Signal management

Excess Consumption – The Portal to the Next Generation of Supply Chain Management Systems

According CrunchBase, funding for supply chain management startups skyrocketed in 2021, reaching $11.3 billion. For years, investors have ignored companies trying to develop solutions for an archaic industry that, to this day, still relies heavily on pen, paper and spreadsheets for day-to-day operations. More than two years have passed since the start of the pandemic, but supply chain disruptions are still in the headlines, encouraging more tech companies to scramble to fix the problems. In this race to win the Holy Grail, the companies that survive will dominate the market and serve as the pillars for the next generation of manufacturer management systems in the industry.

Many failures throughout the global supply chain have accumulated over the years because the management systems in place did not provide manufacturers with what they needed to run day-to-day operations. Furthermore, globalization processes have led to changes in the way manufacturers treat their suppliers and subcontractors; at the same time, the volatility of customer demand has increased, and all of this has not been reflected on the screens of OEM dashboards as one would expect from tech giants. As a final deal to all the problems that already existed, the public became addicted to smartphones and saw that as consumers they could track their food delivery or transportation service from the starting point of their order to the point of delivery. arrived, all from their mobile screen, so everyone started asking questions; how come these services do not yet exist in the business sector?

Technology and innovation have shown that dreams can come true. Sometimes it can take a few years to establish a lasting solution; however, when many competitors register for this race, the chances of finding solutions sooner increase. In this journey to create the next generation of supply chain standards, less than 10% of startups are likely to succeed. Unfortunately, startup success rates haven’t increased over the years. However, if we want to solve this global chaos by developing new technological solutions, this world needs as many competitors as possible to survive in this race. Looking at this chaos from a macro perspective, we can identify two main sets of challenges. The first consists of scattered data and the second of data from obsolete equipment.

Scattered data

Scattered data refers to all data that exists in various management systems, spreadsheets, emails or any other application, but is not connected and therefore cannot provide valuable business information in time. . In these cases, there are two main ways to solve the problem. The first method is the traditional method, which involves writing code between two systems or platforms. In this case, software developers must connect the data, and it must flow at least in one direction, if not in both directions. These types of solutions are mostly called professional services and are run by dedicated service companies or technology companies that don’t have a complete technology solution, so they have to manually add parts to their product. These solutions are customized for each company separately; They are expensive; are time-consuming, require specific knowledge of multiple systems and platforms, and are certainly not scalable. Manufacturers find it difficult to budget for these types of projects, especially after purchasing expensive management systems such as ERP, WMS, TMS or CRM and paying their annual license fees. The second way to solve the sparse data problem is to develop a repeatable solution that can work for multiple customers without coding it from scratch for each new customer. Currently, many startups are primarily focused on developing a solution that could work for multiple customers in the supply chain, logistics, and transportation industries. Investors want to see a repeatable and scalable solution. Some startups may refer to their solution as “connectors to legacy management systems”, and others may define it as a dashboard that presents the full picture of business operations, but whichever definition they use, they all try to figure out how to collect data from multiple data sources, integrate it, clean it and use it as quickly and efficiently as possible for multiple customers and show that the solution is scalable. If a startup’s product requires too many manual additions to its core technology solution, it will become a service company. Therefore, the race is on for a product that can do the closest thing to downloading an app from the App Store and connecting it to relevant data sources to deliver full visibility on a single dashboard to manufacturers.

Data from obsolete equipment

The second challenge is a significant hurdle at the moment. Many tech companies don’t deal with this directly and develop a solution for a reality where this obstacle either doesn’t exist or is someone else’s responsibility. Data from obsolete equipment refers to all data that exists in obsolete analog equipment such as production machinery, vehicles, containers or any other equipment that is not connected to management systems because it is old . In this case, information on production rate or location can only be transmitted manually, which means that data entry into spreadsheets or directly into management systems is done manually by people. New equipment purchased in recent years is better suited to the digital world. It can connect and transmit data in a structured way or have an API infrastructure that software developers can use easily. The problem is outdated equipment that is still not connected to anything and works like an analog (standalone) machine. To solve the connectivity between the analog world and the digital world, there are companies whose main objective is to upgrade analog equipment into intelligent machines. Without this piece of the puzzle, technological solutions will not work, no matter how brilliant. Currently, a significant portion of the equipment in this world is obsolete. The cost of production machinery or heavy equipment is very high; therefore, the replacement of such equipment is not carried out very often and requires financial planning. What ends up happening is that manufacturers who need to receive information from multiple internal and external analog sources find that the infrastructure currently in use is still not suited to the technology that is developing for the digital world.

Product development

Tech companies that focus on developing a solution to only one side of the problem are putting themselves at risk. To provide a complete solution for manufacturers, logistics companies, or any type of transportation business, technology companies need to cover both sides of the problem. Many startups are developing solutions for a future market that will one day exist. However, currently, we are not there; thus, start-ups must bridge this gap if they are to survive.

The path to the solution goes through collaboration

It will likely take more than a decade for manufacturers, logistics and transportation companies to upgrade most of their equipment to work well with digital technology. However, during this period, if startups want to stay in the game, they must find a solution that can help them solve the lack of data due to outdated equipment. The solution must include a way to upgrade existing outdated equipment so that it can communicate with dashboards that provide real-time information. A lot of best supply chain management unicorns currently leading this race, work with companies whose expertise is in transforming obsolete equipment into smart equipment that can work with digital technology. For newbies reading this, keep your heads up! If you can provide a SaaS product that covers obsolete equipment, you’ll make life easier for manufacturers. In this way, startups take responsibility for the current gaps in the market and provide a unique SaaS solution. Knowing the people on the ground is key. Startup founders with experience working with production workers, procurement teams, or truck drivers, for example, have enormous leverage in creating better solutions for this market.

The essential

The supply chain crisis is reflected in every aspect of our lives. Many tech companies see the same core problems but focus on different industries, so these may look like different solutions, but in practice they are similar. It doesn’t matter if startups focus on food production, consumer goods, fashion, or agriculture, as long as they provide solutions for fleet management, moving inventory, and the ability to pick up on market signals. that have an impact on demand planning. It also means that some startups don’t have a complete picture of their competitors and have to consider that they might be crushed by better solutions from parallel industries. Startups should learn from history of tech giants. It took more than two decades for SAP, including two major phases of product development, to gain expertise and establish a market presence. During this time, they focused on specific industries based on their early customers and partnered with Microsoft to design an electronic archiving solution to deliver a complete package to customers. It wasn’t until the mid-2000s, as technology capabilities improved and some 30 years after its inception, that SAP expanded its offerings to encompass solutions for dozens of additional industries.

Whatever path startups choose, the macro solution is to build a bridge between the analog and digital worlds. Only then will manufacturers be able to see full visibility of their supply chain layers and, therefore, be able to make changes in the way they forecast and plan for demand and supply. .