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Supply chain visibility on tap

Dec 20, 2022
Illustration of packages on a conveyor belt that is shaped like a question mark.

Illustration: Megan Robinson/Axios

Supply chain tech is seeing burgeoning growth, despite disruptions and macroeconomic headwinds that have been pervasive throughout the pandemic.

Why it matters: CEOs, CFOs and board members are advocating for moving from "that efficiency model to more of this revenue assurance model,” says Dave Petrucci, a managing director at global consultancy Protiviti.

  • It isn't just about finding low-cost suppliers anymore, he adds — now companies are determining how to negotiate better terms with multiple suppliers, instead of a single supplier and regionally rebalancing.

Context: Investment in supply chain technology has slowed, with 188 deals in the third quarter, a 56% decline from the previous year, per PitchBook.

Yes, but: Petrucci expects more money to be poured into tech that emphasizes transparency.

  • “Even where other parts of spending have been reduced or cut or been pulled out altogether, this is actually an area that we're seeing almost the double down mentality,” he says.
  • Many retailers outsource their manufacturing to contract manufacturers, causing them to lose sight and control of their build materials, he says.
  • "Optimization is still critical at low margins,” says Ram Ben Tzion, CEO of Publican, a digital vetting platform for trade.

Zoom in: Supply chain tech investors like Activant Capital want to see a multi-pronged approach.

  • “We think e-com companies… should become logistics companies,” Activant partner David Yang quips.
  • While he doesn't expect those players to handle all the goods themselves, “they should certainly be very steeped in it. They should double-click on it. They should have a trusted partner.”

What we're watching: Yang believes there may be room for more strategic M&A, especially with companies that integrate various parts of the supply chain.

  • Activant was an investor in a logistics company called Deliverr, which was recently acquired by Shopify for a whopping $2.1 billion.
  • Activant will continue to invest in other companies that could be rolled up by players like Shopify, Yang says.

State of play: The supply chain technology ecosystem has exploded in recent years, with players tackling all angles, from freight management to instant grocery delivery.

  • Flexport, a freight tech provider, raised $935 million in Series E funding from Andreessen Horowitz, MSD Private Capital in February.
  • Faire, whose marketplace connects retailers to independent brands, in May raised a $416 million extension to its Series G, coming to a total of $816 million for the round, at a $12.59 billion post-money valuation.
  • Jokr, an instant delivery startup, was in talks with investors to raise between $35 million and $50 million in Series C funding at a pre-money valuation of $1.3 billion, The Information reported in September
  • Choco, a software startup helping food producers and restaurants better manage food inventory, netted $111 million in Series B2 funding at a $1.21 billion valuation in April.
  • Getir, the Turkish instant food delivery company, agreed to acquire German rival Gorillas in a deal that values the company at $1.2 billion earlier this month.
  • EmergeTech, a freight management tech platform, raised $130 million in Series B funding from 9Yards Capital, Tiger Global Management and Spruce House Investment Management in September for a post-money valuation of $550 million, per PitchBook.
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