Our Deep Dive on Global Supply Chains

AuthorAuthor

Ciara Gumsheimer & Philipp Werner
April 11, 2024

👋 Welcome

Welcome to the first edition of Project A’s Supply Chain Tech newsletter, where we will explore the growing landscape of Supply Chain technology, from procurement and manufacturing, to warehousing and transport logistics. Current macroeconomic trends, such as shifts in global trade practices, severe weather events, and geopolitical tensions highlight the critical need for resilient and highly responsive supply chains. As investors, we see a broad range of emerging opportunities for technological disruption in this space. Through this newsletter, our goal is to build an ecosystem of founders, operators, investors, and industry experts who share the same vision. In this first edition, we’ll explain how we’ve structured our deep dive into the space.

The next frontier in Supply Chain Innovation

Global supply chains are undergoing a monumental shift, prompted by several key trends and macroeconomic factors. The Covid-19 pandemic's disruption, geopolitical tensions, and labour shortages have exposed the lack of resilience and visibility across the supply chain. Simultaneously, environmental and ethical concerns amplified by regulatory tailwinds are pushing companies towards more transparent and green supply chains and an increased focus on sustainability and ethical sourcing. These shifts, combined with advancements in technology such as AI, blockchain, and sensors, have resulted in rapid innovation in supply chain technology. 

Venture capital has not been blind to these shifts. Recent years, fueled by Covid-19, saw substantial investments flowing into supply chain tech, notably in transportation, across freight, shipping, and last-mile delivery, as well as warehousing and fulfillment. Funding in supply chain tech has seen 70% growth per year since 2014, reaching an all time high in 2021. However, the subsequent shift in consumer spending from goods to services and associated decline in online retail led to a major investment decline specifically in distribution & fulfillment, last-mile delivery and warehouse picking. Lower investment, combined with broader economic slowdown over the last two years has resulted in some high profile logistics companies failing (Convoy) and significant layoffs across the industry. Nonetheless, investment in critical areas such as sustainable logistics continue to rise, and the overall upward trend won’t be reversed despite the recent dip. 

Source: Pitchbook *as of Dec 31, 2023

The critical need for continued supply chain innovation in resilience, visibility, and sustainability prove that supply chains span much broader than what is conventionally referred to as logistics, and we believe that there is ample opportunity for continued investment.

Our Deep Dive on Global Supply Chains

Our investment thesis is grounded in a holistic understanding of Global Supply Chains. Though we conventionally speak of ‘The Supply Chain’ the reality is a complex, vast network of nested and interdependent supply chains. While some of these are geographically global, we think of it instead as a global system, one that encompasses all parts of the value chain both locally and internationally, across a variety of modes of communication, transportation, and data exchange. At Project A, we break down Global Supply Chains into the following core areas.

  1. Procurement

From tactical spend analysis to strategic supplier management, the procurement sector offers vast ground for disruption and is one of the most funded parts of supply chains. Technologies enhancing B2B marketplaces, enriching supplier discovery (Scoutbee) or management (Tacto), automating negotiations (Pactum), and streamlining procure-to-pay processes (Pivot) are just some of the ways procurement processes are being enhanced.

  1. Supply Chain Planning

Crucial for orchestrating the balance of supply with demand, technology-driven solutions in demand forecasting (Quantics), production and resource planning (Flowlity, Metronome), and effective inventory management (Katana) embody the strategic pivot points for achieving efficiency and adaptability in supply chain planning.

  1. Transportation

The transportation segment spans a wide spectrum, from digital freight forwarding across road (Sennder), air (cargo.one), and maritime freight (Forto), including innovations in autonomous and electric freight solutions (Fernride), workflow automations on top of transport management systems (Raft) and new delivery services, to asset-light last-mile parcel delivery (Relay) and drone delivery (Manna, Skyflow). The focus here is on optimizing the movement of goods through smarter, cleaner technologies. 

  1. Intralogistics & Warehousing

After a wave of VC funding in fulfillment providers (Hive, Alaiko, Byrd) the warehousing domain is witnessing transformative changes with the introduction of robotics (Dexory, Filics), advanced Warehouse Management Systems (WMS) and innovations in on-demand logistics services (Spacefill, Unnbound), setting new paradigms for inventory and fulfillment operations.

  1. Manufacturing

The adoption of robotics (Robco, Wandelbots, Micropsi), the rise of on-demand manufacturing (Saeki), and the customization of production processes (Assemblio) underscore the manufacturing sector's evolution, enabling more agile and bespoke production capabilities at scale.

