• Tomáš Formánek, Co-Founder at inventory optimisation platform at Inventoro


• 11.05.2022 12:15 pm
#supplychain

The supply chain industry is the new fintech. Do you want to know why? No other field creates such a large potential for reducing costs and increasing profits as the supply chain industry. The art of moving and storing materials and goods around the world has been data-driven, even before the phrase data-driven became a must-have on every startup press release. Even more so now, this data can be read, analysed, and made effective for a price affordable to almost any business on the market. That's why the supply chain industry is the next big thing. But first….

Let’s look at some key numbers. If we were to account for every part of the chain: freight, storage, services, machines, and software, then the total global amount of the industry is valued at 10 trillion USD - that’s more than 10% of the global GDP. As the demand for supply continues to grow, the industry also gains an extra 500 billion USD each year. 

Supply chain SaaS software - like Inventoro - is expected to quadruple in the next 10 years to reach 100 billion USD annual turnover. This probably makes the supply chain industry the fastest-growing major industry in the world. As such, it is prone to startup disruption and creates a perfect ground for new unicorns and IPOs. 

Obviously, the supply chain industry has been around for centuries. So what makes this current climate different and why should things change so dramatically now, you might ask? It’s a mixture of several circumstances, which all add up.

Firstly, we live in uncertain times, which makes the global (just-in-time) supply chain very vulnerable. The war, Covid, energy crises, the Suez canal boat obstruction, raw material shortage, Brexit, etc., all create risks for maintaining the supply chain. Currently, 95% of board-level execs see increasing supply chain security as their top priority. In order to do that, they need to plan better and execute faster. Both of these are only manageable with powerful software.

Secondly, everybody is now looking into robotics and warehouse automation. Robots are cool, they look great and they are great. But they do need very intelligent software to work well; without software robots are useless. Automation processes are now implemented in every part of the supply chain. Starting with raw material mining, through to driverless cars and boats, and automatic warehousing, all the way to 2-hour delivery programs, to the end customer. All these processes need automation software.

Thirdly, supply chain optimisation technology is getting very affordable. Supply chain optimisation has always been a privilege of the largest, most wealthy organisations on the planet - but not anymore. As systems move to the cloud and develop an ever-growing net of API connections, suddenly the technology becomes affordable to any business. This again is the perfect ground for any disruptive startup to flourish.

Combining all these aspects together is what makes the supply chain industry the new fintech. Just like disruptive companies (Stripe, Revolut)  in the financial world that took on big banks and succeeded, new unicorns are already taking a big step in changing the way the supply chain industry is driven. Companies like Flexport - the sixth biggest freight commissioner in the world, despite being a software company - are already making headlines, with many more to come in months and years ahead.

This is all great news because unlike in other industries, new startups, affordable software, and extended automation technology all add up to a better, more democratic planet. Saving jobs, creating jobs, reducing CO2, and improving the quality of lives, all at the same time.