What role are Startups playing in the Digital Transformation of Supply Chain Management?

When most people hear the word ‘startup’ their minds instantly wander to a mental image of a business started by young adults, sitting around on beanbag chairs, wearing branded t-shirts and hooded sweatshirts, down to their last cent of funding and underdeveloped as an organization.

Do your thoughts align with that mental picture described above?

If so, it’s ok…that just makes this post all the more fun!

When I hear the word startup I think instantly of tech, innovation, market expansion, disruption, new products and exciting opportunity.

I, as an employee of a startup, am (of course) a bit biased within my opinions surrounding the stereotyped image of a startup.

For this post, when speaking of a startup, I would like to refer to the following definition as our framework of shared understanding for what ‘startup’ means.

Source: techtarget.com

The portion I find most interesting in this definition is the poignant mention of “something that addresses a particular market gap”.

This is the exact reason why startups hold such a massive potential for impact within existing business structures whether it be social, political, industrial or financial. Regardless of the vertical, startup ventures are locating gaps in the existing market and attacking them with rapidness even cheetahs would respect.

Recent trends in the global marketplace have shown that there is a digital transformation of supply chain management; moving away from its traditional state. There are multiple technological advancements that have caused this disruptive chasm in the industry. As days pass by, the technology just grows more intelligent, more structured, more user-friendly.

Technologies such as AI, Big Data, Machine Learning, IoT, Uberization, SaaS, 3D printing, workflow automation, self-driving vehicles, drones, wearables, and many more have led a surge into transitioning the daily activities completed within the domain of supply chain management.

Advancements such as the Internet of Things (IoT), which allows a virtual continuum for data collection between the physical and cloud, have been estimated to have economic impact in the range of $2.7 trillion — $6.2 trillion, by 2025.

Source: Mckinsey

Trillion.

What if I were to tell you none of this would be possible without the contribution of those measly, cheese curl stained t-shirted, startup ventures?

Believe it or not, startups have a major stake in the digital transformation of the supply chain management marketplace.

Startups have seen the gap in the market, and attacked.

Due to this trend, businesses globally have reaped the benefits of more efficient supply chains, providing stakeholders with the transparency they demand, and doing it all without hurting their top-line.

Just last week, 2 government organizations from Singapore gave 2.8 million dollars worth of soft-money to startups building technology to enhance supply chain activities. These are exactly the kind of investments that show the support big business and government is willing to throw at these small companies.

Startups functioning in the supply chain management domain, are creating a new dichotomy of managing supply chain risks.

The irony of it all is perfectly wrong.

Supply chain management teams- individuals that evaluate risk and manage that risk for a living -are putting their trust in new/young/less-experienced (potentially risky) startups in order to optimize risk management.

If doesn’t make you smile, I dunno what will.

Technology First

Development and updating of supply chain technology has continued to push the innovation curve.

For this reason, enterprise corporations aren’t able to develop the same capabilities that can be purchased from other tech services (many of which are provided by startups).

Technological advancement and automation is one of the sole focuses of startup ventures working within the supply chain management domain. As for the users, this makes for a continual educational experience, which some traditional supply chain pro’s are less than thrilled about.

“Automation through software achieves better operating margins which are leveraged for faster growth, better product, higher levels of service or lower pricing” (supplychain247).

Staying ahead of the coming trends has become the new standard of supply chain management.

As my grandpa always used to say; ‘you don’t hire an electrician to fix your toilet’.

Enterprise organizations are becoming increasingly aware, and humbled, to the fact that their internal development of supply chain management technologies will never match the smorgasbord of startups offering new and exciting tech.

Follow the money

Trends come and go, in business and our personal lives.

But, if you want to see the trends that typically stick around, just follow the money.

An article by TechCrunch back in March revealed that Freightos, a startup digitizing the global shipping process, received $25 million in a Series B extension round led by GE Ventures.

That investment brought the total funding of Freightos to $50 million.

With supply chain management becoming an increasingly complex and business-critical sector, enterprise organizations are becoming more willing to put their money where their mouth is; investing millions upon millions on startup ventures, developing technologies that could potentially revolutionize their businesses.

I mean seriously, there’s a new headline every week:

The stakes are getting higher, and startup ventures seem as if they’ll continue to be a key factor in the development of supply chain management.

Until next week.


This publication is brought to you by author Sam Jenks, but also on part by Kodiak Rating — A Supplier Relationship Management SaaS functioning out of Stockholm, Sweden. Kodiak Community intends to challenge traditional business practices with innovative thinking and creation.