Disrupting the supply chain with startups

Startups and established firms are rushing into the innovation battle to optimize and invent the supply chain of tomorrow. Delivery Day +1 or same day, and “real time” operations are a few of the many challenges the players need to address today.

In France, La Poste, Cdiscount, La Redoute, Showroomprive.com are digitizing their warehouses and fulfillment centers with state-of-the-art technologies. This represents massive investments but keeps those players in the play when competing against the reference in the sector: Amazon and its Prime offer.

On the other side of the scale, startups like La belle Vie are betting on the delivery within the hour to differentiate themselves from a fierce competition.

To achieve such amazing logistic miracles, players are deploying a full range of high tech solutions involving robots, conveyors , miniloads, stackers merged with iot and specialized softwares often based on artificial intelligence and machine learning.

French startups in #supplychain. You can download the file in PDF here: https://blog.lehub.bpifrance.fr/mapping-supply-chain/

Our segmentation

This mapping covers the “enablers” of the supply chain & logistic challenges i.e technologies and players which design, facilitate, optimise indoor and outdoor activities from the shipping from the production unit to the delivery to the final client. In many cases this is coupled with a S&OP (Sales and Operations Planning) ensuring an optimal production planning taking into account sales forecasts and storage costs.

By design, the present mapping is somehow overlapping with solutions from industry 4.0 (see previous mapping here) especially for technologies which power the automation and tracking within fulfilment and logistic hubs. Downstream on the chain, the adjacence is with the mapping of the Retail-tech (see here) with the omnichannel and last mile delivery concepts.

  • WMS stands for « Warehouse Management System »: this includes the technologies optimizing the warehouse such as storing, collecting, sorting, packing, shipping.
  • TMS stands for « Transport Management System »: this includes upstream or downstream process and activities (from the warehouse).
  • SCM stands for « Supply Chain Management System »: this includes end to end modeling and optimization solutions (logistic operations, transport infrastructure, and business perspectives). This category also covers new softwares addressing the strategic management of suppliers and business partners often with a collaborative perspective.

Startups and established firms are rushing into the innovation battle to optimize and invent the supply chain of tomorrow

The unmanned warehouse

21st century logistic hubs are revolutionizing the historic static shelf configuration where operators are wandering in the warehouse maze equipped with a caddie and a headset pushing operational instructions into their ears.

Today, shelves are mobile and move flawlessly and silently to the picking operator thanks to robots which are moving the shelves. After the acquisition of Kiva System by Amazon in 2012 for $770millions, a few French solutions have emerged such as Scallog and Exotec. These solutions have already been adopted — for instance — by Gemo, Decathlon, and La Poste for the first one, and by the online retailer, C-discount, for the second one.

But this revolution has a significant cost and the level of CapEx involved could slow down the adoption of these amazing techs especially for smaller players. Those automated & intelligent palette conveyors & shuttle systems require a high level of investment and a visibility on the medium and long terms which are not in the pocket of all incumbents.

The order processing step could be performed through the implementation of a semi-automated process with augmented operators. It could work with the help of a robot (unsupervised.ai), an exoskeleton (RB3D), an IoT or AR solution (pickeos).

The rise of Blockchain solutions

The industry did not wait for the blockchain buzz to put traceability at the center of the search for better quality and operation efficiency. However, the rise of blockchain based solutions seems to address new expectations and services awaited by clients and consumers. Raw material origin, production & transformation date logs, carbon chemistry of a steel bar, numbers of kilometers covered by the crate, quantity of antibiotics used in the process, names of the supplier which have been involved in the transformation and transportation processes; all these are elements that the client seems to request to take an informed decision when placing its order.

Today, even if the number of tests of blockchain based solutions in the supply chain is skyrocketing, only few large corporations have really experienced the techno for real

The moment is also the one chosen by some incumbents to position themselves as a premium supplier and guarantee state-of-the-art quality products to their clients.

Today, even if the number of tests of blockchain based solutions in the supply chain is skyrocketing, only few large corporations have really experienced the techno for real. The high cost of those solutions sits not (only) in the blockchain itself but more in the domino effects and changes required on the field operations: acculturation of the suppliers and brokers, iot based process etc. Another barrier which could slow down the adoption of such techno could also be psychological when keeping hidden its supplier identity is a competitive advantage. Check Stratumn and Ownest.io among other promising gems.

