Startups apply artificial intelligence to supply chain disruptions

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  • By Nick Carey/Reuters, LONDON

Over the past two years, a series of unexpected events have disrupted global supply chains. COVID-19, the war in Ukraine, Brexit and a container ship stuck in the Suez Canal have combined to delay deliveries of everything from bicycles to pet food.

In response, a growing group of start-ups and established logistics companies have created a multi-billion dollar industry applying the latest technologies to help businesses minimize disruption.

Interos Inc, Fero Labs, KlearNow Corp and others are using artificial intelligence and other cutting-edge tools so manufacturers and their customers can react faster to supplier issues, monitor raw material availability and get through the thicket bureaucratic cross-border trade. Trade.

Photo: AFP

The market for new technology services focused on supply chains could be worth more than $20 billion a year over the next five years, analysts say.

By 2025, more than 80% of new supply chain applications will use artificial intelligence and data science in some way, said technology research firm Gartner Inc.

“The world has become too complex to try to manage some of these things on spreadsheets,” said Gartner analyst Dwight Klappich.

Interos, valued at over US$1 billion in its last funding round, is one of the best performers in the nascent market.

The Arlington, Va.-based company says it has mapped 400 million businesses worldwide and uses machine learning to monitor them on behalf of business clients, alerting them immediately when a fire, flood, hack or any other event causes potential disruption.

Before the Russian tanks arrived in Ukraine in February, the company assessed the effects of an invasion.

Interos said it has identified about 500 US companies with direct relationships with businesses in Ukraine.

Further down the chain, Interos found that 20,000 US companies had ties to second-tier suppliers in Ukraine and 100,000 US companies had ties to third-tier suppliers.

Interos chief executive Jennifer Bisceglie said after the war began, 700 companies approached the company to help assess their exposure to suppliers in Ukraine and Russia.

The company is developing a new product to play out other what-if supply chain disruption scenarios, such as China’s invasion of Taiwan, for customers to understand their risk exposure and where to find alternative suppliers, a she declared.

Supply chain shocks are inevitable, Bisceglie said.

“But I think we will improve to minimize these disruptions,” she added.

One company that uses Interos to track its 600 main suppliers and 8,000 in total. Suppliers.

“We don’t expect to avoid the next crisis, but we do expect to be much more effective and efficient than our competitors in how we assess risk when it happens,” said Heather Ostis, vice president, head of the global supply chain. management at Delta.

KlearNow, based in Santa Clara, Calif., sells a platform that automates tedious, paper-dominated customs clearance processes.

It has been a lifeline for Doncaster, England-based EED Foods, which imports Czech and Slovak sweets and smoked meats for expat customers in Britain.

“Before Brexit, we were very afraid that we would have to close, but instead we are busy like never before,” said EED procurement manager Elena Ostrerova.

Ostrerova said her business continued to grow at an annual rate of 40% after Brexit took effect in early 2020, partly because some competitors gave up rather than tackle the onerous new formalities to import from. the EU.

KlearNow’s customs clearance platform tracks its hundreds of shipments from Central Europe, accounting for thousands of items, correcting errors on everything from country of origin to gross net weight, and providing a entry number – under which all information about a shipment is contained – for the company transporting it to Britain, she said.

“We have minimal human involvement,” which saves the company the time and cost of manual data entry, Ostrerova said.

Berk Birand, managing director of New York-based Fero Labs, said the COVID-19 pandemic has highlighted the need for manufacturers to adapt to changing suppliers so they can continue manufacturing. identical products, regardless of the origin of the raw materials.

The startup’s platform uses machine learning to monitor and adapt to how raw materials from different suppliers affect product quality, from varying impurities in the steel to the viscosity level of a surfactant, a key ingredient in shampoo. The system then communicates with plant engineers to adjust manufacturing processes to maintain product consistency.

Dave DeWalt, founder of venture capital firm NightDragon, which led Interos’ $100 million Series C funding round last year, said regulators are going to pay much more attention to the risk of the supply chain.

“If you have a supply chain issue that could cost you significant shareholder value, you will also have a major liability,” DeWalt said. “I believe that will happen in the near future.”

Large logistics companies are also deploying machine learning to boost their competitiveness. US truck fleet operator Ryder System Inc uses real-time data from its fleet, as well as that of its customers and partners, to create algorithms for predicting traffic patterns, truck availability and prices.

Silicon Valley venture capital firm Autotech Ventures has invested in KlearNow and newtrul, which aggregate data from transportation management systems in the highly fragmented U.S. trucking industry to predict price changes.

“Mapping your supply chain and interconnectivity down to the individual part level is the holy grail,” said Autotech Partner Burak Cendek.

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