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The World is a Supply Chain

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Lisa Morales-Hellebo, and Brian Laung Aoaeh. Kicking off #SCIT2019, June 19, 2019 in NYC. Photo Credit: Ray Neutron.

Originally published at www.refashiond.com on Friday, October 18, 2019.

Note: 3,749 Words, 14 Minutes Reading Time

Authors: Brian Laung Aoaeh, CFA, and Lisa Morales-Hellebo

The world is a supply chain. It’s that simple. 

But what does that really mean?  Whether we like it or not, current economic, political, social, and technology trends will compel more people to think about the implications of that statement more consciously each day.

In this blog post we;

  • Share a definition of supply chain,
  • Put the challenges confronting supply chains in context,
  • Discuss why socio-cultural forces will act as the leading catalyst for the innovations that will define supply chains of the future,
  • Explain why the refashioning of supply chains matters,
  • Explain why the technological transformation of supply chains is an economic issue, as well as one driven by evolving consumer preferences,
  • Describe the role that early stage technology venture capital can play in the transformation of supply chains,
  • Describe how individuals, private sources of capital, and governments can play a role in the transformations that will lead us to the supply chains of the future. 

What Is A Supply Chain?

First, let’s answer the question: What is a supply chain? 

A supply chain is a network of organizations that work collaboratively to move products and services from producers to consumers. At a high level, the business of supply chain can be subdivided into: 

  • Supply chain management;  which is about supply chain network design and management; 
  • Supply chain logistics; which is about the storage, transportation, and movement of physical goods from one place to another;
  • Supply chain finance; which is about ensuring that producers, and other supply chain participants and intermediaries get paid for the value they create and deliver to consumers.

Supply chains play two critical functions: 

  • First, they enable the flow of goods and services from producers to consumers. 
  • Second, they facilitate the transfer of information about the movement of goods and services between every entity that is part of the supply chain network.  

The world we’ve become accustomed to will not exist without supply chains.  And further, the world is a mechanism for providing humanity with the resources we need to survive on Earth.  We know this to be true — “when supply chains function, societies thrive”.

The Challenges Confronting Supply Chains

Today, we face an inflection point as our world confronts some big crises. If current trends hold, between 2015 and 2050 the world’s population is expected to increase by about a third, to roughly 10 billion people. According to Our World in Data, the world’s population stood at about 190 million people in the Year 0, and approximately 4 billion in 1975. In other words, the world’s population will jump by about 6 billion people over the 75 years between 1975 and 2050 after having only climbed to 4 billion people over the previous 1,975 years. This is happening, according to Our World in Data, despite the world’s population growth rate peaking at 2.2% per year in 1962 and 1963, and then declining to its current rate of about 1% per year. 

While this rapid increase in the world’s population is occuring, global supply chains face some big challenges: 

  • An ongoing increase in the frequency of severe weather events that cause large-scale disruptions to local and global supply chains. 
  • Trade disputes threaten to dismember the system of world trade established following the end of World War II. 
  • The growing world population has created a critical need for significantly better dynamic resource allocation throughout supply chain networks in every industry around the world. 
  • Changes in consumer behavior are putting the world’s supply chains under increasing strain and business competitiveness is increasingly tied to supply chain mastery.

Socio-cultural Attitudes Will Be The Catalyst For Supply Chain Innovation

Perhaps counterintuitively, innovation in global trade and supply chains will be driven most immediately by changing social attitudes towards climate change. A recent poll of adults and teenagers in the United States conducted between July 9 and August 5, 2019 by The Washington Post and the Kaiser Family Foundation offers some early evidence of the changes taking place. 

When asked if human activity is causing climate change, 79% of the adults polled responded yes, while 86% of teenagers responded yes. When asked if reducing the negative effects of global warming and climate change would require major sacrifices, more than 30% of adults, and more than 40% of the teenagers surveyed said yes. Also, at least 70% of adults and nearly 80% of teenagers said that technological advances will be able to reduce most of the negative effects of climate change. 

There are more conversations than ever about decarbonizing supply chains. At about the same time this poll was published, Quartz reported that two states in India have said they will not build new coal power plants. Earlier this year, governments in Europe called on the fashion industry to tackle its waste and pollution problems more aggressively and some are looking at passing legislation to that end. In Asia, more governments are moving to address issues around plastic waste imported from abroad. Starting in January 2020, the International Maritime Organization will begin adopting new regulations to curb harmful emissions from the container shipping industry. 

Another example of the rapidly evolving social and cultural attitudes that will drive innovation in supply chains and global trade is the growing movement led by young people such as Greta Thunberg, Jamie Marglois and others like them. Political, business, and technological leadership is shifting into the hands of a generation of men and women who do not want to leave a more inhospitable planet as their legacy to their children and grandchildren.

What does this mean? 

In the next half-decade or so we will see political and business leaders facing increasing pressure to adopt policies and business practices that reflect how voters and consumers feel about climate change. Those who do not risk losing political power and market share, respectively, to their opponents and competitors who do. As this social and cultural movement gains strength, it will accelerate the economic drivers of innovation, which in turn will propel the drivers of technological innovation in global trade and supply chain. 

In his August 2011 article, Why Software is Eating The World, Marc Andreessen said: “Companies in every industry need to assume that a software revolution is coming.” The process he described has only accelerated over the intervening 8 years, and that statement is more true now than it was then. As information technologies that were pioneered in the 1950s have reached maturity, technology startups around the world are developing new innovations to solve some of the supply chain problems that seemed intractable in the recent past.

Why The Refashioning Of Supply Chains Matters

However, before we can understand why the confluence of software and hardware engineering is going to be transformative to the supply chains on which the world runs, we must understand why that matters.

Supply chains exist to connect producers and consumers in an ongoing exchange of value. As a result, innovations in supply chain drives innovations in the rest of the economy. Given that supply chains are about the back-and-forth movement of physical goods, services, and information, it is easy to understand why advances in information technology must necessarily precede cycles of innovation in supply chain.

Because innovation in supply chain acts as an accelerant for increases in production and consumption, supply chain innovation acts as an economic multiplier. Every dollar of innovation in supply chain innovation leads to more than a dollar of total economic output. It is not a coincidence that countries ranked highest on the Worldbank’s Logistics Performance Index tend to have the most developed economies, while those ranked lowest tend to have the least developed economies. 

Supply chains are to human civilization what oxygen is to life; When they work well, no one notices them. It is only when they start to fail that we realize there’s a problem. It is easy to assume that there’s no room for innovation in global supply chains and trade, but this is simply not true. Here are four examples. 

