About The Author: Brian Aoaeh is a Cofounder and General Partner of REFASHIOND Ventures, an emerging venture capital fund manager that invests in early stage supply chain technology. He co-founded The Worldwide Supply Chain Federation, and is an Adjunct Professor of Supply Chain & Operations Management in the Department Technology Management & Innovation at the Tandon School of Engineering at New York University.
Author’s Note: By definition a work like this will be incomplete, and perhaps even obsolete by the time you read it. My goal is not perfection. Rather, I want to stimulate debate and conversation about what’s possible and what the future of software technology for supply chain logistics might resemble if we allow ourselves to imagine a better tomorrow. Many of the startups highlighted here are early-stage startups. This means that their platforms are still nascent enough that industry incumbents might be tempted to dismiss the impact they could have over the long term. One goal of this post, and indeed of the work we do at REFASHIOND Ventures and The Worldwide Supply Chain Federation is to close this gap between the BUILDERS & BUYERS of early-stage supply chain innovation and technology.
- We are entering an era of supply chain networks, platforms, and ecosystems that are enabled by advances in connected devices, cloud computing, edge computing, machine learning and artificial intelligence, and other exponential technologies.
- Customers desire supply chain logistics technologies that are both interconnected AND interoperable in ways that create incremental customer value by abstracting away complexity while increasing productivity and efficiency.
- The problem of Data Quality and Data Interchange is an issue that has to be solved in a scalable way for connected ecosystems to thrive.
- This calls for the leaders of new entrants and incumbents in logistics technology to think differently about their relationship with each other and with their customers; Logistics technology startups must be willing to alternatively compete and cooperate with one another to deliver customer value.
The market map in the image above represents an effort by a group of volunteers to organize activity in the market for logistics technology and innovation in a way that is useful for BCOs to consume. We released it on November 22, 2021, and you can read more about it here.
The need for the types of conversations I hope this article will encourage was put in the spotlight on March 15, when the White House released the statement, Fact Sheet: Biden-Harris Administration Announces New Initiative to Improve Supply Chain Data Flow; “To take the first step toward addressing this challenge, the Biden-Harris Administration is announcing the launch of Freight Logistics Optimization Works (FLOW), an information sharing initiative to pilot key freight information exchange between parts of the goods movement supply chain. FLOW includes eighteen initial participants that represent diverse perspectives across the supply chain, including private businesses, trucking, warehousing, and logistics companies, ports, and more. These key stakeholders will work together with the Administration to develop a proof-of-concept information exchange to ease supply chain congestion, speed up the movement of goods, and ultimately cut costs for American consumers.”
It’s impossible to have an information exchange without connected platforms and ecosystems. It is also noteworthy that the initial parties invited by the White House to participate in this initiative represent various intermediaries in the supply chain logistics value chain.
Also on March 15, Global Trade Review published Exclusive: ICC and WTO launch toolkit to raise awareness of trade digitalisation standards, stating that “The issue is not a lack of standards – in recent years, an almost uncountable number of organisations have been actively working on developing trade standards – but rather a lack of awareness of those that exist, due to the complex and fragmented nature of the standards landscape.”
The authors go on to point out that, “With this standards map, the ICC and WTO aim to solve for this problem. They have identified close to 100 available standards, frameworks and initiatives that offer the potential to enable all parties in global supply chains to speak the same, universal language – regardless of the tools used to automate processes – by leveraging a core set of standardised trade-related document and data formats.”
In the rest of this article: First, I outline some Definitions; Then I examine the important and perennial problem of Data Interchange; Finally, I highlight some startups and more established companies that may play a role in the creation of an emergent connected ecosystem.
PART I – DEFINITIONS
Using the market map as a starting point, I want to briefly explore the topic of Networks, Platforms, and Ecosystems in Supply Chain Logistics. This is a topic that I expect to revisit over several years, because I believe that the shift towards supply chain networks, platforms, and ecosystems is in the very early stages. I have explored this topic here (FedEx/Microsoft, June 2020) and here (Open Visibility Network, February 2021) and here (JB Hunt/Google, February 2021).
To ensure that we are on the same page, I’ll start with some definitions.
Definition #1: Networks – In Networks, Crowds, and Markets: Reasoning About a Highly Connected World, David Easley and Jon Kleinberg state that “In the most basic sense, a network is any collection of objects in which some pairs of these objects are connected by links.” Adding that “ . . . depending on the setting, many different forms of relationships or connections can be used to define links.”
Definition #2: Platforms – In The Economics of Platforms: Concepts and Strategy, Paul Belleflamme and Martin Peitz define a platform as “an entity that brings together economic agents and actively manages network effects between them.”
