A supply chain improvement industry is rising from the pandemic

Sabri Ben-Achour Jan 11, 2022
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"The future of supply chains really is this visibility, it's being able to know where your goods are at all times, what your suppliers are planning," says Eric Oak, a senior trade analyst with S&P Global Market Intelligence. Above, an aerial view of shipping containers. Christopher Furlong/Getty Images

A supply chain improvement industry is rising from the pandemic

Sabri Ben-Achour Jan 11, 2022
Heard on:
"The future of supply chains really is this visibility, it's being able to know where your goods are at all times, what your suppliers are planning," says Eric Oak, a senior trade analyst with S&P Global Market Intelligence. Above, an aerial view of shipping containers. Christopher Furlong/Getty Images
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Empty store shelves: so simple, yet so complicated.

“The reason that something doesn’t show up on the store shelf, there can be a lot of reasons for that,” explained Ed Barriball, a partner at consulting firm McKinsey & Co.

One of those reasons: an inability for a manufacturer to see very far along the supply chain of which they are a part. “Understanding not just who their immediate suppliers are, the people they buy from, but their suppliers’ supplier, and their supplier’s supplier’s supplier,” he said.

A company’s product can be all ready to go, only to get stuck on the assembly line because the packaging supplier didn’t come through.

“Over 90% of companies say they would like to improve their supply chain resilience,” Barriball said, “but only 2% of companies say they have the visibility they need” — particularly down to the raw materials.

In the past — and in the present for some industries — suppliers were not inclined to share who their own suppliers were, as this may be a source of competitive advantage. There may also be intellectual property secrets at play. This is one reason why this supply chain problem has persisted for as long as there have been supply chains.

It was also accepted for many years, and the negative consequences were rare or minimal enough to keep it out of mind. Sometimes, it was just assumed to be the supplier’s problem if they couldn’t deliver.

But the supply chain hiccups of the past have, through a trade war and a pandemic, become major spasms. Now an industry is rising to treat them. From new startups valued in the billions to old legacy companies, insight into supply chains is selling.

A startup called Project 44 was just valued at $2.4 billion after raising $240 million in equity funding from, among others, Goldman Sachs Group. Interos, which uses artificial intelligence to model supply chains, is valued at more than $1 billion. 

Legacy logistics companies, like Flexport, entice customers with the ability to collect supply chain data. Manufacturers are also paying more attention and asking more questions about their supply chains. 

Companies are also simply paying more attention and doubling down on investigating their own supply chains, according to Eric Oak, a senior trade analyst with S&P Global Market Intelligence.

“The future of supply chains really is this visibility, it’s being able to know where your goods are at all times, what your suppliers are planning,” Oak said.  

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