  • As governments and people around the world awaken to the issues posed by climate change, there’s a growing social, regulatory, and economic push for innovations in supply chain logistics that will significantly reduce the amount of pollution created by the transportation industry. Some of these innovations involve the application of machine learning to the analysis of data obtained from connected devices in transportation and supply chain networks in order to make the operation of such networks more efficient and optimized. This needs to be done in a way that ensures that the transportation of people and merchandise does not destroy the environment. 
  • There is an ongoing shift away from linear supply chains in which the materials that remain after consumption has taken place are discarded, and more towards circular and regenerative supply chains that place an emphasis on using post-consumption waste as raw materials for new products. This shift relies on advances in materials science – both in the creation of new materials that did not exist before, and in the processing of materials that we have become accustomed to, but which we now recognize pose a growing threat to the environment as waste accumulates in quantities that the world can no longer sustain. In order to reduce or eliminate waste and pollution, the focus here is on developing supply chains around the repair, renewal, regeneration, and recycling of materials and products.
  • Manufacturing is undergoing a transformation of its own, one which will make the changes happening in transportation and materials that much more impactful. With the recent shift in political attitudes towards global trade, more companies are beginning to consider regionalized and localized manufacturing as a path towards avoiding costly tariffs. Such a transformation will rely on a mix of emerging and mature manufacturing techniques in order to keep costs within a manageable range. These advances in manufacturing will rely heavily on manufacturing goods to fulfill actual demand, rather than manufacturing goods in anticipation of future demand.
  • Invariably, software is being used more than ever to create new methods of collecting, storing, and analyzing data to augment human decision making in every industry. These technologies are being applied in industrial supply chains as distinct as: Pharmaceuticals and industrial chemicals – to simulate new compounds and test them more quickly and inexpensively; They’re also used in agriculture – to manage the production, storage and distribution of food and other agricultural produce in order to minimize food loss and food waste; And in energy – to aid in the production, storage, and distribution of energy from increasingly complex power grids that incorporate renewable and non-renewable sources of electrical power. 

The way we make things, the way we consume things, the way we move things, and the power that is required to make all that possible is changing dramatically thanks to advances in software and hardware technologies. Solving the foundational problems that plague global supply chains is a daunting task. Moreover, global GDP, most recently estimated at about $88 trillion, rests on our ability to solve these problems. 

Technological Transformation of Supply Chains: An Economic Problem, An Economic Opportunity

In our conversations with other people, we are often asked the question; “Wouldn’t this be easier if the transformation of supply chains were driven more by economic forces and consumer needs?”

In The Supply Chain Economy: A New Framework for Understanding Innovation and Services, Mercedes Delgado and Karen Mills state that; “The U.S. supply chain contains 37% of all jobs, employing 44 million people. These jobs have significantly higher than average wages, and account for much of the innovative activity in the economy.” 

Similar conclusions hold true in every other region of the world, and there is ample evidence to support that belief thanks to work by a number of global. Multilateral organizations like the World Economic Forum, The World Bank, The International Monetary Fund, various agencies of the United Nations, and others.

For example;

  • According to Growing Better: Ten Critical Transitions to Transform Food and Land Use, a September 2019 report by the Food and Land Use Coalition;  “The hidden costs of global food and land use systems sum to $12 trillion, compared to a market value of the global food system of $10 trillion.”
  • According to Long-Term Macroeconomic Effects of Climate Change: A Cross-Country Analysis, a July 2019 paper by researchers at the University of Southern California (USA), the University of Cambridge (UK), Trinity College (UK), the International Monetary Fund (Washington DC, USA), and National Tsing Hua University (Taiwan); “Our counterfactual analysis suggests that a persistent increase in average global temperature by 0.04C per year, in the absence of mitigation policies, reduces world real GDP per capita by 7.22 percent by 2100.” Furthermore the authors state; “We also provide supplementary evidence using data on a sample of 48 U.S. states between 1963 and 2016, and show that climate change has a long-lasting adverse impact on real output in various states and economic sectors, and on labour productivity and employment.”
  • According to Impact of the Fourth Industrial Revolution on Supply Chains, an October 2017 report published by the World Economic Forum; “Disruptive technologies are transforming all end-to-end steps in production and business models in most sectors of the economy. The products that consumers demand, factory processes and footprints, and the management of global supply chains are being re-shaped to an unprecedented degree and at unprecedented pace. Industry leaders who were consulted believe that new technological solutions heralded by the Fourth Industrial Revolution – such as advanced robotics, autonomous systems and additive manufacturing – will revolutionize traditional ways of creating value. As the costs of deploying technology continue to fall, international differentials in labour costs will no longer be a decisive factor in choosing the location of production.” 

Other examples are not difficult to find. 

A company’s supply chain is an integral part of that company’s customer experience, and consumers all over the world will continue to become more demanding, not less. The supply chains of the future will become a reality precisely because the refashioning of global and local trade infrastructure is an economic issue that is driven by consumer preferences.

That being said, it is important to recognize why conversations about the transformation of supply chains are less straightforward than one might hope.

In Disaster Mitigation is Cost Effective, a world development background note by Ilan Kelman, he states that it is easier for politicians who tend to seek visibility for themselves to pursue after-the-fact measures rather than pursue prospective and preventative measures related to disaster risk reduction. After-the-fact measures are more visible, while prevention is intangible and difficult to quantify, resulting in less of a boost for the personal ambitions and ego of individual politicians.

We observe a similar pattern of behavior among corporate executives, who tend to pursue highly visible, customer facing, short-term, tactical initiatives at the expense of long-term strategic initiatives that will help their companies develop and gain mastery over their backend supply chain operations. On the other hand, we observe that the companies that have become globally dominant are also those that have developed superior supply chain mastery within their respective markets and industries. We believe that companies with inferior supply chain operations will continue to fall victim to a degraded customer experience. We also believe that companies with inferior supply chains will lose market share to established, and new, competitors with superior supply chain capabilities.

Early-Stage Technology Venture Capital Will Play An Important Role

Surprisingly, the men and women who set out to tackle these problems usually find a lack of sufficient early-stage venture capital to support their efforts at the earliest and riskiest stages of their work – as they take that work out of academic research labs, or small apartments and houses, and start the often arduous process of commercialization. 

That is when there is the greatest need for venture capitalists who understand the nature of the problems, who recognize the potential commercial opportunities, who have a willingness to do the necessary hard work required to help these entrepreneurs succeed, and who have developed relationships with prospective commercial partners willing to investigate new technological innovations for long-standing supply chain problems.

This is changing, but it is not changing fast enough. The world needs much more risk-seeking capital to fund these entrepreneurs – the market opportunity is enormous. As we have already pointed out, global GDP rests on a foundation built entirely on physical and digital supply chains.

