy or sell with some confidence that prices are fair.

Finance has gone crowdsourced, too. Where entrepreneurs once had to meet with the bank manager, Kickstarter offers a way to fund everything from movies to gadgets, while peer-to-peer loans allow borrowers access to credit and give savers a decent return on investment… with no high street bank in sight.

This is the all-pervasive commerce of the future: where a vastly expanded pool of casual or unconventional actors provide additional capability. Ignore them all and go with old-style formal relationships if you must, but understand that there are a whole lot of other people out there who want to get involved – and might end up working for the opposition. Done well, the coordination of a set of such contributions could be a powerful strategic differentiator because there’s an army of people who could play a part, in every city.

What triggered the change that turned the liquid of old-style commerce into an all-pervasive gas?

Microwaves.

The cellphone changed everything. The Internet made a big change, for sure, but it was mobile that really let the genie out of the bottle. Once calls were make to a person rather than a place, a plumber no longer needed a relative staying at home to take calls and make appointments. Cutting out the ‘receptionist-at-home’ role (and there must have been many thousands of such people) meant they could take on paid work elsewhere. Mobile ’phones also meant a farmer would know if today was the right day to harvest his vegetable crop – and could perhaps secure a price with a buyer, instead of being at the mercy of a middleman. That same mobile telephone allows ride-sharing, live translation services, paperless ticketing and much more.

In my family, when we send holiday postcards, we don’t start by buying a postcard: we use our own photo, uploaded with an accompanying message to a print-on-demand firm who create the card and put it straight into the post. In effect we have become actors in our own supply chain, replacing the professional photographer who formerly earned royalties on their images. We’ve eliminated the foreign leg of the postal service, too: never again will we queue in the bureau de poste and request “un timbre pour l’Angleterre”… and the likelihood that the resulting card will be delivered by the Royal Mail is declining, too: there are so many others who could bid for the contract.

The world has changed, and the lesson to be learned here is not to be the old-style incumbent, selling pre-printed postcards in a digital age. Like any paradigm shift, there will be winners and losers, and the first step towards becoming a winner is to be aware that the shift is underway. The future is digital, no doubt, but it’s also amorphous, chaotic… and gaseous.

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