Innovation Rails Power Supply Chain Software

Entrepreneurs are using powerful Cloud, AI, Data and Connected Devices infrastructure to create new software categories that ease the capacity boom-bust dynamic, remake global supply chains, and accelerate electrification.

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The pandemic was a major disruption across the supply chain that created a massive opportunity for new software entrants. Even as short-term supply shortages have given way to inventory gluts and demolished freight prices, there is now widespread recognition that we need new investment to make supply chains work for the economy of the future. We expect our supply chains to be resilient, near shore or onshore, and sustainable beyond just “check-the-box”compliance. Companies and governments are aligned on new objective function for supply chains.

Speaking with the supply chain executives in our network, we find there is a consensus that modern enterprise supply chain software is the critical building block to achieving resilient and sustainable supply chains. While the front of the enterprise – marketing, sales, customer service, finance, and HR – have adopted cloud-based software and the real-time responsiveness of consumer-like enterprise applications, most supply chains run on on-premises software designed 20-30 years ago. This often takes the form of large software packages that are customized to each company, making them hard to deploy, manage and upgrade. Supply chain operators are trained to be specialists with Oracle, SAP,JDA, or Manhattan Associates reinforcing the rigidity of these systems. Finally, there are parts of the supply chain that still rely on Excel or even pen and paper as their operating system, which creates an opportunity to leapfrog forward to well-designed enterprise applications.

A rapidly transforming $5 trillion supply chain software space and the availability of scaled cloud, data and AI infrastructure is attracting new application developers and entrepreneurs who are building the software category leaders of the future.

Resilience requires real-time data for quick, informed decision making. This data will be generated at the edges of the supply chain and in increasingly large contexts, well beyond what currently deployed software can handle. Supply chain organizations seeking resilience are now ready to adopt modern software to incorporate edge data and drive real-time decisions with machine learning and AI.

Demand for new software is also being driven by rapidly shifting buying behavior that values sustainability, geopolitical forces, and significant regulatory changes. These include the deployment of new infrastructure like EV fleets, the impact of reshoring along the US-Mexico border, the reconfiguring of distribution and transportation routes, and the need to understand Scope 3 emissions. The step-function changes in corporate priorities offer opportunities to draw along enterprise-scale supply chain software upgrades.  

This combination of a rapidly transforming $5 trillion supply chain software space and the availability of scaled cloud, data and AI infrastructure is attracting new application developers and entrepreneurs who are building the software category leaders of the future.

One early example is Samsara, which built a fleet management software business taking advantage of inexpensive connected video cameras, streaming data APIs, off-the-shelf computer vision models, and cloud distribution infrastructure. The availability of these public innovation rails allowed Samsara to scale rapidly, building a $1 billion revenue business and a new category of supply chain software in just 8 years from founding.

We had a chance to observe a previous (and also visionary) company called SmartDrive. SmartDrive had a similar idea to deploy both road-facing and driver-facing cameras, and to use the data generated for insurance, driver safety and other use cases. The company was founded in 2007 during a time that predates much of the innovation rails we are discussing. As a result, they had to build their own cloud operations, their own scene-recognition and object-recognition models and develop custom hardware. These product development challenges all raised the cost and complexity of building SmartDrive's fleet business. Compared to SmartDrive, Samsara was able to price their fleet management service at 1/10 the cost per vehicle, helping them achieve product-market fit and scale rapidly without the limitations of costly, proprietary cloud and AI operations.

We believe there is market opportunity for nearly a hundred application software companies at the scale of Samsara across procurement, manufacturing, B2B logistics, warehouse automation, supply chain mapping, electrification, industrial security, payments, workforce collaboration and more. Harnessing innovation rails is key to the success of new products in these spaces.

The Cloud, AI, and Data innovation rails from AWS, Google Cloud, Azure, Databricks and Snowflake were not built specifically for supply chain. These innovation rails have already created category leaders in other spaces – think Workday, Coupa Software, or Plaid – and they offer tremendous opportunity for new categories as well as new leaders who rearchitect existing supply chain segments. These developer-centric platforms make it easier for entrepreneurs to focus on the needs of specific users within the supply chain and build responsive, scalable, and affordable software to serve them well.

If you are an entrepreneur working to improve the supply chain for all of us, a key to success is to employ widely available AI and data rails to create delightful new uses, and to tap into the cloud rail’s developer interest and distribution economics. We would love to share our knowledge of customer needs and concerns and help you find your proof of market.