For these innovations to succeed, governments and traditional industry must become more open to partnering with venture capitalists and technology startups. Unlike innovations in information technology, the technological innovations that will transform global supply chains and trade interact with the real world. As a result, it is not enough for policies and regulations to lag innovation by years. Instead, regulators and policy makers must work hard to create regulatory frameworks that help to nurture innovation rather than assist in suffocating it. Correspondingly, venture capitalists and entrepreneurs must partner with community organizations, politicians, and regulators to help them keep up with advances in technology and innovation. 

One might ask: “Are there really enough opportunities for early-stage investments in supply chain?” Yet, once one understands what a supply chain is, a few minutes spent thinking about that question illuminates the misconception. 

The recent success of funds like Lux Capital – which announced that it raised a billion dollars distributed across two funds, and DCVC – which announced a $725 million fund, suggests that there are significant financial returns to be harvested by limited partners who have the foresight to invest in the small handful of venture funds that are now choosing to focus on funding early-stage startups solving the sorts of problems we have already described. 

The longevity of Supply Chain Ventures, established in 2001 by Dave Anderson, also suggests that this is a market that is ready for more early-stage venture capital, not less. This is assertion is based on how many advances in computational and information technologies have occurred since 2001, and how much easier it is now for such technologies to be implemented in physical supply chains. That observation is also based on the rising interest, relatively speaking, in issues surrounding supply chains within the general population.

Our conversations with corporate executives responsible for meeting demand from customers suggests that there is a growing appetite for new technology to enable companies to meet the expectations of an ever more impatient and demanding customer base. Also, our conversations with government officials point to a growing desire by public servants to seek new innovations geared at solving the problems that plague large and growing urban communities, and the suburban communities that surround them. 

What Can You Do?

There is a lot that one can do to participate in the coming transformation of supply chains;

  • Individual Consumers: As individual consumers we can all continue to become more active and engaged about understanding how our consumption affects the finite world around us. Social media and information technology makes it easy for attitudes and beliefs about consumption, production, sustainability, the environment, and climate change to spread. In Consumer attitudes towards sustainability and sustainable business: An exploratory study of New Zealand consumers., a 2015 master’s thesis by David Anthony Thompson at Lincoln University in New Zealand, he states; “From a purely pragmatic perspective, this study has indicated that consumers are generally likely to be supportive of not just purchasing sustainably produced goods and services, but that they feel positively towards companies that demonstrate sustainable social and environmental behaviour. This has implications for reputation building for organisations and in turn hints at benefits when it comes to securing supply contracts, recruiting staff and relationships with their physical communities. The study also suggests that understanding and knowledge play a – 56 – contributory role in forming these attitudes, therefore supporting the value in education and information strategies for sustainably run businesses.”
  • Sources of Private Capital: As we have already discussed previously, investing in early-stage innovations in supply chain transformation is an opportunity that remains largely under-resourced in terms of risk-seeking capital relative to the size of the opportunity. It is an area that is ripe for increased allocations of capital within the private equity asset allocation targets of family offices, endowments, foundations, and pension funds.
  • Governments: During #SCIT2019, The Worldwide Supply Chain Federation’s inaugural global summit on supply chain, innovation, and technology held in NYC on June 19 – 20, 2019, Samuel Chan, Regional Vice President, Americas, at the Singapore Economic Development Board provided attendees with a sense of how the Government of Singapore is thinking about the role that supply chain, innovation, and technology can play in Singapore’s economic development. Supply chain occupies a central position in Smart Nation Singapore, and specifically in its Smart Logistics initiative. As we have stated previously; It is not a coincidence that countries ranked highest on the Worldbank’s Logistics Performance Index tend to have the most developed economies, while those ranked lowest tend to have the least developed economies. Increasingly, the countries and regions of the world that will continue to experience the strongest economic growth will be those that are quickest to embrace and deploy the still nascent and emerging engineered systems that reflect a tight integration of computation and physical supply chains, in every area of economic activity.

If by now, the reader is beginning to conclude that the future of supply chains will be driven largely by supply chain enthusiasts, we agree.

We Will All Be Supply Chain Enthusiasts

So who is today’s supply chain enthusiast? A supply chain enthusiast is;

  • Someone who recognizes that the world is a mechanism for providing humanity with the resources it needs to survive. 
  • Someone who recognizes that each of us has a responsibility for ensuring that this supply chain that we are part of is managed in a way that ensures that humans continue to thrive. 
  • Someone who understands that collectively, we must summon the political will to begin the effort of arresting, and then reversing, the harm that we have caused to the environment. 

We will all become supply chain enthusiasts, not because it is the fashionable thing to do, but because with every year that passes it will become an issue of increasing and critical necessity. As more people become aware of, and start to understand that how we produce, store, transport, and consume things has a profound impact on our environment, enthusiasm about supply chain, innovation, and technology will become more socially and culturally mainstream. 

At that point, “The world is a supply chain.” will become a rallying cry everyone innately understands.

Note: “The world is a supply chain.” is a trademark owned by The New York Supply  Chain Meetup.

About The Authors: Brian Laung Aoaeh (@brianlaungaoaeh) and Lisa Morales-Hellebo (@lisahellebo) are co-founders of REFASHIOND Ventures, an early-stage venture capital fund that is being built to invest in startups creating innovations to refashion global supply chain networks. They are also co-founders of The Worldwide Supply Chain Federation, a growing network of grassroots-driven communities focused on supply chain, innovation, and technology.

#UserManual – Send Us All The Early-Stage Supply Chain Technology Startups

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Brian Laung Aoaeh and Lisa Morales-Hellebo, at #SCIT2019, June 19 – 20, Microsoft, Times Square, NYC. Photo Credit: Ray Neutron.

Author’s Note: This blog post is an updated version of User Manual: The Early Stage Startups I Want To Hear About Most in 2016 and 2017 and User Manual: The Early Stage Startups I Want To Hear About Most in 2017 and 2018. Certain portions of this version may be exactly the same as in the prior versions. However, there are significant differences between the prior versions and this one.

About REFASHIOND Ventures

REFASHIOND Ventures is a seed-stage venture fund that Lisa Morales-Hellebo and I are building to: invest in startups developing technology innovations to refashion global supply chains – across different industries. 

We are in the process of raising our first fund. Once we raise the fund, we will be based in New York City. 

While we are raising the fund, we are collaborating with a family office to make some early investments that fit our investment thesis, and the family office’s investment interests.

The three philosophical pillars of our investment thesis are;

  1. The world is a supply chain.TM
  2. Software is eating the world.
  3. Disruption creates opportunity.

Our working definition of a supply chain: “A network of connected and interdependent organisations mutually and cooperatively working together to control, manage and improve the flow of materials and information from suppliers to end users.”

