By Nick Carey
LONDON, May 3 (Reuters) – Over the past two years, a series of unexpected events have shaken up global supply chains. Coronavirus, war in Ukraine, Brexit and a container ship stuck in the Suez Canal have combined to delay deliveries of everything from bikes to pet food.
In response, a growing group of startups and established logistics companies have created a multi-billion dollar industry applying the latest technologies to help businesses minimize 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 faster to supplier issues, monitor raw material availability and get through the thicket bureaucratic cross-border trade. .
The market for new supply chain-focused technology services could be worth more than $20 billion a year over 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 technology research firm Gartner.
“The world has become too complex to try to manage some of these things on spreadsheets,” said Dwight Klappich, analyst at Gartner.
Interos, valued at over $1 billion in its last funding round, is one of the best performers in the nascent market. The Arlington, Va.-based company says it has mapped 400 million businesses worldwide and uses machine learning to monitor them on behalf of business clients, alerting them immediately when a fire, flood, hack or any other event causes potential disruption.
Before Russian tanks arrived in Ukraine in February, the company assessed the impact of an invasion. Interos said it has identified about 500 US companies with direct relationships with businesses in Ukraine. Further down the chain, Interos found that 20,000 US companies had ties to second-tier suppliers in Ukraine and 100,000 US companies had links to third-tier suppliers.
Chief executive Jennifer Bisceglie said after the war began, 700 companies approached Interos to help them assess their exposure to suppliers in Ukraine and Russia. She said the company is developing a new product to address other what-if supply chain disruption scenarios, such as China’s invasion of Taiwan, so customers understand their risk exposure and where to find supplies. alternative providers.
Supply chain shocks are inevitable, Bisceglie told Reuters. “But I think we will improve to minimize these disruptions.”
US airline Delta Air Lines Inc, which spends more than $7 billion a year on catering, uniforms and other goods in addition to its aircraft and fuel budget, is one company that uses Interos to track its top 600 suppliers and 8,000 suppliers in total.
“We don’t expect to avoid the next crisis,” said Heather Ostis, Delta’s chief supply chain officer. “But we expect to be much more efficient and effective than our competitors in how we assess risk when this happens.”
MEAT, STEEL, SHAMPOO
KlearNow, based in Santa Clara, Calif., sells a platform that automates tedious, paper-dominated customs clearance processes.
It has been a lifeline for Doncaster, England-based EED Foods, which imports Czech and Slovak sweets and smoked meats for expat customers in Britain.
“Before Brexit, we were very afraid that we would have to close,” said Elena Ostrerova, EED’s purchasing manager. “But instead, we are busy like never before.”
Ostrerova says her business continues to grow at an annual rate of 40% after Brexit took effect in early 2020, in part because some competitors gave up rather than tackle the onerous new formalities to import from Europe. ‘European Union.
She said KlearNow’s customs clearance platform keeps track of her hundreds of shipments from Central Europe, tallying up totals on thousands of items, correcting errors on everything from country of origin to gross net weight, and providing an entry number – under which all information about a consignment is confined – for the company transporting it to Britain.
“We have minimal human involvement,” Ostrerova said, saving the company the time and cost of manual data entry.
Berk Birand, CEO of New York-based Fero Labs, said the coronavirus pandemic has highlighted the need for manufacturers to adapt to changing suppliers so they can keep making identical products. , regardless of the origin of the raw materials.
The startup’s platform uses machine learning to monitor and adapt to how raw materials from different suppliers affect product quality, from varying impurities in the steel to the viscosity level of a surfactant, an ingredient shampoo key. The system then communicates with plant engineers to adjust manufacturing processes to maintain product consistency.
Dave DeWalt, founder of venture capital firm NightDragon, which led Interos’ $100 million Series C funding round last year, said regulators are going to pay much more attention to the risk of the supply chain.
“If you have a supply chain issue that could cost you significant shareholder value, you will also have a major liability,” DeWalt said. “I believe that will happen in the near future.”
Large logistics companies are also deploying machine learning to boost their competitiveness. US truck fleet operator Ryder System Inc uses real-time data from its fleet, and that of its customers and partners, to create algorithms to predict traffic patterns, truck availability and prices.
Silicon Valley venture capital firm Autotech Ventures has invested in both KlearNow and newtrul, which aggregates data from transportation management systems in the highly fragmented U.S. trucking industry to predict price changes.
“Mapping your supply chain and interconnectivity down to the individual part level is the holy grail,” said Autotech Partner Burak Cendek. (Reporting by Nick Carey editing by Bill Rigby)