To understand the vulnerabilities of the global movement of goods, think about toilet paper and face masks. During the first weeks of the coronavirus pandemic when both items were in extreme demand, the systems in place to move them from manufacturers to consumers were unable to keep pace. The global supply chain—an intricate network of manufacturers, warehouses, and shipping and delivery companies spread around the world—was not broken, exactly, but it also wasn’t nimble enough to work the way the world needed.
Now, a consortium of powerful companies and organizations such as PepsiCo, BMW, Shopify, DHL, and the U.S. Postal Service is joining forces with emerging tech startups to fix that.
In normal times, online sales of items such as groceries, backpacks, and indoor fans can go from order to delivery in hours. But when there’s a sudden surge in demand for something very specific—personal protective equipment manufactured in China and needed desperately in New York or Seattle—the global supply chain is not fully able to meet the demand.
“Supply chains are very manual and they need to catch up,” says Harpinder Singh, a partner at Innovation Endeavors, a venture capital fund cofounded by former Google CEO Eric Schmidt. From workers driving forklifts to paper-and-clipboard shipment tracking at ports to the upwards of 10 phone calls it can take to move a truckload of goods across the U.S., the logistics systems underpinning the rise of e-commerce are surprisingly analog. Many people, including executives at some of the biggest companies in the world, think the supply chain needs an upgrade.
That’s why, together with Sidewalk Infrastructure Partners, Innovation Endeavors has launched a new effort called Link to convene big global companies and startups focused on solving the problems of the decentralized supply chain system. The idea is to put the big players in the global supply chain in the same room as startups to find ways of applying new technologies to an old system. Innovation Endeavors calls this convening an “ecosystem”—a meeting of established companies and startups that’s more problem-solving than sales pitch. The companies and startups began meeting about a year ago, before the coronavirus pandemic, but the impact of this global crisis has only made the mission more urgent.
Though the global supply chain may seem like some distant infrastructure, its smooth operations fuel much of the increasingly online world of shopping. For anyone who has shopped online during the pandemic lockdown, a better functioning supply chain means faster deliveries and better service—in addition to getting critical medical devices and equipment to where they’re needed most.
Other participating companies include paper company Georgia Pacific, Estée Lauder, and Starbucks. Two or three times a year, they will meet with startups in Innovation Endeavors’ portfolio to discuss common problems and seek out potential solutions. “It’s bringing together people across the supply chain that normally do not have the opportunity to coordinate with each other,” Singh says.
Some of the startups involved include Fabric, which runs automated 10,000- to 30,000-square-foot micro-fulfillment centers in or near cities for same-day deliveries, and Third Wave Automation, which adds robotics to forklifts to improve the safety of one of the most dangerous parts of operating a warehouse.
To enable some of these technologies and ideas to work within the domain of a multinational company, the big companies allow the startups inside their operations to adapt their innovations to the companies’ needs. “These companies can rapidly get in and accelerate their pilot or their deployment and get something rolled out very, very quickly,” Singh says. “As you can imagine, deploying technology at some of these large companies can take a long time. So think of it as a fast-track for startups to talk to the right people and accelerate their deployment.”
The companies also provide startups with access to internal systems and data sets to help them understand how their systems function from the inside—a rare chance for startups to learn about the proprietary workings of major global corporations. Singh says it’s a mutually beneficial approach that gives startups the opportunity to turn big companies into clients and big companies the opportunity to have some of their problems solved.
“It’s not about matchmaking, it’s about corporates putting their skin in the game and saying, okay I’m willing to help startups accelerate their cycle so they can address my problem the quickest,” he says. “It’s about them being involved in facilitating the deployment cycles of these startups.”
For a large company like DHL, getting involved in LINK is a way of helping fresh ideas make their way into the company, according to Nabil Malouli, who leads global e-commerce for DHL’s Supply Chain division, one of many parts of the company that saw its profits drop as a result of the pandemic. “To challenge yourself, it’s not as simple as saying you have think outside of the box. Well great, how do you think outside of the box when it’s the same people, the same environment, the same processes and the same way of thinking in the same job?” he says. “When we see a company that is really tackling something that we see is becoming a major trend, we look at that hard and then we start to engage.”
In combination with DHL’s own in-house expertise, Malouli says the company has used its experience within this network to identify new ideas, develop proofs of concept, and get them tested and analyzed quickly. The company has already worked with one startup on efforts to rethink its warehouse operations. “When we bring our people to the table and they start to see the technology and they start to exchange, we get to a lot of very good mutual ideas jointly,” he says.
Building on the deep expertise of these large companies is at the heart of what Link is trying to do, says Singh. “They move billions of dollars in product per year, and they’re responsible for trillions of dollars in trade. So there is so much experience, and these guys are at the forefront of what the cutting-edge problems are,” he says. “The startups have front-row seats for what problems need to be solved and what are the right technologies to intersect that group with.”
Another of the startups involved in Link is ClearMetal, which has developed a tool for end-to-end visibility and tracking of global freight to eliminate the sometimes days-long delays that can result from paper record keeping at ports and on ships. Through the meetings and interactions at Link, the ClearMetal CEO Adam Compain says his company has been able to better understand how this service can be useful for a wider variety of customers than they first realized. For example, an industrial supplier wants to know an accurate promise date for the delivery of goods just as much as a clothing retailer wants to know how long it’s going to take to get the next season’s clothes to market. “We have this dynamic transportation planning tool that allows companies to see in a very accurate way how long it will take a product to go from Shenzhen, China, to Chicago,” Compain says. “You listen to these two different companies and you realize that a single tool that we build can actually serve both these markets.”
Singh says the supply chain vulnerabilities made evident during the coronavirus pandemic are not going away, and other shocks to the system are only becoming more likely as e-commerce continues to upend traditional pathways of goods from producer to consumer. New problems will require new solutions.
“As things change [in real time] because of the virus, because of trade wars, or because of what consumers want, [companies’] systems, their processes, their infrastructure has to be really nimble. And they have to have visibility, they have to be able to respond to shortages of labor and so on,” Singh says. “There is no shortage of issues and opportunities.”