– Martin Christopher, Logistics & Supply Chain Management: Creating Value-Adding Networks, 4th ed, Pearson Education Limited 2011, p4

We believe that a perfect storm of irreversible social, economic, technological, and environmental forces, has created an urgent and critical need to refashion global supply chains. This process presents the biggest investment opportunity of the next half-century. We are building a fund to invest in that opportunity.

We’ll invest in startups in the following areas; Supply Chain Management, Supply Chain Logistics, and Supply Chain Finance – across industries.

Our initial focus is on startups based in the United States, and Canada.

About The Worldwide Supply Chain Federation

The Worldwide Supply Chain Federation, which we founded in August 2017, is the collaborative, and mutually supportive coalition of grassroots communities focused on technology and innovation in the global supply chain industry. Each chapter is a community of practice that connects the builders of technology innovations for supply chain with the buyers of technology innovations for implementation in real world commercial supply chains. The New York Supply Chain Meetup is its founding chapter.

The Worldwide Supply Chain Federation is the world’s first, largest, fastest growing, and most active network of grassroots driven communities focused on supply chain, innovation, and technology. You can learn more here: The Worldwide Supply Chain Federation.

You can check out our Youtube Channel here. Join our community here. Follow @tnyscm on Twitter.

Characteristics We Look for in Teams, and Founders

We look for – we will not learn this until we actually interact with you. But this is what we will be looking for;

  • Teams in which the founders have known one another for a considerable amount of time prior to launching their startup; We look for teams in which the level of trust and respect between the co-founders is high. This reflects our belief that at the earliest stages of a startup’s life, team risk is the greatest risk we must worry about.
  • Teams that will not have difficulty attracting other great people to join the startup; We look for founders who inspire confidence and loyalty from others because they are good at what they do, the kind of people we could picture myself working for. We look for people that others outside the startup can come to look up to as thought leaders in their chosen area of expertise.
  • Founders for whom solving the problem that their startup is solving has become their life’s mission and they will work to solve that problem with or without help from outside investors; We look for founders who have an unconventional opinion about the market opportunity they are pursuing, and can explain their position is with evidence that investors can analyze independently. We look for founders who are focused squarely on solving their customers problems.
  • Teams that can focus on building a simple product that their initial customers love, and who can focus on a niche within which to launch that product. We look for teams that are judicious and frugal in how they deploy the startup’s resources.
  • Founders who value teamwork, and who can become great leaders if they desire to do so; We value transparency, honesty, and openness. We value self-awareness. We like people who are determined and tenacious, who do not give up just because the going gets uncomfortable and things seem bleak.
  • Founders who have a hard time doing something simply because it is what someone else expects them to do; We do not like obedience. We detest arrogance. We admire confidence. We look for founders who are not afraid to be different. We look for founders who have prior demonstrable experience of good decision-making when things are uncertain and information is incomplete. We are not looking for perfection.

Characteristics We Look For in Markets

We look for;

  • Large markets that could ultimately be served by the startup’s product, even though the initial target might be a small portion of the whole. We look for customers capable of and willing to pay for the product, and who are looking for and eager to find a solution to their problem.
  • Markets in which the pain is acute because the problem suppresses customers’ profits significantly, or because the problem makes users far less effective and efficient than they could be.

If currently the addressable market is between $1B and $10B, we want to see evidence that it is growing quickly enough to support the startup’s future goals, and the competition that we assume will quickly follow if the team is successful.

Characteristics We Look For in Business Models

We look for products and business models that:

  • Will benefit from network effects as time progresses,
  • Can scale efficiently and quickly once product-market-fit has been established, and
  • Can eventually benefit from an economic moat as the startup matures into a company, and the business model becomes established.

The Themes We Are Focused On

Notes:

  • These themes cut across different industries and sectors. That is a deliberate choice in the way we are designing REFASHIOND Ventures.
  • The technology sector evolves constantly. Accordingly, our team’s interests might adjust in response. The themes we have described below should serve as a rough guide to how we think about the universe of startups in which REFASHIOND Ventures will invest. It is not comprehensively exhaustive, nor is it mutually exclusive of themes we have not described. If the innovation you are working on fits our definition of supply chain and the descriptions above, please reach out to us.
  • We anticipate that REFASHIOND Ventures first fund will be a pre-seed and seed-stage fund. Our current collaboration will primarily focus on startups raising an institutional seed round, or raising a round between a previous institutional seed round and a series A round.

Our current investment themes;

  • Next Generation Logistics: Platforms or applications that significantly improve how logistics and transportation networks are operated and managed.
  • Advanced Materials: Platforms or products that make it possible to research, invent, and create new types of materials at scale. We are especially interested in the conversion of large quantities of waste of different types into new materials. 
  • Advanced Manufacturing: Platforms or applications that make it possible to integrate advances in software engineering into manufacturing processes. 
  • Data & Analytics: Platforms or applications that help people or other machines to manage, analyze, interpret, make decisions, and take actions based on vast and growing amounts of centralized or decentralized data from disparate sources. Such platforms or products enable large numbers of different types of connected devices, machines, apps, and websites to communicate with one another seamlessly, and with the people managing or using them, within a secure environment. 

Connecting With Us

If you know someone who knows us, an introduction would help. If you do not, never hesitate to communicate with us directly. We are both very easy to reach on the major social networking platforms. 

The best time to start communicating with us is before you are raising a round because we believe it is important to build trust and understanding before entering into the kind of working relationship that exists between startup founders and their early stage investors.

That also gives us sufficient time to understand the problem you are solving, so that if REFASHIOND Ventures invests, we are doing so with conviction. Time enables us to become a more effective advocate on your startup’s behalf when we have discussions about you with other investors we know, and who we feel would be a good match for the round you are raising.

Communicating With Us

If we are not meeting through an introduction, we will respond quickest to founders who get straight to the point, and explain why we should speak with them in 250 – 400 words in their first email to us. We try our best to respond to founders who initiate communication with us. However, depending on what else we have going on, we may not respond if we feel the startup is outside REFASHIOND Ventures’ areas of interest. 

Follow up with us once or twice if you believe we have made a mistake by not responding.

Things We Believe Are Red Flags

  1. Exploding rounds: An exploding round comes with a caveat like “Seed round in ground-breaking tech startup closing in 1 week!” We need time to do our own homework.
  2. Meetings led by an advisor: We prefer our first few interactions with a startup to be with the team of co-founders, not with an advisor or an investment banker. It is okay for an introduction to come from an advisor if that advisor is someone we already know. We do not like to have advisors or mentors micro-manage our interactions with startup founders. That does not inspire confidence.
  3. Lack of control over core technologies: We try to avoid situations in which the startup has a product that has launched to the public, but the startup’s team has no primary responsibility for actually building the core product. If there’s IP we’ll spend some time trying to understand who owns the IP.
  4. Founders who are mainly focused on invention: Some founders are born inventors. In and of itself, that is not a bad thing. However, as investors we have made a choice to invest in founders who want to build potentially big businesses. 

