By Erik Terjesen, Partner at Silicon Foundry and Cleantech Expert
The pandemic’s disruption may have receded, but it has left a mark on the supply chain and revealed some hard truths. Prior to 2020, many logistics companies were slowly shifting towards a digital transformation, but they were doing this on their own time. When the pandemic hit, it exposed the technology gaps that a lot of corporations were dealing with — and pushed the smartest companies to take action. The challenge has been for these enterprise organizations to identify the right digital tools for their business, as newcomers to the technology world.
These giants know logistics inside and out, but may need assistance bringing their operations into the future. Increasingly, this means turning to a new range of digital-first start-ups that offer a new perspective on the industry and a new approach to supply chain management. Although newer in the market, start-ups have been designed from the ground-up to leverage software and work in a modern environment. Through collaborations with these start-ups, big buyers can gain visibility into supply chain weaknesses, assess geopolitical risks, adopt new tech, and better navigate all the moving partners of the supply chain.
Old Approaches Can’t Solve Today’s Logistical Challenges
Change can be risky, expensive and intimidating, which is why so many organizations put off overhauling their technical infrastructure — but they can’t do this anymore. As business has become more globalized, supply chains have grown more complex. Companies are working with more suppliers across multiple locations and so manual methods of keeping track no longer suffice. A single supply chain may have several components and participants, with everyone needing instantaneous access to order updates and details. Pen and paper can’t keep up.
On top of that, vendors utilize different methods of communication and monitoring, which historically has been impossible to combine into a single interface. Between emails, faxes, Excel spreadsheets, and so on, information is split across too many locations. These legacy approaches are particularly dangerous for the supply chain, because the nature of logistics requires real-time visibility and the ability to respond to emergencies or unexpected events. Without access to up-to-date information, mistakes can be frequent and costly.
Emerging Solutions are Coming from Next-Generation Startups
Corporations understand that things need to change, but the solutions haven’t been obvious. Most legacy organizations aren’t equipped to develop their own cutting edge technology as their corporate experience lies in other areas. Product development can also be very expensive, labor-intense, and time-consuming, which isn’t practical for companies that need to implement changes quickly and efficiently.
Fortunately, one effective solution is emerging: partnering with a start-up. They may be limited in experience and scale, but these companies are flexible and able to approach the supply chain from a new angle. These teams are frequently digital natives who see the problems within a technological framework and therefore can offer new digital solutions, which may have been invisible to corporations.
Examples of these game-changing new initiatives are everywhere. For instance, Slync offers a logistics orchestration platform that is able to tackle both structured and unstructured data, bringing together all the complex processes of a supply chain into a single ecosystem. Meanwhile, Flexport’s supply chain management platform supports real-time communication between suppliers, customers, and partners, so that everyone is able to maintain visibility and react to new developments as they arise. This minimizes the risk of unresolved errors or unaddressed issues.
The Value of Startup-Corporate Collaborations
Start-ups and corporations have opposing strengths and this could suggest a rivalry within the logistics industry. However, this would be a missed opportunity. By working together and leveraging each other’s expertise, both companies gain a valuable partner and customer. This then frees them up to focus on their own strong suits.
For corporations, this is an opportunity to license cutting-edge solutions that they would struggle to develop in-house, due to a digital skills and experience gap. Rather than investing in their own research and development, they can partner with an experienced technology service and utilize software tools in a more timely and cost-effective way. This ensures their existing logistics frameworks can function at their best long into the future.
For start-ups, this is the chance to work with a huge and thriving sector and bring on long-term, lucrative clients. These collaborations can provide exposure to decades of experience and knowledge of the industry, which can fuel future development and help refine existing products. Large-scale partnerships also enable start-ups to work at a scale that may have been unavailable to them previously.
While the most dramatic impacts of the pandemic have eased off, there will likely still be fall out for several months. In fact, many experts predict that it won’t be until some time in 2023 that logistics activity begins to stabilize again. What’s more, that new landscape will demand more from supply chain participants, in terms of digital savvy and technical capability. The corporations that are proactive and identify the right start-up solutions for their particular needs will be the ones that emerge into that new environment in the strongest position.
Bio: Erik has spent his career turning groundbreaking clean technology research into commercial products that make our world cleaner and more efficient. At Silicon Foundry, he advises organizations on their cleantech adoption, commercialization, and investment strategies. Before that, he worked at Ionic Materials, where he negotiated partnerships to bring the company’s novel solid polymer technology to market in battery applications. He also led Qualcomm’s Halo program, which brought wireless charging technology to the electric vehicle market. Earlier in his career he gained experience in venture investing at HarbourVest Partners and investment banking at Robertson Stephens. Erik holds a BA from Harvard and an MBA from Wharton. When he’s not working, you’ll find Erik spending time with his family in San Diego and working on his electronic music production hobby.