Supply chain trends – part 2: Gaining control over supply chains

In the first part of our blog post series on creating robust and controllable supply chains, we dived into technologies that enhance the efficiency of supply chain processes and enable companies to nearshore their production. In this second (and last) post, we discuss gaining control over (offshored) supply chains with technologies that enable thorough visibility into supply chains and their surrounding processes.  

Offshoring – visibility & control  

Gaining control over supply chains requires gaining detailed visibility into them 

Enabling nearshoring by enhanced efficiency (as discussed in blogpost I) is not a solution for every company. Not all sorts of resources are available close to home, and certain companies will thus have to keep relying on their overseas suppliers. The results from a 2021 McKinsey survey[1] show that far more companies opted to counter supply disruptions by increasing inventories rather than by nearshoring production (which is rather inefficient; luckily, inventory optimization solutions can help with this). Offshored supply chains are thus likely to remain important for many firms, and innovating them with smart technologies to gain more control is key. According to a study from the European Parliament[2], enhanced ICT capabilities can help solve the lack of control over offshore activities, which might even slow down the nearshoring trend. Technologies that enhance such control primarily include technologies that increase visibility into offshored supply chains and transportation processes. With enhanced visibility, more informed decisions can be made. Possible disruptions can be foreseen and countered timely. Control and visibility thus work interchangeably.  

Tracking and monitoring 

To gain control, it is essential to have (real-time) knowledge of the location and conditions surrounding assets. Only in this way can informed decisions be made. Companies like Aioneers offer software that assists such decision-making. Furthermore, detailed reporting on the asset’s routing and environmental/societal impact of the transport and production is becoming increasingly important (for regulators, customers, as well as investors).[3] Visibility thus includes knowing the current status and location of products and their origins. The increased need for non-financial reporting drives the development of companies like Tilkal, which develops software that enables visibility into products’ origins and subsequent supply chains. Specific industries like the medical or food industry also require certain transportation standards (related to temperature, time in transportation, hygiene, etc.). Visibility into transportation conditions is essential for meeting and reporting such criteria. Companies like Logmore, Globe Tracker, and Nexxiot provide IoT data loggers that enable real-time monitoring of transportation conditions. And Cargosnap developed a platform that allows for simplified, real-time cargo inspections, to establish streamlined ‘trusted’ handovers of cargo.  

Countering congestions 

Another significant problem that companies with offshored supply chains face is congestion of their goods in ports and before entering ports. Dutch readers might have noticed the line of anchored ships that queue in front of the Dutch coastline. These are (partly) ships waiting for a spot in the Port of Rotterdam[4]. Precise visibility of assets and the vessels/vehicles carrying them enables better scheduling of berth and the subsequent freight forwarding and foreseeing possible disruptions in this process. This reduces congestion or can help counter them when foreseen in a timely manner. Take, for example, the company Portchain or Awake.ai, which builds a data network with (shipping) carriers and terminals to ensure better port alignment with the aim of reducing port congestion. And the company Flowfox counters congestions in the freight forwarding space by automating container release.  

Our vision and conclusions 

Even though there are promising companies on more niche aspects, the visibility space is dominated by some large players, such as Shippeo, Flexport, Project44, and FourKites. They offer end-to-end visibility solutions presented on platforms from which the supply chain processes can be orchestrated. This crowded landscape makes it hard for start/scale-ups to gain sufficient market share within the space. We nevertheless believe there is still room for innovative solutions from start-ups that can move quicker than the large incumbents. For example, the French firm Wakeo, managed to grow rapidly by establishing an extensive data network (which is essential for thorough visibility) by collaborating with freight carriers and forwarders. And BuyCo, which did a similar job with their container transport management system. Furthermore, we observe that focusing on a specific industry pain point can help companies move more rapidly than the incumbents, who instead primarily focus on supply chain processes for several industries and offer more general solutions.  

Supply chain visibility is thus a term with a broad scope, implying a wide range of solutions needed to establish end-to-end visibility. It includes visibility into the root of products, as well as real-time visibility into the status and location of assets. It is essential for control and well-informed decision-making over offshored supply chains.  

Conclusion on blog post series  

At Endeit Capital, we believe in the nearshoring trend (discussed in blogpost I) and its positive effects on climate and society. However, we also see that not all firms can inshore their processes and believe globalization is a phenomenon that connects countries and should be stimulated and made more efficient with smart technologies. Large improvements can still be made in this space; we believe technology will drive this. At Endeit Capital we are eager to support founders in growing their innovative approaches to tackle these challenges! Our team has the experience and track record to help you grow your company organically, expand to new markets, and/or through acquisitions. Reach out if you want to talk about growth!   

SOURCES 

[1] McKinsey & Company – ‘How COVID-19 is reshaping supply chains’, link. 
[2] European Parliament – ‘Post Covid-19 value chains: options for reshoring production back to Europe in a globalised economy’, link. 
[3] EY – ‘The Evolving Non-Financial Reporting Landscape’, link. 
[4] Port of Rotterdam – ‘Schepen voor de kust: deze parkeer ik even’, link.