Innovative solutions to build resilient supply chains
By Margaux Cervatius - 24 June 2021
The Covid-19 pandemic has exposed a number of failures in our current systems, particularly in the supply chains of several sectors. According to a study by Orange Business Services, the pandemic disrupted the supply chains of 40% of multinational companies.
Some have seen their production halted due to a shortage of raw materials or components. Others were unable to cope with sudden fluctuations in demand. We all remember the images of empty shelves in supermarkets. At the beginning of the crisis, consumers rushed to buy basic necessities (toilet paper, pasta, flour, etc.).
Adaptability and resilience are now the keywords of the FMCG industry. And startups can be great allies for players in this industry to build more resilient supply chains.
Predict and adapt to changes in demand
There are many software tools available today to help companies better adapt to changes in demand. These tools collect information as close as possible to customers to monitor demand in real-time. This is often accompanied by a predictive component based on artificial intelligence. Algorithms analyse consumer information (online and/or in-store) but also market events. The German startup 7Learnings, rated by Early Metrics, enables retail players to accurately predict the evolution of demand. They can also choose to automatically adjust their prices according to this demand. 7Learnings relies on both internal data (e.g. sales history, catalogue) and external data (e.g. competitors’ prices, weather).
Other startups offer to automate inventory tracking and management. Flowlity, a French startup rated by Early Metrics, sets up a secure network between all the players in the supply chain. Clients can view sales and consumption forecasts, and can then better plan their supplies. The aim is to reduce financial losses due to overstocking or shortages. Their suppliers also have access to the software to view future order forecasts and access current orders. Flowlity is currently working on using its software for the vaccination campaign against Covid-19, as part of the INNO’Vaccins project.
Reinventing industrial processes
While such software can help companies build more resilient supply chains, that’s not enough on its own. They must be accompanied by changes in the manufacturing infrastructure itself. Indeed, companies need to adopt manufacturing processes that can quickly adapt to changes in demand or product. 3D printing, which has been gaining in popularity for several years, can address this issue. This technology makes it easy to create customised parts in a variety of materials (plastic, resin, ceramic, concrete, etc.).
Robotics must also become more flexible. Programming a robot to perform a specific task can be time-consuming and expensive. Startups have appeared on the market to facilitate the programming of robots, such as Intermodalics, rated by Early Metrics. Its Pick-it software solution automatically programs handling robots using a camera and computer vision software. Pick-it automatically detects the products and programs the robot’s movements accordingly.
Demonstration of the Pick-it robot developed by Intermodalics
Finally, in order to meet demand, factories need to operate optimally. Solutions are available to monitor operations in real-time, in order to detect any anomalies on the production line. This prevents downtime, which can be very costly for a company. Declique offers connected buttons to track and measure production stoppages. A platform collects and analyses all the data from the buttons to help companies identify recurring problems and take corrective action. Companies can also deploy self-driving vehicles to move goods safely and autonomously. This reduces accidents and production delays.
Diversify and secure relationships with suppliers
Companies can optimise their operational and industrial processes, but they are rarely the only actors in the supply chain. Indeed, the supply chain is made up of several elements and the relationship with suppliers is a crucial issue.
Increased demand for transparency
The Covid-19 crisis has marked a strong resurgence of local channels. Startups are helping retailers to find local suppliers. Alkemics has developed a collaborative platform where manufacturers and distributors share all their product data (composition, regulatory information, labels, etc.) in a single secure location. The startup facilitates exchanges and enables retailers to quickly connect with new suppliers. In 2020, Carrefour bought the startup Potager City, which specialises in the delivery of fruit and vegetables in short channels.
This boom in short channels can be explained in large part by the increased demand for transparency. Consumers are increasingly concerned about the origin and authenticity of the products they buy. Many manufacturers are therefore implementing traceability solutions. These are based on connected devices (IoT) attached to products in order to follow their journey and on blockchain technology for secure and immutable data storage. Circulor, a British startup rated by Early Metrics, tracks the movement of raw materials at every stage of the process. It uses a combination of GPS, biometric and QR code data. Circulor then stores the data in a secure registry using the blockchain.
Optimisation of administrative processes
Startups combining regtech and fintech can optimise the management of contracts and payments to suppliers. For greater efficiency, contracts can be created automatically from templates and signed online. Contracts are then stored on secure platforms to improve tracking throughout the supplier relationship. In addition, some startups are providing better financing solutions. Paygevity allows companies to optimise their working capital management by extending supplier payment terms free of charge.
Key challenges faced by supply chain startups
Startup solutions to build resilient supply chains are not lacking. However, their deployment faces several obstacles, which are more or less easy to overcome.
To be relevant, AI algorithms need to be fed with large amounts of standardised data. However, large data silos continue to exist within large companies. In some cases, it is also difficult to obtain actionable data from suppliers. Startups need access to all the information at each stage to provide a reliable view of the supply chain. They must therefore make the various players aware of the challenge of data sharing while ensuring that the interests of each party are protected.
Moreover, the deployment of these solutions may require technical skills that are not always mastered in-house. Startups must therefore offer turnkey solutions that are easy to deploy. Indeed, we have seen the emergence of “no-code” solutions, such as the one offered by Wandelbots. The rated German startup is developing a suit equipped with sensors to teach a robot actions to reproduce. Thanks to their solution, workers can easily and quickly programme industrial robots without needing to be a technical expert or programmer.
Dependence on foreign markets
Finally, despite the increasing number of networking and collaboration platforms, it is sometimes difficult to find suppliers of certain products or raw materials in Europe. Manufacturers are forced to turn to international players, mainly in Asia, and are thus dependent on various macroeconomic factors (political tensions, pandemics, natural disasters, etc.). Today, many manufacturers in the automotive, electronics, and household appliance industries are seeing their production slowed down by the global shortage of semiconductors, for instance.
While most large groups had already begun their digital transformation, the Covid-19 pandemic gave it a significant boost. Basic trends such as traceability or short circuits have been reinforced. Investments in supply chain optimisation should continue to increase, by an estimated 20% per year. However, this funding goes against the trend of globalisation, as it will largely be directed towards local production. Ongoing efforts are therefore needed to create resilient supply chains that can meet local demands in a globalised context.