Our Commitment To Startup Founders

Based on Gil Dibner’s VC Code of Conduct;

  • We will be transparent.
  • We will respect your time.
  • We will not ask you for material we do not need.
  • We will not string you along.
  • We will let you know about any competitors in our portfolio.
  • We will be transparent about conflicts of interest.
  • We will not share any of your material without your permission.
  • We will not speak with your customers without your permission.
  • We will educate before we negotiate.
  • We will be honest about what standard terms are.
  • We will not issue a term sheet unless we have made a firm decision to invest.
  • We will reflect the term sheet in the final legal documents.
  • We will not seek an unreasonable equity stake.
  • We will avoid surprises.
  • We will always act in the best interests of the startup.

Without doubt, there will be times when we fail to live up to these ideals. When that happens we hope founders will let us know. That is the only way we can get better.

Can Collaboration and Community Serve as Catalysts For Innovation in Supply Chain?

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Note: A version of this article was first published on July 31, 2019 at Port Technology.

The innovations required to reinvent global supply chains will not happen without collaboration. This article describes our experience facilitating such collaborations, starting in late 2017.

In late 2016 and early 2017, I spent a lot of time studying trucking and shipping, with a view to understanding the industry dynamics at play, and to see what opportunities might exist for software startups. What I learned about the trucking industry piqued my interest in logistics overall, and ultimately led me to a decision to focus on early stage technology investing in supply chain by building REFASHIOND Ventures to invest in early stage technology startups reinventing supply chains.

Through that work it became painfully clear to me that there is a need for closer collaboration between software startups and established, mature companies. 

This article will explain why there’s a need for such collaboration. I will also discuss the approach our community, The Worldwide Supply Chain Federation, has taken to enable such collaboration. Although it is still early, we will end with a discussion of some early indicators of the results we might expect in general.

Note on prior and recent work: Disruption, supply chain management, supply chain finance, and supply chain logistics are topics I have been studying for some time – from the perspective of an early stage venture capitalist specializing in supply chain; Notes on Strategy; Where Does Disruption Come From? (2015), Industry Study: Freight Trucking (#Startups) (2016), Updates – Industry Study: Freight Trucking (#Startups) (2016), Industry Study: Ocean Freight Shipping (#Startups) (2017), Updates – Industry Study: Ocean Freight Shipping (#Startups) (2017), Where Will Technological Disruption in The Fashion Supply Chain Come From? (2018), Is disruption finally underway in the freight brokerage industry? (2019), and Why digital freight brokers might fail to disrupt the freight brokerage industry (2019).

Identifying The Chasm

A consequence that arose from my decision to publish my articles on trucking and shipping is that it prompted several executives at established companies to reach out to me to talk about my findings. The same happened with startup founders – though, they mostly wanted to meet an early-stage venture capitalist who cared about supply chain logistics.

Those conversations made it painfully clear that: On the one hand, executives at established companies know the business problems in supply chain operations for which they desperately need new innovations. However, they typically do not have sufficient time to meet their daily responsibilities at work and scour the globe seeking out such new innovations. Moreover, their companies might not be plugged into the right communities to find such innovations through tradition RFP processes. Moreover, such executives also tend not to have a very good sense of how much certain emerging technologies have matured, and if such technologies might be applicable to the problems they need to solve. I call such executives BUYERS: these are people and organizations who want to buy new technology innovations for supply chain operations. This is particularly true in a nascent area like cryptocurrencies and blockchain.

On the other hand, founders of software startups that are creating new innovations for supply chain tend to understand the technology well, but they lack a deep and nuanced understanding of the business problems that potential customers face. They lack a sufficiently mature understanding of the value proposition they must offer to the BUYERS if they are to win market adoption. I call such startup founders BUILDERS: these are people and organizations who are building new technological innovations for supply chain operations.

For this conversation to make sense, it is critical that we share a common understanding of what I mean by supply chain. 

The definition I have adopted is from the 4th edition of Martin Christopher’s Logistics & Supply Chain Management: Creating Value-Adding Networks. A supply chain is: “A network of connected and interdependent organisations mutually and cooperatively working together to control, manage and improve the flow of materials and information from suppliers to end users.”

Crossing The Chasm

In order to bridge this chasm between BUYERS & BUILDERSTM, Lisa Morales-Hellebo and I founded The New York Supply Chain Meetup in August 2017. We started with a very simple premise: Once a month, for about 9 out of the 12 months each year, we would bring these two groups of people together to:

  • Network, 
  • Talk to one another about the problems they were trying to solve and the products that they were building, and
  • Participate in curated programming that is based on relevant and topical themes related to supply chain. 

Each event would last about 3 hours. The format of a meetup appealed to us because it is inherently grass-roots driven, and emerges spontaneously based on a shared enthusiasm among a group of like-minded people for a particular topic. 

We ultimately settled on a mission for The New York Supply Chain Meetup: To nurture and grow the world’s foremost open, global, multidisciplinary community of people devoted to building the supply chain networks of the future – starting in NYC.

Even before we held our launch event on November 16, 2017 people in other parts of the United States, and in other countries asked us if we would be live-streaming the event. We took this as a promising sign. As we approach 24 months since we initially started working on this, our tentative first efforts have grown into an initiative to build The Worldwide Supply Chain Federation; A collaborative, and mutually supportive coalition of grassroots communities focused on technology and innovation in the global supply chain industry. The New York Supply Chain Meetup is its founding chapter. 

The initiative is entirely grass-roots driven. Our community includes:

  • Startups,
  • Mature Companies – across all industries,
  • Academics from research institutions,
  • Early-stage technology venture capitalists, and other late-stage investors, and
  • Journalists, regulators, professional services providers, and any other groups of people with interests and skills relevant to innovation in supply chain.

We have 1900+ members in The New York Supply Chain Meetup – the founding chapter, 2700+ members around the world, an active chapter in Charleston, South Carolina, and chapters in the process of being formed in several other cities around the world. 

The Worldwide Supply Chain Federation held its inaugural global summit, #SCIT2019, on June 19 and June 20 in NYC. 

  • We had 1000 people sign up for the event before we closed registration. 
  • During the event we had about 400 people attend on each day of the summit. Attendees came from 15 countries. 
  • We had 31 speakers: With 11 startup showcases, and a presentation by the Singapore Economic Development Board on June 20. Video of the event is available on our YouTube channel. 