In The Business of Platforms: Strategy in the Age of Digital Competition, Innovation, and Power, Michael Cusumano, Annabelle Gawer and David Yoffie define an innovation platform as one that offers “technological building blocks that third-party innovators use to develop new complementary products or services. The building blocks usually include tools and connectors that facilitate the creation of complements such as software applications for computers and smartphones. At least one side of an innovation platform always consists of complementors, and at least one other side always consists of end users.”
They go on to state that “The key for successful innovation platforms is to identify complementors that will stimulate demand for the platform by making new products and services that add significant value. Of course, we don’t always know in advance which companies or individuals will create those innovations. Innovation platforms (especially digital ones) often try to solve this problem by broadly exposing their application programming interfaces or APIs (meaning they release information and allow access to the platform’s internal instruction sets and communication protocols). They also actively encourage third parties to design complementary products or services, such as through sending out free software development kits and organizing developers forums, or creating incubators and venture funds that subsidize new developers of complementary innovations.”
Definition #3: Ecosystems – In Predators and Prey: A New Ecology of Competition, James F. Moore states that “In a business ecosystem, companies coevolve capabilities around a new innovation: they work cooperatively and competitively to support new products, satisfy customer needs, and eventually incorporate the next round of innovations.”
Definition #4: Supply Chain Visibility – In Supply Chain Visibility: From Theory to Practice, Jonah Saint McIntire defines Supply Chain Visibility as “a process of collecting supply chain data, integrating it, extracting intelligence from it, and using that intelligence to interrupt decisions in a cross-organizational supply chain oriented context.”
The common theme that connects industrial or business networks, platforms, and ecosystems is that of connection for the purpose of enabling decision-making in real-time. Successful platforms offer building blocks that allow each unique industry participant to do what they do best, and only do what they do best. By doing this, platforms and ecosystems minimize the duplication of effort.
There’s a desire among customers of logistics technology for connected and interoperable networks, platforms, and ecosystems that enable them to accomplish their work without the need to constantly switch from one application to another. Or, as Michael Jacobides puts it in On ecosystems and egos, “Customers expect a seamless suite of services focused around their needs, not the offerings of individual companies that they must piece together themselves.”
This is not a theoretical problem. The Wall Street Journal published Why Is Workplace Technology So Much Harder to Use Than Personal Technology? on March 6, 2022, an article in which the authors explore the factors that contribute to the complexity of technology in the workplace. Their discussion echoes observations I made in Commentary: Key supply chain innovation issues to consider in a world with VUCA which was published by FreightWaves on June 11, 2019.
This transition is happening because; Supply chains have evolved into elongated, inter-connected, multi-layered networks of partners, suppliers, regulators, service providers and customers – with profound interdependencies. This complex, dynamic, and evolving system can no longer be described adequately using the linear concept of a ‘chain.’ The depth and breadth of complexity, connectivity and interdependencies are such that we are now firmly in the sphere of global supply chain ecosystems. (Mark Millar, Global Supply Chain Ecosystems)
At REFASHIOND Ventures, our investment thesis is completely focused on supply chain networks, platforms and ecosystems – this is a topic we think about a lot. Our publicly announced logistics technology investments in Leaf Logistics, ShipDay, Greenscreens.ai, our investment in OTONOMI – a parametric insurance platform for cargo, and our yet unannounced logistics technology investment have put this topic back on my mind recently.
Briefly recapping observations from my June 11, 2019 article referenced above, customers of supply chain logistics technology are now demanding;
- Ease of Use; Logistics technology should be as easy to use as the software we use in our personal lives, and complexity should be abstracted away. Weeks of training shouldn’t be a requirement for using new logistics technology.
- Ubiquity; Logistics technology should be seamlessly available across the major computing platforms on which customers’ employees expect to be able to get work done, and the user experience should be optimized across each of those platforms.
- Customization and Personalization; As I stated in that article, “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.”
- Speed, Responsiveness, and Redundancy; This is self-explanatory.
The following schematic from How to build a data architecture to drive innovation—today and tomorrow, published by McKinsey & Company on Jun 3, 2020 is a useful representation to keep in mind.
Quoting the authors of the article, the upshot of the diagram above is that; “To scale applications, companies often need to push well beyond the boundaries of legacy data ecosystems from large solution vendors. Many are now moving toward a highly modular data architecture that uses best-of-breed and, frequently, open-source components that can be replaced with new technologies as needed without affecting other parts of the data architecture.”
What the authors are also saying is that there’s a need for highly flexible AND infinitely extensible data schemas that can be adopted and used however organizations and people within an industry, and within specific companies, wish.
