The Gig Economy: Threat and Opportunity

AlexaCheater

Gig economy workers are expanding into warehouse operations

The notion of 9 to 5 is dying, and the implications to your supply chain could be monumental. According to Intuit, by 2020 there will be 7.6 million gig economy workers, with nearly 40% of Americans in non-standard jobs.

So it seems there’s no escaping it. This notion of a gig economy appears to be here to stay – at least for the foreseeable future. If you aren’t yet familiar with the term, it relates to the concept of hiring a more temporary, transient workforce. Employees who choose to work hourly jobs on a contract basis instead of joining the ranks of the permanent full-time. Many of these new positions are spawning from businesses like ride-sharing giant Uber, who are appealing to those who want to have more flexibility, be their own boss, or just make a little extra money on the side.

It’s become an increasingly hot topic in recent months, finding its way into practically every facet of the business world, and now even onto the campaign trail. Forbes recently published an article exploring what US presidential hopefuls all have to say on the topic of the gig economy. While their opinions may be mixed, nearly all of them recognize this new economic reality.

Some of the world’s largest retailers are also jumping on this bandwagon, taking the concept of hiring temporary workers for deliveries one-step further. Now they’re hiring gig workers in warehousing positions to manage inventory and stock shelves.

IndustryWeek recently explored Coke’s journey down this road, profiling the beverage maker’s relationship with tech startup Wonolo. The app matches workers with employers, based on the latest mobile and logistics technologies.

The article notes, “Out-of-stocks are a big deal for consumer goods manufactures like Coke, and the company reportedly loses $1 billion annually in sales due to the difficulty in quickly replenishing its retail customers with fresh stock.”

While hiring temporary workers to re-stock retail consumers or make deliveries can certainly have some positive impacts on the bottom line of the supply chain, there are a few other considerations to keep in mind. Where does the responsibility lie for these contractors? We’ve all heard horror stories about Uber drivers. And while I’m not anticipating the majority of gig economy workers to end up in jail for their antics, it does beg the question will the company be on the hook for their actions?

Say your temporary delivery driver misses the time frame to drop off a critical shipment to one of your biggest customers. Will you even know about it before you get an angry phone call? Odds are, many of these one-off delivery services won’t have the data integration capabilities you’d need to ensure optimal supply chain efficiency. If you had a real-time view into their logistics data, perhaps you could have spotted the problem and been more proactive in managing the customer’s expectations.

If your temporary inventory manager decides to drop you for a better gig, how long, and at what cost, will it take before you can find another worker to take the position? Can your supply chain handle that kind of disruption? I want to make it clear that in no way am I stating that temporary workers are more unreliable than permanent full-time employees. It’s more that in the supply chain industry in particular, it’s already incredibly difficult to hire and retain qualified personnel thanks the growing talent shortage.

In the gig economy, the notion of loyalty to your employer is kind of lost, since each worker could potentially work for dozens of companies over the span of a single year. It also means you may end up with a revolving door of employees – all of whom, depending on the nature of the position, need to be brought up to speed before they can perform at their best.

Whether you realize it or not, the gig economy opens your supply chain to a whole new type of risk – the threat of failing to have the skilled workers you need to actually run your supply chain processes.

There are certainly both positives and negatives to this new gig economy reality. What kind of implications does it have for your business? Share your thoughts in the comment area below!

AlexaCheater

As the Product Marketing Manager at Kinaxis, Alexa helps develop and deliver informative, engaging and entertaining supply chain content that also works to promote how Kinaxis RapidResponse is revolutionizing supply chain planning. She joined Kinaxis in 2015 with more than a decade of communications experience. Alexa holds a Bachelor of Journalism (Honors) from the University of King’s College in Halifax, Nova Scotia.

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