Also:

In An Age of Platform Competition, Open Collaboration, Open Communities, and Open Ecosystems Matter A Lot

Why are companies like Amazon, Apple, AirBnB, Microsoft, Alibaba, Google, JD.com, Uber and others, posing a threat to companies in traditional industries? Why are startups that many people have never heard of beginning to attack and threaten companies in mature, established industries that one may have considered immune from such threats as recently as even just half a decade ago?

It is because the companies I have listed, and others I have not, understand the importance of business models that are built on open ecosystems rather than proprietary and linear value chains owned by a single company. 

Using the internet and other maturing software-enabled technologies as the foundation, these companies are launching demand-side and supply-side attacks on industries that have become accustomed to relatively sanguine competition among well established companies. 

That raises the question: What is an ecosystem? A business ecosystem has three main characteristics;

  • First: It is a network of networks.
  • Second: The focus of the ecosystem orchestrator must be on enabling and facilitating the creation and exchange of value, between all participants of the ecosystem.
  • Third: The creation and exchange of value must occur in a way that increases the aggregate well-being of the entire network over time.

When executed well, platforms and ecosystems give rise to powerful network effects. Network effects matter because, in the most extreme cases they can lead to winner-take-all outcomes. At best, they lead to winner-take-most situations. 

What’s are network effects? 

As I explained in my September 2014 article on the topic Revisiting What I Know About Network Effects & Startups: “A network effect occurs when the value of a good or service increases for both new and existing users as more customers use that good or service. The network effect is a virtuous cycle that allows strong companies to become even stronger. Network effects are also known as direct-benefit effects.”

The Results Are Early, But The Signs Look Promising 

As I have pointed out already, our effort is entirely grass-roots driven. We are yet to attract significant outside support to accelerate our efforts. Nevertheless we are showing promising early results in the 24 months during which we have been working on this. Here are just a few highlights.

  • A startup in our community is working with a very large shipping company that is seeking software technologies that enhance its ability to make decisions under uncertainty. Such software can be applied in various aspects of the shipping company’s global operations. The software could also be introduced to the shipping company’s customers who also need to optimize their own supply chain operations. The shipping company gains new technology, while the startup wins a channel partner to aid its go-to-market efforts.
  • A handful of startups in our community are building software to enable established freight forwarders modernize their business operations without bearing the expense of developing software from scratch. Many such efforts are led by people with significant experience in the freight forwarding business who have teamed up with technologists to build the technology. For such startups, a community like ours provides a great, low-pressure opportunity for them to connect with potential customers as well as potential investors.
  • Another startup in our community is building a derivatives exchange for the freight markets, creating a new suite of tools that shippers and carriers can use to manage risk.
  • One startup in our community is building a communication platform to enable communication around the transactions that take place between shipping companies and beneficial cargo owners, freight forwarders, and other parties involved in the shipping of cargo. Currently that communication happens over email, and relies on manual, paper-based processes. The team already has significant experience building software for the maritime shipping industry. The need for the product it is building is confirmed by the explosive rate of growth in adoption by very large shipping companies around the world. Where our community can help is with advice about the startup’s interactions with potential venture capital investors, and providing opportunities for the startup to tell its story to a wider audience. In one instance, after presenting at one of our events, a real estate broker told the startup’s founder that the same problem exists in the real estate industry. He also met an executive from a large shipping company who offered to introduce him to the shipping company’s corporate venture capital arm.   

Collaboration Is Especially Critical in Blockchain + Supply Chain

Like everyone who is enthusiastic about supply chain and technology, we are exploring how blockchain and other distributed ledger technologies will affect the supply chain. Here are some of the things I have learned;

In relation to blockchain, one of the lessons I learned while studying the shipping industry in early 2017 was this: 

“One product that it appears the industry would gravitate towards is a system of record that connects all participants in the supply chain, from end-to-end. This would be a platform into which various shipping industry data could be input, and other data can be obtained as outputs. Probably most input data would come from other platforms and data repositories, while output data would be fed to different counterparties based on their access rights and information requirements.” 

In that blog post, which I published in June 2017, I went on to say that this product seemed to be one ideally suited to be built on a blockchain. The platform would need to allow several independent parties to collaborate with one another while providing each of them with anonymity for certain aspects of their interactions. 

For example: Customs agencies around the world might demand special access rights to enable them monitor international trade transactions happening under various national regulatory jurisdictions. Such agencies could desire anonymity under certain scenarios.

About a week after I published the blog, I discovered that IBM and Maersk were beginning to release more details about their plans for TradeLens to the public.

During our meetup in January 2018, we hosted a discussion featuring speakers from UPS, SAP, Sweetbridge, Blockcience, and MState. The keynote speaker at that event was Dr. Michael Zargham, CEO and Founder of Blockscience, and at the time, also a technical advisor to Sweetbridge. The overarching conclusion I reached by the end of the event was this:

 “Successful implementations of cryptocurrencies and blockchains in supply chain will require more collaboration than the traditional industry is accustomed to.” — Why? The technology combines: digital systems; physical systems; social and political organization; economic structures and incentives; finance; and capital markets. No single organization is expert enough in all those fields to go it alone.

At our meetup in April 2018, we had speakers from: Algorand, Maersk, IBM, TigerTrade, EY, MState, Celsius Networks, and Sweetbridge. Professor Silvio Micali of MIT’s Computer Science and Artificial Intelligence Laboratory was the keynote speaker at that event. He described the key ideas behind Algorand, a blockchain he invented expressly to satisfy the demands of businesses. The other speakers discussed what it would take to bring blockchains out of the lab and into the real world of supply chain. Based on the discussions that day, I reached the conclusion that: 

Blockchain applications for supply chain must be interoperable with other blockchain platforms, and they also must be interoperable with the older technologies that businesses have relied on up till now.

TigerTrade started a conversation with IBM as a result of initial informal interactions at our in April 2018. Ultimately, this led them to partner and collaborate on the creation of TRADEFLO, a blockchain-powered platform for global trade facilitation and financing. Tanjila Islam, CEO and founder of both TigerTrade and TRADEFLO presented TRADEFLO at The Worldwide Supply Chain Federation’s inaugural global summit in New York City on June 20, 2019. Tanjila’s experience building TigerTrade directly informed her understanding of the need for a platform with TRADEFLO’s attributes. 

Conclusion

Platforms and ecosystems work well because they allow each participant of the platform to play to its unique strengths, while relying on its ecosystem partners for capabilities that it does not have in-house. This is not an issue that has mattered for shipping companies in the past. But, it is becoming more of an issue now, and it will continue to become a more acute problem in the future as beneficial cargo owners demand more sophisticated services from their supply chain partners. 

Collaboration is difficult because it requires a change in culture. It requires an openness that is not customary in many organizations. Collaboration for the purpose of discovering and nurturing innovative new ideas, products, services, and business models is even more difficult because it requires a commitment from senior leadership. Given how often individuals are shuffled around in organizations, it can be difficult to get anyone to focus appropriately on the long and difficult work that is required to build collaborative partnerships.

