The middleman supercharged

The go-between cannot be created or destroyed it can only be changed from one form or another

Technological advancement is shifting the role of the middleman in the supply chain, making practices once dominated by humans now being overtaken by new technologies. The logistics of moving products around has become more automated, smarter and efficient with robots, artificial intelligence and machine learning now doing the jobs that were once undertaken by the middleman.

But fears that technology would make the role of the middleman obsolete have not proved correct – the role has simply changed – much as it did during the advent of e-commerce, when people found they no longer needed to use travel agents to book their holidays as they could find good deals directly online. Travel agents were no longer in demand on the high street.

But, instead of e-commerce completely cutting out the need for them, new types of intermediary services emerged online. Travel comparison sites such as Expedia, or Lastminute created a new kind of middleman. Rather than displace the middleman, technology companies are working with them to make their services more efficient.

Online takeaway delivery service Just Eat has partnered with Starship Technologies, with a view to using the firm’s robots to deliver takeaways to customers, while car companies are working on developing driverless trucks, two such developments that are likely to change the role of the intermediary in the logistic industry. It is new technologies which third-party logistics companies are using to differentiate themselves in the marketplace and drive economies of scales.

“Fears that technology would make the role of the middleman obsolete have not proved correct – the role has simply changed”

In warehouse fulfilment centres, logistics firms are using robots and artificial intelligence (AI) to automate systems and manage logistics. Robots can stock shelves automatically, while AI and machine learning can be used to make forecasts about demand for products.

Another new technology expected to transform the position of the middle man is blockchain. Blockchain – the distributed ledger system where all transactions are recorded and shared on a ledger, the technology behind cryptocurrencies such as Bitcoin – cuts out the need for a middleman. As all transactions are confirmed and shared with others on the chain, there is no need for a third party such as a lawyer or bank to act as a go-between.

Although blockchain may remove some third parties, companies will more likely than not still need the services of a technology company to make it work. For example, IBM has been working with logistics giant Maersk to create trust and transparency in the supply chain through blockchain, by being able to track goods more efficiently without the need for excessive paperwork.

Over the next 10 years the role of the middleman is likely to change again. But whatever happens it is probably fair to say that technology will be playing a prominent role.