Supply chain improvement industry emerges from pandemic

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Empty store shelves: so simple and yet so complicated.

“There may be many reasons why something is not showing up on the shelves in the store,” said Ed Barriball, partner at McKinsey & Co.

One of these reasons: an inability for a manufacturer to see very far down the supply chain of which it is a part. “Understand not only who their immediate suppliers are, the people they buy from, but also the supplier of their suppliers and the supplier of their supplier’s supplier,” he said.

A company’s product may be out of the box, only to get stuck on the assembly line because the packaging supplier did not come.

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

In the past – and now for some industries – suppliers were not inclined to say who their own suppliers were, as this can be a source of competitive advantage. There may also be intellectual property secrets involved. This is one of the reasons 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 ignore. Sometimes we just assumed it was the supplier’s problem if they couldn’t deliver.

But the supply chain hiccups of the past have, through a trade war and pandemic, become major spasms. Now an industry is rising to deal with them. From new startups valued in the billions to legacy legacy companies, knowledge of supply chains sells.

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

Traditional logistics companies, like Flexport, attract 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 paying more attention and redoubling their efforts to investigate their own supply chains, according to Eric Oak, senior business analyst at S&P Global Market Intelligence.

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

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