Supply chains: transformation by design
From back office to centre stage
Nearly 75% of companies reported disruptions to their supply chains during the Covid pandemic, according to Fortune magazine. In early 2020 it was difficult to receive orders from China and now in 2021 a number of logistics issues are intertwined, including a worldwide shortage of shipping containers. It’s important to examine the root causes of these challenges and to evaluate some innovative startups operating within the supply chain ecosystem.
To succeed in supply chain management, companies need to be global, agile and adaptive – three attributes that are also associated with successful digital transformation programmes. Additionally, successful companies tend to have a high level of ESG awareness, with a view to removing carbon, waste and cost from supply chains.
Over 90% of Fortune 1000 companies have have tier 2 suppliers in the regions of China most affected in the initial phase of the global COVID-19 pandemic. Any impediment to interaction and engagement with these suppliers makes concentration risks hard to manage. Vertical Just In Time (JIT) supply chains may benefit large companies at the expense of small ones. A more regional approach to supply chains may be appropriate for some industries.
How can organisations limit, manage and foresee supply chain risk and future disruptions?
One contributing factor organisational agility is technology that facilitates data-driven decision-making. While many of the top challenges faced by each industry seem to be influenced by their specific external situations, there is an opportunity across sectors for companies to leverage their data to create transparency and better address short- and medium-term demand and supply-chain implications. In this way, companies can minimise disruptions and optimise cost.
Adaptive to change
The power to adapt and evolve in fluid situations is critical. Demand volatility is causing issues for planning, with many leaders reporting that they are finding it challenging to trigger new orders because they cannot make accurate demand forecasts, which affects their ability to manage cash flows and working capital. Alternate sourcing strategies can only be achieved with end-to-end visibility in JIT supply chains,
Many companies are developing new technologies and systems for managing supply chains. These innovations will enable management of demand disruptions, workforce flexibility, manufacturing ecosystem viability and the rebalancing of physical production network assets. Three innovators stand out in the supply chain ecosystem.
The first company to highlight is Arviem AG, which addresses the critical problem of visibility and intelligent trade. Currently Arviem is the only full-service, pay-as-you-go provider for real-time cargo tracking and monitoring on the market, providing exceptionally accurate location and quality condition monitoring of cargo throughout the global supply chain. Real-time data improves the entire supply chain in the areas of inventory management, product quality, insurance costs and customs clearance. For customers using the Arviem solution, this provides a significant competitive advantage in managing their logistics.
Using the Internet of Things (IoT) technology of sensors on containers and cargo, Arviem delivers real-time oversight of trade. The system relies on three elements: data monitoring through devices, data analytics and notifications and global device operations. Arviem are so confident of the value they deliver to customers that they guarantee a minimum of 150% ROI on their cargo monitoring and supply chain visibility services, Improved logists data enables customers to manage working capital more efficiently. Arviem is heaquartered in Baar, Switzerland.
The second example is Agility, a leader in supply chain solutions and sustainability with a strong position in emerging markets countries, and one of the largest private owners and developers of warehousing and light industrial parks in the Middle East, Africa and Asia. This company can offer digitally-enabled freight forwarding, ecommerce logistics and last-mile delivery, fuel logistics, airport services, customs digitization, remote site services, and commercial real estate and facilities management. Through its subsidiary Agility Ventures, the firm invests in and offers incubator support to startups in the sector. With its Green Supply Chain commitment, Agility works to achieve sustainability targets. Agility is headquartered in Kuwait and is a listed company on the Kuwait and Dubai stock exchanges.
The third innovator is Project 44, which has received investment from Goldman Sachs, among other investors, in its Series E funding round. Servicing shippers, logistics service providers and carriers, Project 44 is the largest network for supply chain management and is used by large multinationals such as Starbucks. With an emphasis on visibility, automation and collaboration, the company integrates data from myriad sources to deliver customer solutions. For example, they analyse weather data to understand its impact on container sailing schedules and port-to-port shipping times. Project 44 is headquartered in Chicago.
The way forward
Better, faster, cheaper, greener – that’s the future of supply chain management. We believe that the winners in supply chain management will be companies that provide a platform of services that benefit producers, shippers and consumers. To the extent that supply chain providers can be leaders in sustainability, this will contribute to their durable competitive advantage. Operational excellence is correlated with ESG awareness. Investment Week recently cited the Morningstar Wide Moat Index when referring to companies scoring well on “economic moats” also recognised for adherence to ESG metrics.
VIVA Investment Partners is proud to have made a direct investment in Arviem AG as its first foray into the growing arena of supply chain management solutions. We look forward to supporting them and other companies in this sector.
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