Supply Chain Digitization; An Automation Surge by Startups

supply chain digitization 

Since the advent of Industry 4.0, manufacturers are heavily investing in automating the production processes. They aim at connecting every machinery and components to each other so that they can communicate freely without human intervention. These internet connected things, provide the required information transparency to make data driven decisions in production and improve the operations’ efficiency accordingly. Considering the enormous advantages of automation, supply chain digitization is taking place in a blink of an eye and companies either small or large are adapting to the trend. Here we will take a look at important definitions and then narrate the story of startups in the supply chain that have gone through the digitization process. 

What is industry 4.0?

Industry 4.0 which stands for the “Fourth Industrial Revolution” was first coined by a group of scientists who were designing a technology strategy for the German government. In 2015 Klaus Schwab, the executive Chairman of the World Economic Forum for the first time used the term Industry 4.0 publicly. The term Industry 4.0 can be interpreted as the continuous digitization of traditional operations in the manufacturing and to that end, companies have to integrate mobile devices, IoT platforms, Human-Machine interfaces, smart sensors, e-identification technologies and RFIDs to their processes. 

The adoption of Industry 4.0 in the supply chain operations paves the way for the manufacturer to reduce the costs of their processes and save the time which is normally allocated to the operations and as a result increase the efficiency in workspaces. Whether you are a automaker relying on the components produced by third parties or a medical equipment producer that needs raw material which is sourced through different channels, digitization of your supply chain adds to the transparency of operations and in that way, the stakeholders will have access to all the data they need. 

What is Supply Chain Digitization?

Supply chain normally consists of a series of discrete operations performed by various departments including advertisement, R&D, manufacturing and distribution. Thanks to Industry 4.0, all of these operations would go digital; i.e. all the stakeholders within the supply chain become unified thanks to various components that have been discussed earlier and include but are not limited to RFID tags, IoT platforms, smart sensors, etc. In the light of digitization, the whole processes that happen inside the supply chain become transparent to all partners from the suppliers of raw materials, to the logistics and distribution players and to the consumers.   

Digital supply chain typically consists of eight fundamental components that go hand in hand with each other: integrated planning, logistics visibility, Procurement 4.0, smart warehousing, efficient spare parts management, autonomous and B2C logistics, prescriptive supply chain analytics, and digital supply chain enablers. Digitization of the supply chain tries to put all of the aforementioned components together and create a smooth and coherent workflow which is transparent for everybody. Despite the enormous advantages of supply chain digitization, based on a 2017 study conducted by McKinsey, only 43 percent of this business area has migrated into digital solutions which is quite low compared to other business areas including products and services, marketing and distributions, ecosystems and processes. But in the light of Covid pandemic, the trend has accelerated and various startups appear here or there to add the flavor of technology to the operations within the supply chain and we will refer to a number of them at the end of this article. 

The Advantages of digitized Supply Chains

Before transforming the supply chain operations, companies must take into account the pressures and trends that might affect their workflow and be aware that every decision about the supply chain must be in line with their own strategic objectives and after this stage they can take advantage of its benefits which are listed below:

  • Better decision making: using data mining and machine learning technologies which are used in the process of digitizing the supply chain lead to data driven suggestions for the decision makers and help them to better adapt to the changes.

  • Improved transparency: integrating technology into the operations that happen within the supply chain facilitate access to the information for all of the involved partners and this in turn will increase the data transparency. 

  • End to End engagement: thanks to the unprecedented transparency which is provided by supply chain digitization, customers will have access to the data concerning their inventory and receive end-to-end live updates about them.

  • Automation: By integrating technology into the supply chain, operations companies can automate time consuming processes and in return concentrate on tasks which are more important.  

  • Innovation: Thanks to technology, companies can implement innovative ways for doing routine operations in the supply chain and carry out tasks in more cost effective ways. 

Startups’ Success Stories

Supply chain digitization

There are various startups all around the world that have started automating their operations to expedite the procedures in the supply chain and increase their efficiency. Following we will take a look at startups that are working in the supply chain and are trying to get in line with the principles of industry 4.0.

1- Cargo Produce

Cargo Produce is a supply chain startup headquartered in Austin, Texas that tries to digitize the transport journey of products from the production plants to the shipping points. To that end, the startup has created an integrated platform for all of the involved players within the supply chain (from the manufacturer to the shipping companies and to the customers). In this platform those who are involved in the chain, have access to all of the documentation to track the inventory that has been procured and can obtain various information including weather conditions, congestions in the shipping points and estimated time of arrival for the inventory. Cargo Produce also has the mission of reducing carbon emissions and providing the facilities for its customers to automatically calculate their carbon footprint. 

2- Photon Commerce

Photon Commerce is a San Francisco based startup which uses AI to automate document processing. The company has more than 100 customers all around the world and so far has processed over 8 million documents. According to its founders Photon Commerce uses AI not only to process the documents but also to analyze them and uncover the hidden trends inside them. As an Example companies can use its platform to scan their invoices, automatically extract and assess their data, find errors and trends in their invoices and reduce the manual paperwork which is normally done. Thanks to the system the workflow speeds up by more than 100 percents and costs for manually reading the documents and transferring the information to the computer systems reduces significantly.

3-  Responsibly

Responsibly is a Danish startup that tries to provide the technology infrastructure which is required for a responsible industrial procurement; in other words, the startup tries to prevent any possible deforestation, violation of human rights and water pollution so that every inventory is responsibly procured and manufacturers will have the opportunities to assess their suppliers based on a set of specified criteria just like the way they compare the proposed prices by them. The newly found company has recently raised 2 million US dollars and in the first stage is going to monitor the data for more than 10000 suppliers.

4- Arxum

Arxum is a German startup that helps other companies to automate their supply chain using blockchain technology and provides the required security for their activities in cyberspace. Using Arxum Connectivity Agent, only specific actors within the supply chain have access to their required data and others are excluded from this loop. In this system which is built on blockchain technology, a smart contract is defined for the partners in the supply chain and the contract defines in detail which data should be transferred between which points. 

5- Portcast

Portcast is a startup based in Singapore which tries to revolutionize logistics services. Its founders describe it as the operating system for modern logistics. To that end, they have devised a platform which tracks the shipments in real time and integrates data about the inventory from various sources and based on the information including the weather conditions, pandemic, port congestions, etc, the system predicts what will happen for orders. In this way all of the members who are involved in the process will have live access to the required information.

Article By: Maryam Mousavi

 

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