B2B marketplaces are the next stage of sharing economy
- Category: Electronics
- Publishing date: 01 June, 2022
- Author: The LabShare Team
B2B platforms offer new tools for the sustainable develop-ment of the testing industry
The latest economic trend is based on the responsible use of environmental resources and the sharing of capacity between corpo-rations. The popularity of B2B marketplaces might well lead to a de-crease in our ecological footprint, while platforms connecting industry players might make global production processes greener, cleaner, more cost-savvy, and efficient in the long run.
In recent years, the world learned about the sharing economy: a con-cept based on the use of common goods in line with our occasional needs. Well-known examples are aplenty, from the car-sharing service Uber to the vacation marketplace Airbnb, not to mention the increasingly popular trend of individuals offering dinner to strangers in their own homes.
The sharing economy is gaining ground more than ever, but what ex-actly makes it so appealing to our generation? The widespread use of digi-tal platforms certainly helps, as well as a more flexible approach that may overwrite our hardwired attachment to private property.
The model builds on exploiting capacities that would otherwise remain unused, be they products, services or our own resources. Just think of how we can accommodate tourists in our holiday home or make a few extra bucks by assembling someone’s flat-pack furniture?
This approach not only helps us manage our resources more rationally – it serves sustainable development by promoting the occasional use of goods and services instead of taking possession of them.
Many people who travel to the countryside twice a week would rather use GreenGo than buy their own car, which, according to statistics, would go unused 95 percent of the time. We already understand and know this on an individual level – but how can corporations utilize the same business model?
The next step: sharing economy for companies
The concept has been constantly evolving in recent years – just re-cently, it also appeared in certain sectors of the economy where its use would have been previously unthinkable.
In today’s virtual marketplaces, not only individuals but companies are also increasingly willing to outsource certain tasks and share resources with one another. But how can this new trend contribute to the success of freshly formed startups?
According to the American high-tech news site Techcrunch, the future belongs to those who create B2B (i.e. inter-firm) economic platforms: it is estimated that these businesses could add up to $3.6 trillion in profits by 2024.
Instead of individuals, the main consumers of these marketplaces are corporations. Through the sharing economy, not only do they rationalize their expenditures by tapping into previously unused resources, they can also make their own operations more environmentally friendly in the pro-cess.
International examples include Orderfox and Xometry, platforms which connect CNC software providers in the field of machining and metalwork-ing with companies who employ them. Or take BookKit, a platform where biotech laboratories conducting research can browse among companies offering testing equipment. Another promising newcomer for automotive and electronics industry is LabShare:
“Many companies could benefit from a more rational use of available resources. Online marketplaces provide an excellent opportunity for corpo-rations to outsource certain tasks to other companies, instead of having to create extra capacity,” says company CEO Levente Bakos.
LabShare, for instance, uses its own platform to connect automotive, rail, aerospace and electronics manufacturing companies with test labs that perform environmental testing and carry out validation tests for pro-duction.
In many cases, it is difficult for manufacturers to find a laboratory that provides the full scope of necessary tests within the given timeframe – LabShare, however, allows companies and engineering centers to browse and choose between laboratories based on price, availability and capacity.
At the same time, the platform makes it possible for labs to outsource certain operations or even cooperate with each other, allowing them to provide the best possible service to their manufacturing partners.
This is how supply and demand meet – it’s essentially a win-win situa-tion for everyone. Environmental awareness is also an important aspect: if we harmonize our needs, no unused capacities will remain, while the exist-ing ones will be fully exploited. Such cooperation can successfully reduce our ecological footprint and make the testing industry carbon neutral in the long run.
The popularity of the marketplace for business products and services is enhanced by the infrastructure, financial background and security that corporations represent. And while B2B platforms may not become house-hold names like Uber, they might pave the way for a greener and more sustainable economy.
The second wave of outsourcing ensures higher efficiency than ever before
To today’s companies and entrepreneurs, the benefits of outsourcing are self-evident, but few know that this was no different in ancient times - writes Boris Kontseovski, the CEO of Intetics Inc. in Forbes magazine.
The concept of outsourcing has been around since the dawn of agri-culture and various crafts which led to the emergence of cities. The pros-perity of individuals largely depended on the division of labor and special-ized activities. Even in those early days, this meant the employment of lightly qualified workforce to save on production costs.
