Consumers care more than ever about how products move. It’s new to the average consumer and that’s largely because of recent shortages related to the coronavirus pandemic. Yes, some consumers have always cared about supply chains because how a product gets from A to B affects things like carbon emissions, exploitation of vulnerable people, and other social justice issues. But the typical consumer cares, because how a product moves, where it moves, and where it needs to be, has a big impact on their life.
When America experienced a shortage of infant formula, it was both a supply chain issue and a population health issue. Some babies were at a significant risk of malnutrition. Concerned parents reacted as expected. Consumers are as much a part of the supply chain as trucks, shipping containers and customs declarations. And they are beginning to realize that their behavior has a direct influence on supply chain dynamics. So they care and some are willing to change their behavior accordingly.
It’s not just global pandemics that are disrupting supply chains. It can happen quickly and without warning. The 2021 Suez Canal blockage caused tens of millions of dollars in disruption a day. In Europe, supply chains are currently strained and failing due to protests by farmers in the Netherlands. This is in addition to the existing challenges posed by Russia’s invasion of Ukraine.
These are geopolitical events and the average consumer would expect a big geopolitical event to impact supply chains. What the average consumer may not expect, and may be very surprised to learn, is that their household budget has been directly impacted by years of avoidable supply chain inefficiencies.
An example is export documents. In many export scenarios, these are filled in by hand. This leads to errors and delays. The problem is particularly acute in Europe, where national borders are closer and where one of the largest local economies recently opted out of the unified EU trading bloc, which means more red tape across the board. .
“Customs paperwork has always been the biggest source of friction in the global supply chain,” said Sam Tyagi, Founder and CEO of KlearNow, an intelligent logistics-as-a-service (LaaS) platform that helps importers and exporters gain greater supply chain visibility.
“The level of bureaucracy has created a system that cannot tolerate even minor disruptions. The consumer always pays the price for inefficient customs processes. Supply chain inefficiencies are priced into the price of goods on supermarket shelves,” he continues.
Governments are aware of the problem, but have been slow to react. The Biden-Harris administration’s March unveiling of the Freight Logistics Optimization Works (FLOW) initiative aims to address “supply chain vulnerabilities and congestion, speed the movement of goods and reduce costs.” for families,” according to a White House press. Release.
Many leaders in the supply chain industry wondered why the administration had not sought to include off-the-shelf solutions in the initiative. Ben Gordon, managing partner at Cambridge Capital, an expert in supply chain investing, told industry press:
“Why is the White House forming a supply chain data initiative but not including any supply chain software company? Who is implementing this initiative? Where are the true industry leaders in supply chain data?”
It’s a frustration shared by Tyagi. His company creates exactly the kind of software that could support initiatives like this around the world. And with the UK government now opening a consultation on a similar initiative, he worries about missed opportunities.
“Providing reliable data flow and end-to-end visibility is crucial for supply chain resilience and it’s a problem that KlearNow is already solving in the UK, North America and soon in parts of Europe. We know that sharing information is key to securing supply Supply chains are flexible, resilient and able to withstand shocks. Lack of visibility and data sharing has been a major historical weakness in the industry. Significant disruptions to global supply chains over the past two years demonstrate the need for visibility and collaboration. KlearNow welcomes the announcement from the Biden-Harris administration and calls for similar action from the UK government.”
Solutions to a significant number of supply chain problems already exist. The weak appetite for mainstream adoption worries the industry. Private companies develop solutions to problems before governments officially acknowledge the problems exist. Investors are more connected.
KlearNow, for example, closed a Series B funding round at the end of 2021. Tyagi noted at the time that demand for services that ease supply frictions was understandably very high.
“Our latest round of funding allows us to aggressively accelerate our technology development and deployment, geographic expansion and talent investments, helping us transform the supply chains that power commerce.”
Tyagi wasn’t alone in predicting the importance of supply chain technology late last year. The Wall Street Journal reported that investors were “piling up” on the industry, “inflating valuations of logistics startups as global bottlenecks raise the profile of a once neglected sector.”
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