PART II – DATA INTERCHANGE REMAINS A FOUNDATIONAL PROBLEM
One would be forgiven for assuming that Data Quality and Data Interchange are solved issues. They are not. I highlighted this in my June 18, 2019 article in FreightWaves, Commentary: What role will data standards organizations play in a world powered by artificial intelligence? Fundamentally, my argument is that the digital transformation required to create connected supply chain networks, platforms, and ecosystems requires a shared language across disparate systems. Historically, this is what data standards organizations (DSOs) have sought to accomplish. It is also the problem electronic data interchange (EDI) is meant to have solved.
Yet, supply chains are still plagued with manual processes that rely on keying in data from an amalgam of emails, excel spreadsheets, PDF files, and paper documents, constantly going back-and-forth between software applications that do not speak directly to one another.
Towards Automated, Customizable, Electronic, & Instantaneous Data Interchange
I met Matt Wong and Lisa Wong, co-founders of Liquidaty, in 2017. Liquidaty is the developer of a software platform for making data instantly usable by enabling reuse of common processes within or across corporate boundaries. This enables Liquidaty’s customers to focus more on solutions that drive proprietary competitive advantage and less on solving the common baseline of problems that is merely necessary to operate the business.
If you are wondering why I am bringing up Liquidaty, my friend Eric Johnson, senior technology editor at the Journal of Commerce and JOC.com, puts it well in A Tangled Web of Good Intentions; Data interchange between entities in the logistics chain is a confusing mess and because of the events that have taken place since early 2020, there’s now a plethora of plans to solve this problem by developing standards.
Without going into all the details of my conversations with Matt Wong, he points out that the assumption that the data interchange problem can be solved with data standards is flawed because;
- First, there is no such thing as “one true standard”. As Johnson points out in his article, “Standards have long been tough to develop in an industry that, in spite of itself, loves customization.”
- Second, data integration is not as simple as it superficially appears, and is only getting more complex as datasets become broader (more columns) and longer (more rows) and measures of quality become more refined.
- Third, validation is inseparable from standardization, and it is simply not possible to consolidate validation into a single set of rules, as is demonstrated by the increasingly common practice of employing specialized predictive models that augment a targeted segment of a dataset (e.g. crime rate by zip code, discretionary spend by age range and income bracket, property value by address) and which each have their own model-specific validations that define the limits of the model scope (e.g. a property value model that only covers half of U.S. zip codes)
- Lastly, data integration is dynamic, and something that works at any one point in time will need to continuously be modified and updated to continue to work over time. In other words, data standards become obsolete very quickly, making them ineffective for the businesses that are expected to use them.
In Wong’s view, centrally-planned data standards will become a thing of the past, and standards will instead become specifications that are de-centrally managed and maintained, but which will be made actionable through centralized platforms that, given a raw data shape, map the transformation path for conforming the raw data to the destination shape, in the same way that navigation systems map out a path for getting from one place to another– and that will be complementary to today’s emerging technologies in the same way that Google maps is complementary to our system of roads and highways. I call this “a Google Maps for data transformation and interchange.”
PART III – HOW CONNECTED ECOSYSTEMS MIGHT DEVELOP THROUGH ALLIANCES
In the rest of this post I’ll describe how some of the startups in the market map above might collaborate with one another to start creating a connected ecosystem that benefits the buyers and users of logistics technology. There’s no particular order to how startups are listed, and this is just a sampling, not an exhaustive listing – it is inevitable that there are startups I should have mentioned that slipped my mind.
Remember that the market map is focused on an assessment of the purpose for which shippers use the technology rather than the specific underlying technology itself. For example; Leaf Logistics and Greenscreens.ai use Artificial Intelligence and Machine Learning for Business Intelligence in supply chain logistics to help shippers make Planning and Procurement decisions, which is why they are categorized under Planning and Procurement in the market map.
Startups in which REFASHIOND Ventures is an investor are indicated with an asterisk (*).
Transportation Management Systems (TMS): These are platforms that enable businesses to perform all the functions associated with the physical movement of goods from planning, through sourcing and procurement, to optimization, execution, documentation, and more.
The market map shows some of the incumbent players like Oracle, MercuryGate, SAP, and Infor. New entrants in that market include;
- Voyage Control: A logistics management platform that currently focuses construction, ports, and events.
- Gnosis Freight: A fully-customizable container lifecycle management platform.
- Shipwell: A cloud-native TMS system that also features visibility and third-party integrations to centralize business processes.
- Turvo: A cloud-native, multi-enterprise collaborative TMS platform.