As even the Greek philosopher Xenophon wrote in the 4th century BC: "There are places even where one man earns a living just by mending shoes, another by cutting them out, another just by sewing the uppers to-gether, while there is another who performs none of these operations but assembles the parts.”
This specialization ensured competition, leading to the refinement of craft, continuous quality improvement and the technical improvement of products, which later culminated in the industrial revolution.
However, in order to protect their commercial position, companies gradually took control over every aspect of the production including supply, manufacturing and human resources. Monopolistic capitalism would stop further efficiency advances, but thankfully, the competitive environment has been preserved due to the industrial revolutions and technology inno-vations.
The era of modern outsourcing begun in the 1980s when India and China started to offer large pools of cheap yet unqualified labor. This re-quired additional investment from multinational companies in the field of training and management, yet the difference in labour costs still justified such an investment.
In those days, the main purpose of outsourcing used to be the reduc-tion of costs, concentration in core competence and the achievement of better overall efficiency. Initially, outsourcing was limited to manufacturing, but the emerge of the internet in the 90s allowed for the outsourcing of white-collar services as well.
Proclaimed dead, yet still alive
Over the years, this huge pool of workers gained technological knowledge in many areas. Specialized expertise gradually became the top priority of providers as opposed to cost reduction. Additionally, providers adopted new models like shared services, multisourcing and offshore ded-icated teams.
“At this point this point, a huge wave of outsourcing criticism had be-gun, as it was associated with mass job losses, worker insecurity and melt-ing quality. Outsourcing became almost a public enemy and a new curse. Some even proclaimed it dead” - explains Kontseovski, while also adding that job losses due to innovation have always been present throughout the centuries: “Who now remembers such professors as a human alarm clock or a lamp lighter?”
Further job losses are expected to happen in the future - at least ac-cording to a recent McKinsey report. Robotic automation is predicted to cut as many as 800 million jobs worldwide by 2030, far more than can be at-tributed to outsourcing. On the other hand, AI-based automation is becom-ing an increasingly valuable asset, taking on a significant workload.
Far from being dead, outsourcing has numerous benefits today, from finding and engaging world-class talents in a shorter time to utilizing the wealth of knowledge that a wide pool of professionals has to offer. While this second wave of outsourcing continues to be cost-efficient, it primarily builds on the expertise of full-fledged specialists.
“At the end of the day, we have gotten better efficiency of professional services for less money. The key benefit of outsourcing is evolving from cost-cutting to process and labor optimization. It will continue to be one of the most important components of business strategy for decades to come” - concludes Kontseovski.
The business-to-business (B2B) model is the next stage of sharing economy
The pandemic has taken its toll on the sharing economy - but far from being dead, the concept is progressing towards a lucrative new model ac-cording to an article by Navi Radjou, the author of Fast company.
Sharing economy had gained ground in the wake of the Great Reces-sion, in the early 2010s. The crisis necessitated a societal shift: young, cost-conscious and eco-friendly millennials ditched the concept of owner-ship for optimization, making it their priority to only access good and ser-vices when they actually need them. Platforms such as Uber and Airbnb allowed owners to monetize their assets by sharing them with others and generating revenue, all while still retaining ownership.
The so-called business-to-consumer (B2C) model took off, so suc-cessfully that in 2015, PwC predicted a more than 22-fold market growth in the next 10 years: profits from $15 billion at the time could have multiplied to a whopping $335 billion by 2025.
However, the COVID-19 pandemic interfered. Sharing economy largely depends on mobility, and lockdowns all over the world meant a serious setback for companies such as Uber, who lost $6.8 billion during 2020, while Airbnb reported a net loss of nearly $4 billion in the fourth quarter of the last year alone.
However, these changes do not mean that the sharing economy is go-ing to die - it’s merely evolving from its adolescence to its mature adult-hood, the article argues. While the past decade was about consumers sharing goods and services, the success of the concept convinced busi-nesses to share their assets and resources with each other, be it physical or even intangible. This led to the rise of the business-to-business (B2B) sharing economy.
But what makes B2B sharing so beneficial to everyone con-cerned?
First and foremost, businesses can reduce capital expenditure by sharing their assets. Instead of wasting capital to build new capacities, in-dustrial firms can expand and increase their supply chain capabilities by renting production capacity from machine shops.
Lower operating costs mean another great advantage, illustrated by the example of healthcare providers in the US and Europe who’ve been struggling with a shortage of drugs and medical supplies imported from abroad. These providers could pursue long-term purchasing arrangements with domestic suppliers, hence reducing their expenses while stabilizing delivery.