  1. Supply Chain Optimisation

From risk management (Prewave) to enabling supply chain visibility and sustainability (Makersite), investments in technologies like IoT for tracking and analytics for smarter decision-making (Tradelink) are redefining what it means to optimize supply chains. Further, data interoperability solutions (Procuros, Sento) are paving the way for more efficient communication across a variety of industries while sustainable supply chain solutions are enabling decarbonisation of supply chains (Neutreeno) and regulatory compliance (zero44) at scale.

  1. Supply Chain Services

This broad category encapsulates essential operational elements such as finance (Finmid), payments (Tilta), workforce solutions (Traba) or seemingly niche areas like spare part logistics (Sparetech) or maintenance (Remberg), with a keen focus on integrating and enhancing service delivery within supply chains.

Beyond and within these seven core areas, we believe that certain industries face unique challenges and hence require specialized supply chain solutions – food (Root Global), medical, fashion (Retraced), and materials supply chains (Metycle, Waypoint) are examples of verticals where we will be looking for targeted solutions.

In the editions to follow, we will delve deeper into each of these critical segments of Global Supply Chains, uncovering the nuances, challenges, and opportunities we see within. Join us on this journey as we explore the potential for innovation and investment in the backbone of the global economy.

💡 Interesting Reads

  • Shein is bringing its unique supply chain tech to market | Wall Street Journal

  • Alibaba testing rocket parcel delivery with Space Epoch | SCMP

  • Uber Freight Eyes Tenfold Boost in European Market by 2028 | Bloomberg

  • Council Post: 'Green Unicorns': Circular Marketplaces Can Lead The Way | Forbes

  • Two Canals, Two Big Problems—One Global Shipping Mess | WSJ

  • Exclusive: Investors push Zara owner Inditex to publish full supply chain | Reuters

  • EU softens crackdown on child labour, pollution in supply chains | Reuters

💸 Funding Rounds

  • Software supply chain security player Binarly Closes $10.5 Million Financing | Business Wire 🇺🇲

  • Gather AI nets $17M for inventory drones | Axios 🇺🇲

  • UK electric vehicle delivery company Packfleet raises $10 mln in funding | Reuters

  • Stuttgart-based software company Assemblio raises €2.1 million to create the future of assembly planning | EU-Startups

  • Aarhus-based Hakio gets €4 million to help fashion brands reduce global waste due to bad forecasting | EU-Startups

  • Paris-based Bene Bono gets €10 million to accelerate the fight against food waste at its source | EU-Startups

  • Stockholm-based eComID secures €2.75 million to address the complexities of returns in the fashion industry | EU-Startups

👷 Jobs in the Industry

Interested in working in Supply Chain Tech? Here are some start-ups and scale-ups hiring across a variety of roles:

If you are a founder and would like to promote your open roles, please reach out to us!

✍️ Want to contribute?

As we grow the Supply Chain Tech newsletter, we are keen to get as many people involved as possible! If you’re interested in supply chain topics, and want to help us spread the word on this exciting space, please do get in touch. We’re always looking for guest authors and collaborators.

Supply Chain Tech Newsletter Team

Philipp Werner is an operator-turned investor and Partner at Project A. He specializes in investing in global supply chain technology and serves on the board of directors of related companies like Relay, Metycle and Enapi. Philipp also launched the Project A Studio, partnering with founders at the pre-idea stage, and previously worked hands-on with 25+ VC-backed startups including Sennder, Trade Republic and Spryker. 

Ciara Gumsheimer is an Associate at Project A covering global supply chain technology and climate technology, with a particular interest in vertical and sustainable supply chains. Prior to joining Project A, Ciara worked at a FinTech startup in Berlin, after completing degrees at the University of Cambridge, UC Berkeley, and EDHEC Business School.

Project A Ventures is one of the leading early-stage tech investors in Europe with offices in Berlin and London and we are early backers of the logistics unicorn Sennder. We have invested in  some other notable companies in Global Supply Chains, such as Pactum, Metycle, and Relay. In addition to $1bn assets under management, we provide our portfolio companies with exclusive operational support by our team of 100+ in-house experts including all areas from Tech and Product Development to Talent Acquisition and Marketing. Other notable portfolio companies include companies such as Trade Republic, KRY, Spryker, Voi, Catawiki, and WorldRemit.