- AscendTMS: A freemium TMS platform founded in 2002 with the goal of creating a browser-based TMS.
Planning & Procurement: These are systems that enable supply chain professionals to coordinate everything that’s necessary for the efficient delivery of goods from producers to customers. They may be platforms that enable many different activities that fall under this umbrella, or they may be more specific solutions that solve one problem better than any alternative.
- Leaf Logistics*: A platform that connects shippers, providers, and partners to gain network efficiencies and unlock a forward view of tomorrow’s transportation market.
- Greenscreens.ai*: A dynamic pricing infrastructure that delivers buy-side and sell-side market intelligence.
- FreightWaves Sonar: A forecasting platform that gives users access to aggregated freight data for monitoring domestic and global market activity.
- DAT: A truckload freight marketplace, in business since 1978.
- Freightos: A SaaS-enabled freight marketplace.
- Emerge: A digital freight marketplace focused on trucking.
- newtrul: A digital freight loadboard and search engine that powers freight brokers.
Visibility: These are systems that enable decision-making in real time.
- Project44: A multi-modal supply chain visibility platform.
- FourKites: A multi-modal supply chain visibility platform.
- Tive: A supply chain visibility platform that pairs a tracking device with a software platform.
- Paxafe: A smart-packaging internet of things platform that aggregates shipping data to enable intelligent insurance for freight.
- Clockwork: A digital delivery platform connecting global shippers to independent carriers in local markets.
It is worth noting that project44 and Tive are founding members of the Open Visibility Network, whose stated aim is to drive customer value.
Freight Brokerage Software: This is software that is designed specifically for freight brokers and/or freight forwarders.
- Parade: A truckload capacity management system for freight brokers and other logistics service providers.
- FreightFriend: A data-powered truckload capacity management and procurement system for freight brokers and other logistics service providers.
- CargoChief: A real-time capacity pricing and procurement platform for freight brokers and other logistics service providers.
- Descartes Macropoint: Freight tracking and matching for carriers, shippers, and logistics service providers.
Automation: These systems enable the use of technology to do what software technology does best, while making it possible for people to do what people do best.
- HubTek: A technology-enabled talent, training, and automation solutions provider for transportation companies.
- Shipamax: An AI-powered data entry software for the shipping & logistics industry.
- Optimal Dynamics: A next-generation artificial intelligence platform to enable logistics companies to better plan, optimize and automate strategic, tactical and real-time operational decisions.
- SEDNA: A smart email solution for enterprises in the supply chain and beyond, bringing simplicity, speed and security to business-critical communication.
- Slync.io: An operating platform for global shippers and logistics service providers that delivers higher productivity and process efficiency through intelligent automation and orchestration.
- Redwood Logistics: An open platform for digital logistics that is described as Logistics Platform as a Service (LPaaS) which allows customers to either use Redwood’s existing partners or bring their own preferred partners. Redwoods says it enables its customers to “weave systems and processes together with drag and drop functionality.”
On March 22, Modern Materials Handling published Greenscreens.ai announces technology partnership with Hubtek, which described the decision made by the organizations to mesh Hubtek’s automated rate quoting platform with Greenscreens.ai’s AI-driven predictive pricing platform to provide a complete solution focused on delivering accuracy, speed, and control to companies that they both count as customers.
This is a start.
What if Greenscreens.ai and Hubtek were tightly integrated into another platform listed above that is complementary to what they each do? What if Greenscreens.ai, Hubtek, FreightWaves Sonar, Leaf Logistics, Tive, project44, Redwood, Parade, and others agreed to make it easy for their customers to mix-and-match their individual platforms seamlessly with one another?
I am not attempting to trivialize the effort necessary to ensure that such partnerships or alliances work.
There are enormous challenges related to getting people who belong to different, independent organizations to collaborate effectively with each other when it might be easier to go-it-alone in zero-sum competition. There are important trade-offs that each organization needs to consider before deciding if joining such an alliance makes sense.
I am only making the case that from the technological perspective, it is finally possible to develop a system of connected networks, platforms, and ecosystems to create more value for buyers of logistics software technology.
There are two observations that I hope are highlighted in Part II above;
- First; Data standards won’t address the increasing problem of data interoperability. In particular, there is an untenable rift between today’s centralized approach to data standards vs the reality of decentralized development of data models, tools, and processes, and
- Second; No clear solution has emerged yet, but any workable solution will necessarily lean on a new innovation.
Nevertheless, as I have argued in a few articles, and in numerous posts on social media, the age of software-enabled supply chain platforms is still in its infancy and logistics technology startups should seize the opportunity this presents to create more value for their customers by working with one another instead of always competing against each other.