But some have taken the bet of the transparent supply chain to gain or keep the trust of their partners and clients.

Blockchain based use cases have emerged trying to solve the challenges of counterfeit and pirated goods and materials or even to encourage a collaborative model between the client and its contractors.

Ensuring trust and accountability to all the players of the value chain allows a fair contribution and reward to the various stakeholders. Lowering the number of damages, costs, losses is also one of the driver which pushes somes players to look at the technology.

Leveraging artificial intelligences and operational data

We’ve seen that the increasing complexity of the logistic chains are driven by an unstoppable quest of traceability, flexibility and — above all — the search for cost savings. “Without ROI, there is no project” reminds Rodolphe Heliot, Business Incubation Director at Schneider Electric, during our Totem.

Understanding and modeling those complex networks are a major challenge. With this algorithmic in place, players are looking for optima which are combining a high level of service quality and an optimised use of resources.

This optimisation is possible if the system is continuously nourished by feedbacks and expertises coming from the operations: the delivery operator stress, the manager gymnastic with regulatory timing constraints, the shipper and its tide table and weather windows allowing the safe docking of the cargo barge. Machine learning and data forecasting are only relevant when trained and built with data from field operations.

A tour plan must be challenged within the day. Avoiding a neighborhood during the exit of a primary school, taking a new road in case of a detour, stopping to refuel are actions that the tour plan must apprehend in real time.

Algorithm optimisation is made under resource constraints. CTOs and CSO (Chief Scientific Officers) are not looking for the ultra optimised delivery plan which could be useless at the first unanticipated event but, first and foremost, for the most robust solution. This reinforces the tech and mathematical expertise mandatory for the candidates who are applying to such jobs in those companies.

On the B2C side, transportation is a major headache for all the players having to deliver at their customers’ favorite place. The last mile delivery could represent up to 30% of the total transport cost with immediate repercussions on the final price and quality of the service perceived by the client impacting, as we know, the online sales volume.

Optimizing the last mile delivery is therefore a key step in the success of the online sale process.

Citodi has developed an artificial intelligence that builds dynamic routes taking into account all the variables of a delivery

Startup solutions like Citodi are positioned on this particular challenge. With their artificial intelligence solution for routing optimization that takes into consideration all variables of a delivery, Citodi targets savings up to 40%. To achieve this, Citodi has developed an artificial intelligence that builds dynamic routes taking into account all the variables of a delivery as well as real-time feedback loop from the operation. As Cédric Hervet, co-founder of Citodi, points out, “A tour plan must be challenged within the day. Avoiding a neighborhood during the exit of a primary school, taking a new road in case of a detour, stopping to refuel are actions that the tour plan must apprehend in real time”.

Vekia, the French champion of sales forecast optimization and inventory management has made its tool more efficient than solutions on the market thanks to AI. There is often a big difference between the operational data and the data made available during calls for tender. “Nevertheless our solution keeps the best forecasts even if the field data are tainted with errors” says Manuel Davy, founder of Vekia.

Towards ever more performance

On the edge of the democratization of new modes of delivery — autonomous cars and trucks, UAVs and even balloons with the French solution Flying Whales which recently raised 25 million euros — horizons remain open.

The consumer demand has never been higher and feeds this rush for performance. “Our customers are extremely demanding. E-commerce and its various modes of delivery require preparation and delivery times aimed at excellence and increase of speed, to reach 100% OTIF (On-Time In-Full), and at the same time to have the most efficient supply chain possible in order to invoice as cheaply as possible,” sums up Cédric Beaujard, Director of Operations at Viapost Connected Logistics (La Poste group).

Market demands have never been higher and each segment of the value chain is witnessing the emergence of its champion. Americans dominate the logistics market as a whole to a fairly large extent. Nevertheless, French players are rapidly deploying in cross-border countries to secure a leading position on the European market and face international competition. This is what Vekia is aiming for, having raised 12 million euros last in March 2018.

We wish all the other French startups the same success!


Authors:
Laurent Chhuon-Nougarède
Octave Letellier

Special thanks to Romain Tabard, Simon Robert and startups/corporates contributions

For Le Hub

More here: https://blog.lehub.bpifrance.fr/mapping-supply-chain/