Supply Chain Compliance — New Rules of Engagement
Over the past decade, virtually every industry has gone through, or has begun a major transition into becoming digital-first. Some sectors are naturally more suited for a rapid transition, and some, like supply chain, have been understandably slower to adapt. However, with the increasing rules and regulations being put in place for managing compliance standards within the supply chain, this is about to change.
At WV, we’re privileged to be able to work closely with some of the global leaders in retail, healthcare, and food. By natural extension, this means we’re working with some of the leaders in supply chain management, operations, and logistics. Over the past 3 years, we’ve come to appreciate the immense pressure that supply chain teams are under, not only to maintain their operations in an increasingly competitive and resource constrained climate, but also to improve upon those operations, as well as enhance their ability to abide by the expanding compliance and regulatory environment across every facet of the supply chain.
WV Top 3 Areas of Interest in Supply Chain Compliance
As we continue to dive deeper into the universe of startups working to solve problems in supply chain compliance, we’ve highlighted the following, broad problem areas that we know are ripe for disruption. If you are working on any of these problems, or know of amazing founders that are, we’re all ears!
- ESG (Environment, Social, and Governance) — ESG regulations are naturally wide in scope; however, a subset of problem areas that our team is particularly interested in includes: forced labor tracking, managing and offsetting a carbon footprint, and maintaining a high standard of working conditions across a supply chain. These problem areas are traditionally very difficult to solve for, as they often required boots on the ground not only at a company’s own facilities, but also at layer 1, layer 2, etc. suppliers. Finding scalable, digitally-driven approaches to tackle these problem areas is a priority for customers, and therefore, a priority for us at WV.
- Network Interoperability — The ability to operate within a single vertical is no longer a clearly effective or scalable approach. Given how increasingly complex the global supply chain is becoming, startups must build solutions with the potential to work across verticals, disciplines, and problem areas. We’re excited about startups that are not only working with a strong pipeline of B2B contracts, but also able to collaborate with a wider range of stakeholders, be it government agencies, financial institutions, law enforcement, insurance, and even the end consumer…and speaking of the end consumer…
- Visibility / Provenance — Traceability within the supply chain is no longer just a valuable capability for in-house supply chain management teams. Today, consumers want to know where their products were made, how they were manufactured, and the impact that a product has had on the world, before ending up in their cart. Startups working on these problem areas have the opportunity to not only provide such visibility, but to also tackle additional subsets of solutions, such anti-counterfeiting, customs and border protections, and more.
WV Top 4 Technologies of Interest in Supply Chain Compliance
Sometimes a problem set drives the development of new technologies, and other times, new technologies can unlock problem sets that were otherwise not possible to target. We believe that continued innovation in the following technology areas will be crucial for manufacturers, shippers, importers, carriers, and merchants the world over, to abide by the increasingly stringent supply chain compliance requirements.
- Coding and Labels — Barcodes and QR codes have long been the standard for adding labels, coding, and other information onto physical goods. While we believe there is still room for innovation within the QR-code landscape, WV is also excited about new technologies that can attribute more information to a single SKU, make fraud detection easier (or make counterfeiting harder), increase product traceability for the circular economy, and possibly even enable a more engaging consumer experience.
- Blockchain — It’s 2022, and there is a lot of hype around blockchain technology. At WV, we see a clear potential for existing technologies to solve many of the biggest problems within supply chain compliance, but we’re also interested when new technologies can rise to the challenge. WV is excited to meet startups that are tackling the many hurdles to still overcome for “blockchain in the supply chain” such as: physical product authentication, know-your-vendor (KYV) solutions, as well as the chicken-and-egg problem of needing multiple stakeholders for a blockchain-based solution to hold its full merit.
- Connectivity, IoT, and Tracking — Edge computing is growing in capability, smart devices are becoming more cost effective, and the need for real-time insights is at an all time high. Whether it’s monitoring a container sitting in port, tracking a pallet as it crosses customs and border patrol, or managing a warehouse of goods, we’re excited by advances in both hardware and software solutions for the connected IoT industry, or Industry 4.0.
- Machine Learning (ML) — As we continue to explore the world of supply chain compliance, we find that machine learning and artificial intelligence (AI) are starting to play a nearly indispensable roll. Simply put, to build a successful, data driven startup within the logistics industry, it is becoming increasingly critical for data science and product teams to be able to glean insights from a collection of disparate data sources, from dozens to hundreds of datasets, and spanning years of historical records.
WV Elements of Startup Success
Finally, as we continue to explore this sector, WV has identified the following factors that we believe will be critical for startups to succeed when building solutions for supply chain compliance startups.
Disparate / Unique Data — For data-driven startups, using information from a single source or vertical will not suffice. Data to drive ML and AI models must come from multiple sources, ideally multiple industries, and in the best cases, the data sources will be unique to your startup!
Data Interoperability — Dashboards and spreadsheets are helpful to one type of user, but software integrations, report generation, and actionable insights are helpful to the entire ecosystem.
Operating Global on Day 1 — In most industries, it’s possible for a startup to begin by thinking small but dreaming big. In supply chain compliance, the problem is inherently global, and thus, a global mindset is critical for founders to have, on day 1.
Rapid onboarding and Simple Pilot Deployments — We’ve highlighted this “element of startup success” on a past supply chain article, but it’s important to re-iterate as often as possible; supply chain teams are busy, they are likely working with some or mostly legacy systems, and their workflow often directly impacts multiple teams and partners beyond themselves. Every supply chain startup must take this into account when developing not only their business models and technology, but also how they approach onboarding new accounts, executing RFPs and RFQs, and ultimately running pilot projects.
Multimodal Transportation Data — The idea of multimodal data can be interpreted in a variety of ways, but in the case of supply chain and logistics, we’re talking about the ability to pull from, and ultimately combine data utility from a variety of transportation modes. Products can move around on a global scale, and the ability to understand a product’s journey across land, sea and sky is becoming increasingly critical for both supply chain management teams, as well as for auditing requirements and maintaining compliance standards.
Domestic vs International Insights — Reporting standards within the logistics and supply chain industry are by no means standard across every country, state, border, or shipper/carrier network. When building holistic solutions, startups should consider this from day one, as it impacts their problem-solution scope, go-to-market strategy, as well as their pitch to customers and investors. Whether a startup is collecting data directly from customers or through government records, pulling data from the bill of lading, understanding the scope of the product’s reach helps to frame the ROI as they move from MVP to enterprise solution.
Working on something big in supply chain compliance? Reach out.
Did we miss something? Let us know at Wittington Ventures