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Unique Opportunities for Startups Amid the Global Supply Chain Crisis

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By Srinivas Rao Mahankali (MSR)

When the coronavirus was first detected in China’s Wuhan province in late 2019, it triggered a worldwide supply chain crisis of an unprecedented magnitude. The pandemic caused logistics and transportation disruptions that resulted in sudden factory closures, depleted inventory levels, delivery delays, and production hiccups, among other jolts that cast a pall over the global economic landscape.

Despite such turmoil, a good number of startups saw lucrative opportunities to revamp the
broken supply chain. They built innovative solutions that pushed the boundaries for a sustainable future. Several startups were nimble enough to proactively identify supply chain vulnerabilities by engaging closely with suppliers, building inventories of crucial components, and investing in modern digital tools to ensure end-to-end transparency and trust in a complex global market. According to a recent forecast, digital technologies will play a key role in fixing the disrupted global supply chain in the next three to five years. By 2023, there would be an increase in real-time transportation visibility and by 2024, 50 percent of supply chain organizations will support AI (Artificial Intelligence) and advanced analytics capabilities.

Leveraging blockchain for ensuring transparency
Global trade is undergoing dramatic transformation due to the use of cutting-edge digital
technologies. AI (Artificial Intelligence), machine learning, cloud, and data analytics are
leveraged by a significant number of startups to identify the kinks in the supply chain.
Automated processes optimize workflows and improve the overall operational efficiency in the supply chain. Blockchain has also emerged as a game-changing technology to introduce transparency and trust in the supply chain processes. Blockchain introduces visibility among supply chain partners and provides near real-time data into the multiple sequences of activities. Participants on a blockchain platform are able to achieve end-to-end traceability of goods, ensure cost efficiency, avoid execution errors and gain visibility into inventory flows across the supply chain.

Blockchain startups have taken the lead in building exciting solutions to transform the supply chain industry. They leverage the technology to identify fraudulent transactions, automate the purchasing process, and track shipment orders, besides other activities that drive continuous supply chain optimization. For example, Dock is a leading US-based startup that leverages blockchain for tracking raw materials and goods, ensuring compliance by suppliers and manufacturers. In recent years, the Indian startup ecosystem has seen the rise of innovative startups in the supply chain industry. For example, KoinArth is an enterprise blockchain startup that seeks to achieve deeper supply chain integration by converting physical products, materials, and documents to NFTs (non-fungible tokens) to track them across the supply chain.

Funding boom for supply chain startups
Disruption in the global supply chain has increased investor appetite for funding innovative
startups in this space. Venture capitalists (VCs) have shown particular interest in logistics
startups as they form the backbone of a robust supply chain network. For example, Project44, a US-based logistics technology startup that provides visibility solutions to span the entire shipment flow, raised USD 420 million. France-based Exotec, which uses robots to reach a height of 36 feet to enable high-density inventory storage, raised approximately USD 333 million in Series D funding.

India, too, has not been far behind in witnessing big deals for disruptive supply chain startups amid the pandemic. For example, Pickrr Technologies raised USD 12 million in funding due to pandemic-triggered growth. The startup that leverages an AI and cloud-based platform for automating seamless shipping for businesses showcases how innovative solutions to strengthen the supply chain is gaining investor attention for logistics startups.
Supply Chain Labs (SCL) recently announced an INR 75 crore-fellowship fund to support
startups that are disrupting the supply chain, warehousing, and logistics to provide new-age solutions to longstanding problems.

The significance of building a more resilient supply chain in India and reimagining its ecosystem was acknowledged in the Union Budget 2022-23. It announced the PM Gati Shakti National Master Plan for connecting the country’s logistics infrastructure—waterways, roads, railways, airports, mass transport, and ports—that integrate the complex movement of goods.

Building resilience to tackle the unknowns
Although the world was gradually on the mend after the pandemic, recent global developments have posed a further setback to the ongoing supply chain crisis. The onset of geopolitical tensions due to Russia’s invasion of Ukraine and the surge in COVID-19 cases in China has led to bigger disruptions. Port congestions and container shortages outside major Chinese and Ukranian ports and escalating oil prices as well as sanctions have resulted in a backlog of orders that could severely impact global commodity prices, European automotive production lines, global food production, and air freight rates.

The current reality has compelled businesses to pursue strategies that would mitigate the risk of disruption and usher in a new era of innovation to manage supply chain bottlenecks. Besides boosting greater agility and resilience in the complex supply chain ecosystem, the
pandemic—and now the war—has led startups to focus on capacity building to remain vigilant.

In the highly interconnected world we live in, the need of the hour is to build a digital roadmap to manage strategic, dynamic, and flexible partnerships with private and public stakeholders who will improve supply chain visibility and decision-making capabilities.
This approach will contribute to a more responsive and customer-centric supply chain that will enable startups to continue to seize new opportunities and be better prepared for the next global crisis.

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