The Rise of Digital Platform–Based Business Models – What Are They and Do They Really Matter?
Original Article: November 7, 2017. Supply Chain Dive (online). “The Rise of Digital Platform–Based Business Models – What Are They and Do They Really Matter?,” bylined article by Lyall Cresswell.
You’ve probably been reading about ‘platforms’ – writers and journalists across every type of media are using the term to describe anything and everything. From Facebook and Instagram to any business model which claims to be a ‘platform’ for something that’s vaguely interesting and topical, the word is certainly in fashion. CEOs too regularly claim to have positioned their businesses as a ‘great platform for growth’. This begs the question as to what exactly a ‘platform’ is and why they matter in 21st-century business, and especially why they are so important to logistics and transportation.
Let’s start by looking at technology platforms. On the surface, the connection between the Victorian architects of Britain’s railways and the digital platforms created by Silicon Valley’s tech-savvy entrepreneurs may not seem obvious. But delve a little deeper and there is a clear link between the two. Just as today’s platform builders have provided an open doorway for businesses and consumers to collaborate and transact; and just as they have constructed digital bridges from billions of lines of code, which are transforming the way we learn, innovate, and mobilize – those who planned, designed and bankrolled Britain’s railway network, had the same pioneering vision, and in an age before computers, the tracks that they laid down affected real and profound change.
Given that the railways served as the trailblazers for the platform-based business model, albeit a more rudimentary version, many believe that the platform architects of today will leave a similar mark in tomorrow’s history books. The reason is straightforward: We are in the wake of a perfect storm, driven by the falling cost of technology and the increasing volume of global trade, which Deloitte describes as the “Big Shift.”
This data, and the devices that absorb, distribute and disseminate it, is the lifeblood of the platform revolution. In the near future, data-integrated platforms will play a crucial role in recalibrating the broken, one-dimensional, linear supply chains that have traditionally provided the template for how we transact. In fact, in a decade’s time, the platform-based business model could be the only show in town.
In the freight industry, platform-based business models offering smart mobility solutions are in great demand. Why? Because they allow thousands of operators to access a virtual fleet of vehicles and consolidate loads, reduce empty miles and decrease emissions. Most importantly, these solutions provide operators an opportunity to turn a healthy profit in an industry where margins are often wafer-thin.
Indeed, as roads become more clogged, the efficiency made possible by leveraging technology through innovative freight platforms is both welcome and necessary. A recent report by the Institution of Mechanical Engineers revealed that in the United Kingdom alone there are around 150 million wasted road miles each year and up to 30% of trucks travel empty.
There are no easy answers to solve these efficiency problems. I do, however, see innovative freight exchange platforms that harness and incorporate the fruits of 5G, the Internet of Things and (much later) the physical internet into their business models, as the industry game changers. Over the long term, for example, intelligent, multi-faceted platforms with the ability to harmonize real-time data across a multi-modal freight landscape could radically transform the movement of goods.
Of course, there are some caveats before this exciting vision can be realized. It will require next-generation infrastructures such as connected vehicles, smart products, intelligent roadside infrastructure and multi-modal cross-docking hubs. With the appropriate groundwork in place, however, innovative freight exchange platforms that can amalgamate the data generated by millions of sensors in vehicles, on road networks, in consolidation centers and in the cross-modal-friendly containers will be able to deliver cheaper, more efficient and more sustainable routing than currently possible today.
The future holds clear opportunities for the most inventive platforms to lend their collaborative reach to reduce emissions on a much wider scale. How? In clean air zones across the world, pioneering freight exchanges fluent in “self-organization” could potentially enable vehicles that do not meet the required emissions standards a seamless transit into the emission zone by positioning them with trucks that are exempt from the emissions charge.
Large exchange platforms, which demonstrate a rigorous framework of compliance, could one day become key industry data hubs. Tomorrow’s trucks and vans will likely be equipped with thousands of real-time sensors. Collaborative logistics platforms could thus become important and strategic nerve centers capable of collecting, disseminating and organizing myriad different data sets. When relayed to transportation officials, the information could provide the feedback needed to create safer roads, bridges and tunnels. Likewise, the data could provide vehicle manufacturers with the intelligence needed to improve vehicle performance and give academia real-world laboratories to further research.
It has been said that “The future belongs to those who prepare for it today.” CX North America technology is well-positioned to offer the envisioned data management and feedback capabilities predicted in the future. With each new partnership and integration, we extend our business horizon and reach. And, each new release adds new functionality that broadens and refines our data capture abilities.
Lyall Cresswell is the founder, president and CEO of Transport Exchange Group and its subsidiaries CX Europe and CX North America. Transport Exchange Group is the leading freight trading platform for the road transport industry in the UK, Ireland and mainland Europe with over 4,500 customers conveying hundreds of millions of freight shipments.
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