Daily Management Review

Supply Chain Disruptions Sought To Be Negated By Startups Using Apply Artificial Intelligence


Supply Chain Disruptions Sought To Be Negated By Startups Using Apply Artificial Intelligence
A succession of unanticipated occurrences has thrown global supply systems into disarray during the last two years. Coronavirus, the Ukraine conflict, Brexit, and a container ship stuck in the Suez Canal have all conspired to cause delays in the delivery of anything from bicycles to pet food.
As a result, a burgeoning sector of startups and established logistics services has emerged, employing cutting-edge technologies to assist businesses in minimising interruption.
Artificial intelligence and other cutting-edge tools are being used by companies like Interos Inc, Fero Labs, KlearNow Corp, and others to help manufacturers and their customers react more quickly to supplier snarl-ups, monitor raw material availability, and navigate the bureaucratic maze of cross-border trade.
According to estimates, the market for new supply chain technology services might be worth more than $20 billion per year in the next five years.
According to Gartner, more than 80% of new supply chain systems will incorporate artificial intelligence and data science in some way by 2025.
"The world's gotten too complex to try to manage some of these things on spreadsheets," said Dwight Klappich, a Gartner analyst.
Interos is one of the most successful startups in the nascent market, with a recent funding round valued at more than $1 billion. The Arlington, Virginia-based firm claims to have mapped roughly 400 million enterprises worldwide and utilises machine learning to monitor them on behalf of corporate customers, informing them promptly when a possible interruption is caused by fire, flood, hacking, or any other catastrophe.
The corporation had calculated the impact of an attack before Russian tanks rolled into Ukraine in February. According to Interos, around 500 U.S. companies have direct supplier relationships with Ukrainian companies. Interos discovered 20,000 U.S. companies with ties to second-tier Ukrainian suppliers and 100,000 U.S. companies with ties to third-tier Ukrainian suppliers farther down the supply chain.
After the war broke out, Interos was approached by 700 companies seeking assistance in assessing their exposure to suppliers in Ukraine and Russia, according to Chief Executive Jennifer Bisceglie. She said the company is working on a new product that will allow clients to simulate other hypothetical supply chain disruption situations, such as China invading Taiwan, in order to determine their risk exposure and where to find alternate suppliers.
Supply chain disruptions are unavoidable, according to Bisceglie. "But I think we're going to get better at minimizing these disruptions."
Delta Air Lines Inc., a U.S. airline that spends more than $7 billion a year on catering, uniforms, and other commodities in addition to its jet and fuel budget, is one corporation that uses Interos to manage its 600 primary suppliers and 8,000 total vendors.
"We're not expecting to avoid the next crisis," said Heather Ostis, Delta’s supply chain chief. "But we're expecting to be a lot more efficient and effective than our competitors in how we assess risk when that happens."
The company is situated in Santa Clara, California. KlearNow is a company that sells a platform that automates customs clearance processes that are now dominated by paper.
EED Foods, situated in Doncaster, England, imports Czech and Slovak sweets and smoked meats for expat consumers in the UK, and this has been a lifesaver.
"Before Brexit we were very scared we would have to shut down," said Elena Ostrerova, EED's purchasing manager. "But instead we are busy as never before."
After Brexit took effect in early 2020, Ostrerova claims her company is still growing at a 40% annual pace, partially because some competitors gave up rather than deal with the onerous new paperwork for importing from the European Union.
KlearNow's customs clearance platform, she said, keeps track of hundreds of shipments from Central Europe, tallying totals on thousands of items, correcting mistakes on everything from country of origin to gross net weight, and providing an entry number - which contains all the information about a shipment - to the company hauling it to Britain.
"We have minimum human involvement," Ostrerova said, which saves the company time and the cost of manual data input.
The coronavirus epidemic, according to Berk Birand, CEO of Fero Labs in New York, underlined the necessity for manufacturers to adapt to changing suppliers so that they may continue to develop comparable products regardless of the origin of the raw ingredients.
From varying impurities in steel to the level of viscosity in a surfactant, a key ingredient in shampoo, the startup's platform uses machine learning to monitor and adapt to how raw materials from different suppliers affect product quality. The system then communicates with plant engineers to make adjustments to manufacturing processes in order to ensure product consistency.
Interos' $100 million Series C fundraising round was headed by Dave DeWalt, founder of venture capital firm NightDragon, which also led Interos' $100 million Series B funding round last year.
"If you have a supply chain issue that could cost you major shareholder value, you'll have a major responsibility too," DeWalt said. "I believe that's coming in the near future."
Machine learning is also being used by major logistics companies to improve their competitiveness. Ryder System Inc (R.N), a U.S. truck fleet operator, creates algorithms for anticipating traffic patterns, vehicle availability, and pricing using real-time data from its fleet, as well as that of its clients and partners.
KlearNow and newtrul, which gather data from transport management systems in America's highly fragmented trucking sector to predict pricing changes, have received funding from Silicon Valley startup capital firm Autotech Ventures.
"Mapping your supply chain and interconnectivity at the individual part level is the Holy Grail," said Autotech partner Burak Cendek.