The series of unexpected events that has whiplashed global supply chains over the past two years has inspired a growing group of technology start-ups to explore solutions to fix the challenges facing the logistics sector.
Coronavirus, the war in Ukraine, Brexit, and a container ship wedged in the Suez Canal all combined to delay deliveries of goods ranging from televisions to canned foods.
But now Reuters reports how a growing group of start-ups and established logistics firms has created a multibillion-dollar industry, applying the latest technology to help businesses minimise the disruption.
Interos Inc, Fero Labs, KlearNow Corp and others are using artificial intelligence and other cutting-edge tools so manufacturers and their customers can react more swiftly to supplier problems, monitor raw material availability, and navigate the red tape of bureaucratic cross-border trade.
The market for new technology services focused on supply chains could be worth more than $20 billion a year in the next five years, analysts told Reuters. By 2025, more than 80% of new supply chain applications will use artificial intelligence and data science in some way, according to tech research firm Gartner.
"The world's gotten too complex to try to manage some of these things on spreadsheets," said Dwight Klappich, a Gartner analyst.
Interos, valued at more than $1 billion in its latest funding round, is one of the most successful in the emerging market. The Arlington, Virginia-based firm has mapped out 400 million businesses globally and uses machine learning to monitor them on behalf of corporate customers, alerting them immediately when fire, flood, hacking or any other event causes a potential disruption.
“Before Russian tanks rolled into Ukraine in February, the company had assessed the impact of an invasion. Interos said it identified about 500 US firms with direct supplier relations with companies in Ukraine. Further down the chain, Interos found 20 000 US firms had links to second-tier suppliers in Ukraine, and 100 000 US firms had links to third-tier suppliers,” Reuters reported.
Chief executive Jennifer Bisceglie said after the war had started, 700 companies had approached Interos for help in assessing their exposure to suppliers in Ukraine and Russia. She said the company was developing a new product to look into other hypothetical supply chain disruption scenarios, such as China invading Taiwan, for customers to understand their exposure to risk and where to find alternative suppliers.
Supply chain shocks are inevitable, Bisceglie told Reuters. "But I think we're going to get better at minimising these disruptions."
US airline Delta Air Lines Inc (DAL.N), which spends more than $7 billion a year on catering, uniforms and other goods on top of its plane and fuel budget, now uses Interos to track its 600 primary suppliers and 8 000 total suppliers.
"We're not expecting to avoid the next crisis," said Heather Ostis, Delta’s supply chain chief. "But we're expecting to be a lot more efficient and effective than our competitors in how we assess risk.”
Santa Clara, California-based KlearNow sells a platform that automates cumbersome paper-dominated customs clearance processes.
This has helped EED Foods, based in Doncaster, England, which imports Czech and Slovak sweets and smoked meats for expat customers in Britain.
"Before Brexit we were very scared we would have to shut down. But instead we are busy as never before," said Elena Ostrerova, EED's purchasing manager.
KlearNow’s customs clearance platform keeps track of its hundreds of shipments from Central Europe, tallying totals on thousands of items, correcting mistakes on everything from country of origin to gross net weight, and providing an entry number - under which all the information about a shipment is contained - for the company hauling it to Britain.
Dave DeWalt, founder of venture capital firm NightDragon, which led Interos's $100-million Series C funding round last year, said regulators would be taking much greater interest in supply chain risk.
"If you have a supply chain issue that could cost you major shareholder value, you'll have a major responsibility too," DeWalt said. "I believe that's coming in the near future."
Major logistics firms are also deploying machine learning to boost their competitiveness. US truck fleet operator Ryder System Inc (RN) uses the real-time data from its fleet, and those of its customers and partners, to create algorithms for predicting traffic patterns, truck availability and pricing. - Reuters
