Some species of scorpions have strong pincers and short tails and others have weak pincers but robust and long tails, it depends of habitat, food and predators of this peculiar arachnid. This is the perfect analogy for the Long Tail Theory published by Chris Anderson in 2004. How to know if scorpions will use pincers or tails, or a combination of both, to defend or attack? If hypothetically we are an insect and the scorpion is in front of us, our first concern would be their pincers, so our defense would be focused to protect ourselves of them, in consequence the tail will be ignored, doesn´t it?
Typically the same happens in business. Anderson noticed that companies concentrate their attention and resources in the “hits of market”, a bunch of popular products that are sold easily while a long list of products are forgotten. He took the case of Wal-Mart and Rhapsody selling music; while Wal-Mart stores a limited inventory of songs satisfying the demand of a few consumers, Rhapsody, as online retailer, is able to store a huge quantity of music tracks, larger than Wal-Mart, covering that long demand of unpopular songs that goes over the X axis without touching the zero, as shown below:
We, the consumers, are changing our purchasing habits, we don´t have to resign ourselves with products offered in local stores, now we can visit an online store in the other side of the world and get the item of our preference, even can be personalized, in our door few days later, or unload a file with our favorite movie, book or song. These new behaviors are changing supply chains.
The long tail is urging supply chains in many ways to innovate and change their mindsets to do not lose ground in competitiveness field. The challenge is big considering the fight between retailers versus e-commerce, Wal-Mart vs Amazon is a clear example, people click in “My cart”, pay and wait for the sound of doorbell. The company that delivers the accurate product sooner than competitors will win the race; that´s why we, supply chain managers, have to understand the long tail phenomenon in order to implement better strategies to satisfy the consumers in long tail area of the chart.
Long tail is not just a trend; it is a philosophy for companies that help to improve their performance and service. Logistics providers, by instance, are constantly looking for new customers, big fishes and huge accounts with a big volume of operations; when they get them the service to small companies turns poor because the efforts of the firm are dedicated to make that new customer the happiest in the world. In consequence, the potential customers in the long tail are abandoned. Several logistics suppliers have noticed this issue and are waving the flag of “there isn´t small accounts”, increasing their revenues as result.
Thanks to the long tail approach there are innovations in problem solving as well. How many of us thought that the “80-20 rule” would solve our life forever? Basically the rule says that the 80% of your outcomes comes from the 20% of your inputs (I am a believer of this true); but the long tail approach would say “take care of those inputs not-repetitive but very expensive and of those cheap but repetitive”, I mean those points out of your Pareto or consolidated in the last bar of your chart as “others”. Working in an automotive OEM we noticed that micro-stoppages of production line, reported commonly as “others”, were significant at the end of month, therefore the causes were stratified, recognized and attacked to reduce the downtime of the plant. Same process was used for quality and other logistics problems.
The long tail economy is pushing us to develop sustainable logistics, firstly because it´s quite different to deliver a movie in DVD format which needs trucks or airplanes to reach its destination than a movie in a downloadable file. Secondly, the consumers prefer products with a good cause associated, something like “this product was made with biodegradable materials” or a stamp of “environment friendly” transportation.
The question is: Are you taking care of the tail of scorpion? I hope yes and that you share with us your innovations, together we can go to the next level in logistics. As always, thanks for reading, until next one!
Anderson, C. (2004). The Long Tail. Wired Magazine.
Anderson, C. (2006). The Long Tail: Why the Future of Business Is Selling Less of More. Hachette Books .
FORA.tv. (2006). Identifying “The Long Tail” – Chris Anderson. Recuperado el 19 de January de 2016, de You Tube: https://www.youtube.com/watch?v=0Yku0GTrcuw