An additional point is generating new revenue streams: at this point, 30% of all warehouse space goes unused in the US any given day, while in Asia this figure could reach half of the storage capacity. Certain plat-forms help warehouse owners monetize these underused facilities by rent-ing them to firms and start-ups.
Businesses can also maximize the value of intangible assets by shar-ing them with others. Currently, more than $6 trillion is generated on a year-ly basis in intellectual property in the US, however, nearly $1 trillion is wasted due to the lack of a clear strategy on how to extract value from them. These intangible assets, such as patents could be monetized through the use of IP brokering services to make a profit by sharing them with buyers.
B2B economy can boost the resilience and agility of manufacturers, particularly small ones with idle capacity. Emerging manufacturing market-places can swiftly connect them with new clients to keep their assets uti-lized.
Big brands, on the other hand, can innovate faster, better and cheaper by using platforms to open pop-up stores and test their new product con-cepts with buyers before they enter mass production. Thus, no capacities are wasted for a product that does not address the true needs of consum-ers.
Finally, a B2B model is able to satisfy customers seeking end-to-end solutions as opposed to point solutions, such as individual products or ser-vices. Instead, tailored solutions can comprehensively address their broader needs. For instance, mobility service providers, such as car-sharing services will need to share data with their shared customers and each other in order to provide a seamless experience.
And lest we forget the social benefits of the concept: emerging new platforms can connect fired employees swiftly with new jobs, or enable hospitals to share their medical equipment and services. This enables health providers to lower costs and deliver better quality care.
B2B can also curb waste by utilizing idle capacities: in the US, a third of the trucks on the road are driving empty, which contribute to millions of metric tons of CO2-emissions each year. However, by bundling multiple truckload shipments into a single job, these emissions could be reduced by 45%.
By sharing their resources and assets with each other, businesses can make immense gains and positively contribute to communities and the planet: “The B2B sharing revolution promises not only to reinvent our economies but also to help us build inclusive and regenerative societies in the post-COVID-19 world”, the author concludes.
On the B2B marketplaces of the future, capacity is the most valuable asset
Whether in testing, manufacturing, or machinery, excess capacity is in high demand. With supply chains tightening during the pandemic, more and more companies realize the potential that lies in monetizing their free capacity. Companies such as Xometry, Orderfox, and LabShare have paved the way to digitized, global B2B marketplaces that connect supply and demand more efficiently than ever before.
A new and exciting player in the field of B2B marketing is LabShare, the online platform that connects demand and supply in the testing indus-try. Their concept brings together labs, engineering centers, and manufac-turers on a worldwide platform.
The model builds on exploiting the capacities of labs that would other-wise remain unused, thereby minimizing costs and maximizing the utiliza-tion of resources on a global level.
Behind LabShare’s platform lies a well-compiled database of accredit-ed labs, each with a detailed overview of their quality of service. A system of personal recommendations provides an accurate overview of custom-ers’ experience with a particular laboratory, allowing them to rate labs based on quality, communication, technical competence, and time man-agement.
Skip the trip to Japan! Hungarians are working on the Airbnb of industrial testing
The Hungarian start-up, LabShare, utilizes sharing economy to con-nect demand and supply in the testing industry. Founded in November 2020, the company promises a good business opportunity and the estab-lishment of a professional community. Industry experts from Europe to China and India speak appreciatively of the digital platform connecting la-boratories with testers.
Conformity assessment, known as testing, is an indispensable part of innovation. SME's and even large manufacturing and engineering compa-nies are often unable to test their new products in-house and outsource to external testing laboratories. Since November 2020, a Hungarian company has been helping these parties find each other.
The founders of LabShare got to know one another on the client-side of the testing industry: they worked in large corporations' test departments, where they often confronted with the market's imperfections. This is how Levente Bakos, the CEO of LabShare, gained several personal experi-ences.
A notable example was when a German partner laboratory refused to organize a test, despite their well-established relationship with the corpora-tion. Eventually, the test was carried out in Japan, multiplying the price and physical distance: the Japanese charged 60,000 euros for a service that the Germans would have provided for 20,000.
The era of "thinking big”
To enter households and become part of our daily lives, innovations need to be thoroughly tested, for which a particular market has been estab-lished within the industry.