However, those companies that do not partner with others to meet their customers’ demands stand the risk of losing those customers to companies that come to grips with platform-and-ecosystem-driven competition more quickly. 

Key Supply Chain Innovation Issues to Consider as the World Becomes More Volatile, Uncertain, Complex, and Ambiguous

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Note: A version of this story was first published on June 11, 2019, at FreightWaves.

For a couple of years now, I wake up each morning thinking to myself; “I wonder what insane thing happened while I was asleep.” Initially, it was an enervating experience. Now, I have become accustomed to it, and I do not feel the same sense of dread when I wake up, or of being drained of energy even before my workday has begun.

In the same way that I have adapted to a less serene world, people who buy, build, or operate new technology and innovations for supply chains must adapt and adjust to a world that is characterised by instability and chaos.

This article will briefly touch on 3 approaches for doing so. It is based on observations I made during The National Retail Federation’s Big Show 2019, when my co-founder, Lisa Morales-Hellebo, and I led 9 different groups of visiting executives on tours of the expo hall to learn about innovations in supply chain that they might buy for their respective companies. Being a tour guide gave me a great opportunity to listen to them describe their problems in their own words.

What are the origins of the acronym VUCA, and what are its implications?

The term VUCA first appeared in the US Army War College’s curriculum in 1987. Subsequent attempts to trace its origins in the curriculum suggest that it may have resulted from a synthesis of ideas in the book “Leaders: The Strategies for Taking Charge” by Warren G. Bennis and Burt Nanus.

VUCA is an abbreviated description of a world that is simultaneously

  • Volatile — change happens more often than usual and the accompanying swings become more extreme with the passage of time,
  • Uncertain — our ability to make predictions of any meaningful nature deteriorates dramatically,
  • Complex — the number of variables we have to track, analyze, and interpret increases beyond our ability to synthesize the accompanying deluge of data and information for decision-making, and
  • Ambiguous — even when we can synthesise data and information, it can appear to lead us towards meaningless and even contradictory conclusions.

It is debatable if the world in general is more VUCA now than it has been at any time in the past. What is not open to debate, however, is that due to the evolution of information technologies, we now become more quickly aware of events around the world. The speed with which news of unexpected and destabilizing events travels contributes to our sense that the world we live in now is more unstable than it was in the past.

Observation #1: Supply chains are becoming less centralized, more distributed, and more integrated.

The days of centralised distribution appear to be well behind us. The trend now is towards more decentralized and localized distribution, and less reliance on centralized and massive distribution centers. This is happening because companies want to increase their responsiveness to changes and disruptions within their supply chain. To accomplish this companies seek to more tightly integrate local stores with one another, as well as to more tightly integrate existing centralized distribution centers with local stores. To accomplish this companies are looking for;

  • Increased automation — freeing human experts to focus on complex cases and issues that arise in the supply chain,
  • More sophisticated forecasting and network optimization capabilities, and
  • The potential to eliminate central distribution centers altogether, so that suppliers ship product directly to local stores.

Observation #2: Supply chain visibility is becoming a more pressing concern.

Supply chain visibility enables customers, producers, and other participants in the supply chain, to track and trace goods as the goods travel through the supply chain from a producer to a customer. Supply chain visibility is a problem of information creation, storage, transmission, retrieval, and delivery. Supply chain visibility is also an issue of information security. It depends on data standardization between organizations. This is something that has been rather difficult to accomplish in the past. However, the push for supply chain visibility will only increase as former arch-rivals and competitors move towards integrating certain aspects of their supply chain operations in order to collaborate more closely with one another.

Observation #3: Simplicity is a virtue to the users of supply chain software.

This thought occurred to me as I listened to the executives ask questions at each of the stops on the tour; The consumerization of enterprise software is now affecting people’s expectations of how supply chain technology should function.

What does this mean?

  • First, people now expect supply chain software to be as intuitive to use as the software they rely on at home. They expect unnecessary complexity to be abstracted away.
  • Second, people expect supply chain software to be always available, and ubiquitous. That is, it must be seamlessly available across computing platforms, with no degradation in experience or efficacy.
  • Third, customization and personalization are key. In this context, customization means that the software is easily configured to match an organization’s unique business operations and structure. Personalization means that within that customized organizational configuration, each user has an experience that is further configured to that individual user’s role and responsibilities within the company, in a way that maximizes the individual users on-the-job effectiveness.
  • Fourth, more so now than in the past, buyers of supply chain software expect speed, responsiveness, and redundancy.

It is clear the trends I have described create an opportunity for early-stage startups building new software-enabled innovations to help businesses simplify and streamline supply chain operations. What remains unclear is the degree to which switching costs will hinder the adoption of new software products from young startups in a world in which VUCA is the norm.

Disputes Will Disrupt Global Trade and Supply Chains

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Note: A version of this story was first published on June 04, 2019, at FreightWaves.

The United States is now in the midst of well publicised trade disputes with China, and Mexico, two of its biggest trading partners. There are also simmering trade tensions between the European Union and the United States. Supply chains are networks of interdependent organizations that cooperate and collaborate with one another to move goods and information between producers and consumers. Global trade has become more complex as supply chains have become increasingly more global. The current tendency towards raising barriers to trade will be disruptive to supply chains, global trade, and economic well-being.

My upbringing, having grown up in Ghana and Nigeria, and then attending college, graduate school, and pursuing professional credentials after that in the United States, coupled with my professional experience since college, and my past decade pursuing a career in early-stage investing, hopefully gives me a unique perspective on this topic.

Today, the most accurate way to think of supply chains is in three ways;

  • First, information and data supply chains are non-physical and typically traverse national borders.
  • Second, conventional supply chains used to move physical goods can’t function effectively or efficiently without tightly integrated information and data supply chain infrastructure.
  • The production of the most valuable physical goods that people consume today relies on complex supply chains that source raw materials in certain parts of the world. Then manufacturing into finished goods, or parts, occurs in other parts of the world. Finally, the goods are shipped to consumers for final consumption in yet other parts of the world.

In sum; Modern supply chains are complex systems which are susceptible to cascading unintended consequences. These consequences may arise due to policies pursued by national governments that do not take a holistic view of global trade and supply chains, and which are not guided by or based on a common understanding of the basic principles of economics.

Barriers to trade affect consumers directly and indirectly. The direct impacts arise when businesses that have pricing power pass 100% of the financial burden that barriers to trade create onto their customers. The indirect impacts arise when businesses that do not have pricing power absorb some or all of the increase in operating expenses, forcing them to make some employees redundant as these businesses attempt to maintain their profit margins. In both cases, it is not difficult to understand how the broader economy starts to buckle; Lower consumer consumption leads to reduced business sales. Lower business sales and increased operating costs lead to reduced production. These interact to create a reflexive spiral of negative business and consumer sentiment about the state of the economy.

