A series of unforeseen events have devastated global supply chains over the past two years. Coronavirus, the war in Ukraine, Brexit and a container ship stuck in the Suez Canal have delayed the delivery of everything from bicycles to pet food.
In response, a growing group of startups and established logistics firms have created a multi-billion dollar industry, applying the latest technology to help businesses minimize disruption.
Interos Inc, Fero Labs, KlearNow Corp and others are using artificial intelligence and other cutting-edge tools to help manufacturers and their customers respond more quickly to supplier conflicts, monitor raw material availability, and manage cross-border trade. can be achieved through bureaucracy. ,
Analysts told Reuters that the market for new technology services focused on supply chains could exceed $20 billion annually over the next five years. According to tech research firm Gartner, by 2025, more than 80% of new supply chain applications will use artificial intelligence and data science in some way or another.
“The world has gotten too complicated to try to manage some of these things on a spreadsheet,” said Gartner analyst Dwight Klapich.
Interos, valued at over $1 billion in its latest funding round, is one of the most successful in the nascent market. The Arlington, Virginia-based company says it has mapped 400 million businesses globally and uses machine learning to monitor them on behalf of corporate customers, potentially causing disruption by fire, flood, hacking or any other event. Alerts them immediately when it is done.
Before Russian tanks rolled into Ukraine in February, the company assessed the impact of the invasion. Interos said it has identified about 500 US firms with direct supplier relationships with companies in Ukraine. Further down the chain Interos found that 20,000 US firms had relationships with second-tier suppliers in Ukraine and 100,000 US firms had relationships with third-tier suppliers.
Chief executive Jennifer Bisegli said 700 companies approached Interos to help assess their risks to suppliers in Ukraine and Russia after the war broke out. She said the company is developing a new product to meet other hypothetical supply chain disruption scenarios, such as China invading Taiwan, asking customers to understand the risks they face and find alternative suppliers. Can go
Supply chain shocks are inevitable, Bisegli told Reuters. “But I think we’re going to be better able to mitigate these disruptions.”
US airline Delta Air Lines Inc., which spends more than $7 billion annually on catering, uniforms and other goods on top of its aircraft and fuel budgets, is a company that keeps track of its 600 primary suppliers and 8,000 total suppliers. Using Interos.
“We’re not expecting to survive the next crisis,” said Heather Ostis, Delta’s supply chain chief. “But we’re hoping to be much more efficient and effective than our competitors in how we assess risk when this happens.”
meat, steel, shampoo
Santa Clara, Calif.-based KlearNow sells a platform that automates cumbersome paper-headed customs clearance processes.
This has been a life saver for EED Foods, based in Doncaster, England, which imports Czech and Slovak sweets and smoked meats for expatriate customers in the UK.
“Before Brexit we were very scared that we would have to shut down,” said EED purchasing manager Elena Osterova. “But instead we are as busy as ever.”
Osterova says her company is still growing at an annualized rate of 40% even after Brexit took effect in early 2020, partly because some competitors have to deal with new paperwork to import from the EU. Instead of giving up.
She said KlearNow’s customs clearance platform keeps track of hundreds of its shipments from Central Europe, totals over thousands of items, corrects mistakes on everything from country of origin to gross net weight, and provides an entry number. – under which all information about a shipment is contained – for the company to carry it to the UK.
“We have minimal human involvement,” Osterova said, which saves the company time and the cost of manual data input.
Burke Birnd, CEO of New York-based Ferro Labs, said the coronavirus pandemic highlighted the need for manufacturers to adapt to changing suppliers so that they can continue to make similar products regardless of raw material origin.
The startup’s platform uses machine learning to monitor and optimize how raw materials from different suppliers affect product quality, from varying impurities in steel to viscosity levels in surfactants, a key ingredient in shampoo . The system then communicates with plant engineers to change manufacturing processes so as to maintain product stability.
Dave DeWalt, founder of venture capital firm KnightDragon, which led Interos’ $100 million Series C funding round last year, says regulators are going to take a lot of interest in supply chain risk.
“If you have a supply chain problem that could cost you major shareholder value, you also have a greater responsibility,” DeWalt said. “I believe it is coming in the near future.”
Major logistics firms are also using machine learning to enhance their competitiveness. US truck fleet operator Rider Systems Inc. uses real-time data from its fleet, and its customers and partners, to build algorithms to predict traffic patterns, truck availability and pricing.
Silicon Valley venture capital firm Autotech Ventures has invested in both ClearNow and Neutral, which aggregate data from transportation management systems in America’s highly fragmented trucking sector to predict price changes.
“Mapping your supply chain and interconnectivity at the level of the individual part is the Holy Grail,” said autotech partner Burak Sendek.
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