At the dawn of the testing industry, the best deals were acquired by those with the best assets and the highest international expansion level. Thus, market players embarked on frantic investments and developments to establish as many locations and capacities as possible. Apart from se-curing their developments, they aimed to attract new business by building even more significant and more extensive lab capacities than their compet-itors.
This crazy pace eventually led to unused test parks. This underutiliza-tion's primary cause is poorly disseminated information: test equipment worth millions of euros are left unused, while elsewhere, a Bosch-sized company has to wait in line for months to access adequate capacity.
If a well-established partner becomes inaccessible, market knowledge is seldom sufficient to help customers find the proper collaboration. Google doesn't help here either: the search engine does not offer useful results for the testing industry's specific needs.
Efficiency over ownership
It was a radio interview that gave Levente and his partners the final push to establish their own company. Listening to the CEO of Parkl, a Hungarian company dealing with smart parking and e-mobility, he realized that their difficulties could also be remedied through sharing economy.
Levente and his peers recognized that instead of increasing capacity, the solution is to make the already existing supply and demand meet. It is no longer possible to gain ground on the test market by investing in new assets. Instead, the market will be dominated by those who earn custom-ers' trust by providing consistently good quality and reliable service.
LabShare often refers to itself as the Airbnb of test labs as they con-nect laboratories and testers on a reliable and user-friendly platform. Angel investors have been recruited from their network: his partners see Levente as a young and ambitious, reliable, and responsible colleague in the cor-porate environment.
Angel investor Zoltán Karászi has fond memories of the first 1,5 years of their work together, which saw a team of dedicated founders developing new procedures. According to him, a playful, experimental approach has persisted since LabShare's launch in November 2020, while Levente has evolved into a determined leader, capable of motivating his co-workers.
Behind the Labshare platform lies a well-compiled lab database. To be displayed on the platform, labs have to be pre-evaluated, certifying which tests they can perform. In addition to the pre-qualification, Labshare can provide the customer with a detailed overview of a laboratory's quality of service.
First, an automated evaluation process categorizes the newly added labs. After a few transactions, this is replaced by market evaluation. A per-sonal recommendations system provides an accurate overview of the testers' experience with a particular laboratory, allowing them to rate labs by quality, communication, technical competence, and time management.
LabShare connects supply and demand, but the testing itself is con-ducted by laboratories. Labs can choose between a sales commission or an annual subscription, which currently provides the company's primary revenue.
In addition to market improvement, LabShare is working on the sus-tainability of the testing industry. The use of sharing economy provides an opportunity for local partners to connect to no longer have to fly something to Japan that can equally be tested in Europe.
Should this method become popular, the ecological footprint of ship-ping and the number of new investments may decrease, and the focus may shift to the optimization of existing capacities.
Helped by the pandemic
The pandemic made it easier to build a network behind the database: LabShare's team did not have to travel to expensive conferences; they could present themselves at online fairs from their office desk. Under the current circumstances, even the ordinarily overbooked laboratories paid attention to their concept. Due to the automotive industry's recession, sev-eral labs struggled with vacancies despite usually being fully booked.
The platform currently links labs to manufacturers of the automotive, consumer electronics, and medical devices industries. According to Le-vente, testing is similar for all products, and thus, LabShare can expand to other sectors in the future. In the long run, there are no obstacles to geo-graphical growth either.
As Levente puts it: "The validation system we employ is based on physics, and the laws of physics are the same everywhere on this planet. Despite the great geographical distances, there is a relatively close con-nection between the markets”.
The company is currently present in Europe, China, and India. As Nor-ton Yuen, the CEO of ECTest, a Hong Kong-based partner company, puts it: "the arrival of LabShare bridges a long-existing gap between labs and testers.”
Partly due to the world's highest rental costs, lab capacities were al-ready organically shared in Hong Kong. The emergence of LabShare and a digital system helped to organize these previously scattered industry players.
Mahesh Dave, the CEO of Tubrotics, an Indian partner company, spoke about the solution with similar appreciation: 150 well-equipped labs in India fail to reach customers due to the lack of money, contacts, and ad-vertisement. These chaotic conditions are well-expressed by Mahesh's words: "No one knows what they are doing."
In his view, LabShare's solution will provide new meaning to this sys-tem of unused devices and incomplete communication. In addition to the expansion, the team is also thinking about developing its business model and securing new revenue sources. An English and German expert base established around them can also assist laboratories in designing valida-tion tests, evaluating test results, and dealing with any problems.