Here are some highlights from Tracking the Economic Impact of U.S. Tariffs and Retaliatory Actions by Erika York, Kyle Pomerleau, and Robert Bellafiore of the Tax Foundation, based on the Tax Foundation’s Taxes and Growth Model, as of April 2018. If all the tariffs announced by the Trump Administration as well as other national governments as of April 2018 were fully implemented;

  • United States GDP would fall by 0.79%, a reduction of $196.77 billion, over the long run.
  • Wages would fall by 0.51%.
  • Employment would fall by the equivalent of 609,644 full-time jobs.

Given this administration’s tendency towards belligerent and ad-hoc decision-making on these issues, one may safely assume that April 2018 represented the optimistic scenario.

Concurrently, according to data on Global Government Bonds as of May 31, 2019 at the Wall Street Journal’s Market Data Center, yield rates and spreads over U.S. Treasurys of 2-year, 5-year, and 10-year maturities are respectively below their levels over the previous month, and the previous year. This is the case for government bonds in Australia, Belgium, France, Germany, Japan, the Netherlands, Portugal, Spain, Sweden, and the U.K.

Furthermore, according to data on International Stock Indexes as of May 31, 2019 at the Wall Street Journal’s Market Data Center; The Global Dow, The Global Dow Euro, the DJ Global Index, and the DJ Global ex U.S. each closed the session an average of 3.8% below their level 52 weeks ago.

If that is not persuasive enough, the June 3rd 2019 J.P. Morgan Global Manufacturing PMITM produced by J.P. Morgan and IHS Markit in association with ISM and IFPSM says; “Global PMI surveys signalled that manufacturing downshifted into contraction during May. Business conditions deteriorated to the greatest extent in over six-and-a-half years, as production volumes stagnated and new orders declined at the fastest pace since October 2012. The trend in international trade continued to weigh on the sector, with new export business contracting for the ninth month running. Business optimism fell for the second month in a row and to its lowest level since future activity data were first collected in July 2012.”

While this data is interesting, and relevant, the real issues of concern are those that aren’t adequately captured in data, the information about hardening attitudes and perceptions towards economic-cooperation and free-trade amongst countries. In what I consider an unexpected and unusual move, the Government of China has published a white paper: China’s Position on the China-U.S. Economic and Trade Consultations. Readers of the white paper can agree on one thing; We are entering uncharted waters as far as global trade is concerned. How will current disputes affect how countries interact with one another as it relates to global trade? Will the progress of the past few decades be eroded due to political sentiments around the world which have led us to these specific trade disputes between the United States and its most important trading partners?

Coupled with the trade disputes between Mexico and the United States, prior disagreements between Canada and Mexico on one-hand, and the United States on the other, about NAFTA, this dispute between China and the United States, as well as other trade related disagreements that appear to be simmering just beneath the surface, one can only conclude that the global economy is in for bumpy 18–36 months.

There’s extreme turbulence ahead. Buckle-in your seatbelts.

The Democratization of Data for Supply Chain Logistics

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Note: A version of this story was first published on May 29, 2019, at FreightWaves.

Almost every day, there are reports warning of severe weather events, across the United States and in other parts of the world. About two weeks ago, while listening to one of those reports I thought to myself “I wonder how easy it is for someone responsible for supply chain operations at any company to proactively get a sense of where there may be severe weather events worth worrying about?” I couldn’t think of any.

Since that day, whenever I have some slack in my day, I go to Google to see if I could find something that provides a simple to use, and holistic source of data and information to enable all types of businesses make preemptive decisions related to their supply chain operations.

The closest I have found is FreightWaves’ Sonar — specifically, for the particular issue I am thinking about, the Critical Events view.

According to Zurich Insurance Group, an extreme weather event is an unexpected weather incident that is at the extremes of historical ranges for a specific location. The record amounts of precipitation that led to flooding in the midwestern United States in March, and the flooding earlier this month, again in the midwestern United States, are both extreme weather events. As bad as the problem is now, it has been getting worse, and will continue to get worse.

In “Economic Losses, Poverty & Disasters: 1998–2017”, the United Nations Office For Disaster and Risk Reduction (UNDRR) and the Centre for Research on the Epidemiology of Disasters (CRED) state:

“The report finds that between 1998 and 2017, climate-related and geophysical disasters killed 1.3 million people and left a further 4.4 billion injured, homeless, displaced or in need of emergency assistance. While the majority of fatalities were due to geophysical events, mostly earthquakes and tsunamis, 91% of all disasters were caused by floods, storms, droughts, heatwaves and other extreme weather events.

In 1998–2017, disaster-hit countries experienced direct economic losses valued at US$ 2,908 billion, of which climate-related disasters caused US$ 2,245 billion or 77% of the total. This is up from 68% (US$ 895 billion) of losses (US$ 1,313 billion) reported between 1978 and 1997. Overall, reported losses from extreme weather events rose by 151% between these two 20-year periods.”

The ability to know where critical weather events may be developing so that a business can adapt it’s plans for moving goods around is quite important. Severe weather events simultaneously increase costs and decrease revenues.

As I write this article, Sonar is showing me;

  • 591 Severe Weather Watches and Warnings around the world,
  • 5 Severe Thunderstorm Outlooks
  • 2 Tropical Cyclones
  • 40 Earthquakes, and
  • 2 Wildfires.

Sonar also allows me to drill down further, to get local data wherever there’s an asset providing data to the system. I drilled down to see more detail from data assets and sources in Kaduna, Port Harcourt, and Warri — cities in Nigeria. It’s the beginning of the rainy season in West Africa so I may come back periodically to see what the data says.


In addition, I can zoom in on parts of the United States, and identify the specific cities that are most likely to be hit by the storms that are mentioned daily in the news. For example, I as I write this article, can see that there are 160 different assets collectively warning of wind gusts, severe weather, hail, flooding, and tornados across the midwestern United States. If I were expecting a shipment of goods from that region, I could make contingency plans to account for these developments.

FreightWaves isn’t the only company building a platform of this sort. In January 2016, IBM announced that it had acquired The Weather Company. Presumably with the data that it has gained from that acquisition its Watson Supply Chain platform is better placed to help IBM’s enterprise clients take proactive measures to prevent disruptions to their business operations.

The power of systems like the ones I have described will be realized when they are as ubiquitous for businesses as Google Maps and Waze are for consumers. The technology keeps getting better, and the need keeps becoming more acute. The days when such information is only available to big companies that can afford to pay significant sums each year for such data and information are now behind us.