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    Asset-Light Model of Supply Chain

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    Rajesh kumar
    1. Most companies will need to leverage an asset-light network of third party partners to access shared assets and build more responsive supply chains, as managing complex supply chains internally will be challenging. 2. An asset-light model confers greater flexibility but can be tough to manage and there is a greater risk of intellectual property leakage or becoming less valuable; companies will share supply chain assets using digital platforms for manufacturing, warehousing, and logistics. 3. To develop and manage an asset-light supply chain, companies will need a new role called a "supply chain architect" who works across functions to define service offerings and partnerships and continuously adjust supply chain solutions based on customer and market demands

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    Asset-Light Model of Supply Chain

    Uploaded by

    Rajesh kumar
    202 views3 pages
    1. Most companies will need to leverage an asset-light network of third party partners to access shared assets and build more responsive supply chains, as managing complex supply chains internally will be challenging. 2. An asset-light model confers greater flexibility but can be tough to manage and there is a greater risk of intellectual property leakage or becoming less valuable; companies will share supply chain assets using digital platforms for manufacturing, warehousing, and logistics. 3. To develop and manage an asset-light supply chain, companies will need a new role called a "supply chain architect" who works across functions to define service offerings and partnerships and continuously adjust supply chain solutions based on customer and market demands

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    Asset light model in Supply chain

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    7. Asset-light Model of Supply Chain

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    1. Most companies will need to leverage an asset-light network of third party partners to access shared assets and build more responsive supply chains, as managing complex supply chains internally will be challenging. 2. An asset-light model confers greater flexibility but can be tough to manage and there is a greater risk of intellectual property leakage or becoming less valuable; companies will share supply chain assets using digital platforms for manufacturing, warehousing, and logistics. 3. To develop and manage an asset-light supply chain, companies will need a new role called a "supply chain architect" who works across functions to define service offerings and partnerships and continuously adjust supply chain solutions based on customer and market demands

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    202 views3 pages

    Asset-Light Model of Supply Chain

    Uploaded by

    Rajesh kumar
    1. Most companies will need to leverage an asset-light network of third party partners to access shared assets and build more responsive supply chains, as managing complex supply chains internally will be challenging. 2. An asset-light model confers greater flexibility but can be tough to manage and there is a greater risk of intellectual property leakage or becoming less valuable; companies will share supply chain assets using digital platforms for manufacturing, warehousing, and logistics. 3. To develop and manage an asset-light supply chain, companies will need a new role called a "supply chain architect" who works across functions to define service offerings and partnerships and continuously adjust supply chain solutions based on customer and market demands

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    © All Rights Reserved
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    Asset-Light model of supply chain

    As companies struggle to deal with competitive pressures, technology change and an ever-
    expanding range of customer requirements, corporate leaders are paying more attention than ever
    to their supply chains. Customers want products in their hands faster and faster, and they
    increasingly expect a more tailored or personalized experience. Over time, operating in this
    environment will require an entirely new way to architect and manage supply chains—an
    architecture than can evolve as marketplace needs evolve. To succeed in the coming years,
    companies will need new supply chain configurations across a broader ecosystem, new roles and
    skills, and new technologies.

    Every company seeks to pursue its strategy with the lowest possible level of asset ownership, but
    determining the optimal level is challenging. Executives face a tough dilemma when considering
    asset weight. Asset heavy, vertically integrated models offer superior control, but they tie up
    significant capital and frequently prove less flexible in a fast-changing environment. By contrast,
    asset-light business model confer greater flexibility, but it can be tough to manage them and the
    risk of leaking Intellectual property (IP) or becoming less valuable is greater.

    MAKE IT ASSET LIGHT

    Most companies will not have the scale and expertise to manage a more complex supply chain
    environment using only their own supply chain assets. They will need to leverage an asset-light
    network that enables them to be flexible and timely in a cost-effective manner. That means that,
    instead of looking internally and only optimizing their own assets, companies will connect with
    an ecosystem of third parties to access shared assets, thus building more responsive supply
    chains. Individual customer orders will be fulfilled by whatever combination of partners best
    meets the service requirements at the time of execution.

    The sharing of supply chain assets will be accelerated by the emergence of digital platforms
    across manufacturing, warehousing and logistics. For example:

     A collaboration among UPS, SAP and Fast Radius offers seamless, on demand
    manufacturing, from order to manufacturing and delivery. Customers’ 3D printing orders
    are placed on the Fast Radius website and can be shipped as quickly as the same day.

     Flexe connects companies in need of flexible warehouse storage with businesses looking
    to monetize their underutilized warehouse space.

     A number of companies have created freight brokerage platforms that match shippers
    with carriers to improve truckload utilization and accelerate shipping times. Leading
    platforms include DHL’s Saloodo!, Freightos, Convoy and Loadsmart.
    BENEFITS OF GOING LIGHT

     Better returns on assets


     Lower profit volatility
     Greater flexibility
     Higher scale-driven cost saving

    NINE ASSET-LIGHT BUSINESS MODELS

    Although there are many asset-light model, some are tabulated below. Six are upstream models
    in which the asset-light company relies in the other companies to provide critical inputs. The
    other three are downstream models in which the company uses an asset-light model to expand
    the reach of its products or services.

    1. Outsourcing Contracting with other companies to perform certain


    activities: works best if IP is either protected or is
    not a source of differentiation.
    2. Pay per use Leasing an asset or paying rent on the basis of usage:
    requires investors willing to buy the asset and is
    enhanced if many users keep utilization high.
    3. Marketplace Providing a platform for asset owners to trade and
    taking a fee on transaction: works best if there are
    scale or network benefits and product or services are
    easily specified.
    Upstream 4. Licensing in Making use of other’s IP to lower development risk
    or reduce R&D or brand investment: commonly
    used in the pharmaceutical industry; works best with
    smart-control techniques.
    5. Rebranding Private labeling a product or service designed and
    executed by a third party: works best if the brand is
    relevant (eg: Tesco Bank and TracFone wirless)
    6. Asset sharing Pooling asset to minimize capital commitment and
    maximize utilization: works best for high-risk,
    utilization-sensitive, or noncompetitive assets.
    7. Franchising Harnessing the energy and capital of entrepreneurs:
    works best with smart-control techniques, especially
    to enforce activities that benefit the franchisor.
    8. Licensing out Allowing others to use a brand or IP: works best for
    Downstream expanding into adjacencies with strong IP protection
    or for existing an undifferentiated brand.
    9. Product-to-service Moving from selling products: useful if products
    transition become commoditized, especially if wraparound
    services reduce system costs for customers.
    HELP WANTED: SUPPLY CHAIN ARCHITECTS

    To develop and manage an asset-light supply chain, a new role will be created: the “supply chain
    architect.” People in this role will work to configure multiple, unique supply chains. Instead of
    the traditional linear and one-way mode of value creation—design, plan, source, make, fulfill
    and service-architects will use a continuous and multi-directional mode: configure, operate,
    connect and manage.

    The key is to move beyond functional silos and think instead


    about how to architect the solutions through a network of
    partnerships and platforms. It’s a customer-centric model, not
    an asset centric one. Accordingly, the supply chain architect
    will work with the customer facing organization, as well as
    R&D and engineering, to define the right service portfolios and
    should-cost targets for customers and customer segments,
    leveraging a company’s own assets as well as partnerships and
    platforms. With those inputs, the architect will design the
    appropriate supply chain solution and then work with the rest of
    the organization to implement, track and continuously adjust to
    market/customer demands.

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