Furthermore, LabShare will expand its services to labs by featuring engineering consulting firms on the platform. Many believe in the popularity of this idea, from which they expect advertising revenue soon. They are also looking for a new investor: an extension of their current seed capital of 63 million HUF (220,000 Euros) is also being negotiated with several ven-ture capital funds and a global professional investor.
Advantages of shared resources in an accredited laborato-ry
How to make testing cost-effective, smart and environmentally friend-ly? Ágoston Lóth, the managing director of ConformiTICs Ltd. delivered a presentation on the topic, entitled “Advantages of shared resources in an accredited laboratory”. ConformiTICs itself is an accredited lab in the med-ical, mobility, energy and consumer segment, with an accreditation for 15 different standards.
As Lóth explained, there are three specific testing models in use today at accredited laboratories. The classic model entails the lab buying its own equipment, creating processes and then obtaining accreditations. This model works well, however, it’s not the most effective since the manage-ment cannot keep up with the demands of a fast-changing market.
A slightly more efficient solution is offered by the subcontractor model. By involving a subcontractor, the lab can provide a range of tests or entire product tests, even when they don’t have the necessary knowledge or equipment.
This model, however, has a number of weaknesses: most importantly, the general contractor has to take responsibility for the work of the subcon-tractor, including the deadlines. Moreover, the report can only be accredit-ed if the subcontractor also has accreditations. A practical difficulty can be handling test samples between the two labs.
This takes us to the shared model, a particularly smart solution: in this case, the contractor lab leases equipment from another lab. The shared model can help with the lack of capacity, while equipment is under repair or when special equipment is necessary.
For instance, if a patient simulator is necessary for a Holter EKG, the lab can avoid buying one for a single test. By using this model, the lab can keep its CAPEX level low by avoiding the unnecessary purchase of equipment, save space and cut down repair costs while leaving no capaci-ties unused.
Should you choose this model, there are a number of principles to keep in mind: the lab needs to have its own equipments, especially the crit-ical ones, as well as staff with the the necessary competences. Without these, the lab cannot obtain accreditation. There also has to be a perma-nent contract between the equipment owner and the lab, and all of the leased equipments need to be calibrated by a third party.
“It is recommended to keep two or three sources for the leased equip-ment, just to ensure that each time there will be free capacity. Also make sure to follow the calibration of the leased equipment, and warn the owner if it’s going to expire” - Lóth added.
Remote Laboratories: Advantages & Benefits
Last year, the emergence of Covid posed a new type of challenge for labs, both in terms of safety and efficient operation. In an unexpected turn of events, labs had to prepare for remote operation, a change that many were completely unprepared for. A year on, access to the appropriate technical tools can still provide your lab a competitive edge over late adopters.
What did the testing industry learn from the early days of the pandem-ic? One thing is for sure: to stay up to date, labs should always be ready for unexpected challenges, such as the need to work remotely.
If your employees are required to work on-site while ill, illness can spread, resulting in a ripple effect. On the other hand, if you are unable to perform laboratory tasks off-site, your laboratory might as well shut down due to the lack of data analysis.
Once you manage to run the lab remotely when needed, even the pandemic will not interfere with your efficiency. But how to make sure your processes run smoothly off-site? A LIMS system, for instance, is suitable for storing samples and evaluating data remotely at the same time.
Although many labs are unaware of this, most data-focused processes can be managed from home. If the information management system is cloud-based, the data is on a secure server, yet accessible from any de-vice, making it easy to generate reports and analyze product data. With a mobile LIMS application, even fieldwork can be done without physical ac-cess to a lab, given that it can enable rapid and reliable sampling, testing, and results.
With the use of cloud-based LIMS, it’s easy to provide a higher degree of flexibility for employees. An important aspect is the possibility to work from multiple geographical locations at the same time: this can increase the capacity of the workers and the number of working hours. Also, fewer workers on-site result in lower maintenance costs for your lab’s infrastruc-ture. But where and how can you access LIMS to reap its benefits?
LabShare offers customers a cloud-based LIMS system, as well as ac-cess to an online marketplace to manage their day-to-day work. If you ha-ven’t tried our platform yet, here’s your chance to increase your lab’s effec-tiveness and ensure your brand continues to grow with user-friendly solu-tions.
If you haven’t already, visit LabShare’s platform and sign up. It is for free! Keep your lab up-to-date and compatible with modern times - we’re here to support you every step of the way.