Supply chain tech investment dives in Q3
Supply chain tech investment declined significantly in the third quarter as geopolitical challenges and a looming recession prompt pause.
Driving the news: There were 188 deals in the third quarter, a 55.7% decrease year-over-year, according to PitchBook data.
- Valuations on those deals dropped 67.9% to $3.3 billion.
Why it matters: Investors are treading carefully as high inflation and the possibility of a recession shifts consumer behavior.
- Retailers are seeing consumer spending slow compared with last year’s breakneck pace, weighing on their ability to move inventory.
The big picture: Covid restrictions in China, and trade tensions between the U.S. and the giant Asian economy are certain to provide more hurdles for companies, according to the report.
- “Sorting out how to comply with these new restrictions and other domestic manufacturing and sourcing rules will likely create headaches for numerous managers,” PitchBook says.
- But novel technologies could “potentially play a key role” in addressing these issues, it says.
Of note: Technologies such as blockchain provide traceability in an expanding and more complicated supply chain, especially in determining the source of parts and materials, PitchBook says
- Nike, Macy’s, Kohl’s and several other retailers are working with Auburn University on the Chain Integration Project, PitchBook says. The project aims to use blockchain to curb counterfeiting, reduce inventory waste and handle disputes across supply chain partners.
- The initiative is intended to save retailers an estimated $181 billion in costs from supply chain inefficiencies.
What we're watching: Automation technologies that help retailers become less reliant on workers, enable 24/7 operations and provide more precise operations are also entering the fray, PitchBook says.
- Though, to be sure, autonomous systems are having some fits and starts, as evidenced by FedEx's curtailed development of its last-mile delivery robot, Roxo, and Amazon's axing of its home delivery robot, Scout.