The Gig is Up

In the new gig economy, workers are individual contractors—they are mobile, can work from any place, and save their companies time and resources.

The paradigm shift from having full-time workers to individual contractors is not that easy to manage when considering companies that have full-time employees, especially in logistics. To decide if a model like this may benefit your company, you need data and analysis. Let’s say the data informs you that working with individual contractors reduces costs for your company and makes operations more fluid. You now need to implement a system that keeps track of multiple contractors and the tasks they perform, so you need data again, maybe even need to manage it in real time.

Sound abstract? The following use case helps paint a clearer picture of how one company put this approach to work for its business.

Uber provides Uber Rush, a consumer-to-consumer service, although it offers its API for business implementations as well. Just like you order an Uber instead of a taxi, you can order delivery from point A to point B using a service that is similar to the Uber you are familiar with.

The first objection that comes to mind in implementing this system at an enterprise level is safety. For example, your company delivers merchandise within a city to your customers, so you need to know that merchandise is safe and arrives in due time. When the driver you hired is doing the delivery, you feel safe as that driver went through a verification process before being hired. When you employ individual contractors that own a truck through an app, that risk becomes higher, especially if the merchandise is valuable.

This is where big data comes in. You can use big data to do a risk assessment and predictions so that the risk of delayed or lost deliveries is minimized to what you feel is a safe level. By adequately using automation, you reach your desired level of reliability and eliminate bad or inefficient actors.

In assessing how the pros outweigh the cons of how this works for the logistics sector, here are some of the significant advantages of using individual contractors in a gig economy.

Your operation will scale automatically based on real-time need and have a granularity of less than one day or even a couple of hours as the system develops. If you purchase a truck and hire a driver, you have a fixed and rigid capacity.

You do not need to purchase a truck or hire a driver, so costs go down. Of course, you may employ a delivery company such as DHL or FedEx, but those companies also have operating costs, so taking advantage of a competitive free market of individual contractors will eventually get you the best price per pallet per day.

You track your delivery just like you follow your Uber driver, so both you and the customer can have access to where the pallet is at any given time. This further cuts down costs with customer support and, at the same time, improves the quality of your service: customers are no longer oblivious to where their order is or how long it will take for it to arrive. And neither are you.

An Upwork report predicts the majority of U.S. citizens will be freelancers by 2027. Big data helps you build a solid base to take advantage of the growing gig economies and adequately enables you to manage them.

Big data with machine learning is a powerful tool that helps scale your operation, reduce the incidence of adverse actors, and reduce costs by taking advantage of a free market of individual contractors.

—Alex Bordei, Director of Product and Development, Bigstep