The year 2024 was challenging for both supply chain professionals and supply chain technology startups in Europe, marked by macroeconomic difficulties and geopolitical crises. The pressure on companies to make their supply chains more resilient and sustainable is greater than ever. Our “Supply Chain Tech Report 2024 (SCT24),” a collaboration with Prequel Ventures — the leading venture capital fund for supply chain technology startups in Europe — features deep insights into the current challenges faced by supply chain executives and the ways in which these challenges can be addressed through technological innovation.
Global supply chain faces new normal of disruption
Disrupted supply chains have become the new normal for companies globally, leading to fluctuating costs and more frequent disruptions to service levels and lead times. Such unpredictability in supply chain performance is having a significant impact on businesses worldwide, with many companies reacting by building up inventory. We think smarter solutions are needed — as supply chain disruptions can be expected to continue for the foreseeable future due to a host of supply, demand, and ecosystem stressors.
Transportation, warehousing, and procurement are at the heart of today’s supply chain disruptions (Exhibit 1). But supply chain leaders at retail and consumer goods companies also are looking ahead to what comes next — with evolving business models, regulation, and greater supply chain interconnectedness of most concern as future disruption drivers. Industry-leading supply chains are looking for an edge through technology, and a wide range of European supply chain startups are set to deliver the innovative solutions they require.
Retail and consumer goods players leverage new technology
Retailers and consumer goods companies have begun to embrace the value that supply chain technology startups can bring. The startups’ novel solutions support a broad range of activities, including warehousing, transportation, procurement, and compliance.
In warehousing, Nomagic supports retail clients with all pick-and-pack-related tasks through a robot-as-a-service model. This innovative approach not only provides hardware and software solutions, but also assumes full process responsibility. By doing so, Nomagic aims to build stronger partnerships with its clients while minimizing upfront investments, allowing for more flexible and scalable operations.
In transportation, Colonia Technology assists consumer goods players and retailers in optimizing road logistics. By digitally sharing fleet capacities on both the demand and supply sides, the company enhances efficiency and competitiveness. This collaborative model also improves sustainability by reducing empty miles and maximizing resource utilization.
In the procurement space, both Pactum and Keelvar offer their retail and consumer goods clients AI-based negotiation support. Pactum helps scale personalized commercial negotiations with long-tail suppliers, enabling businesses to secure better terms and prices. Meanwhile, Keelvar focuses on optimizing negotiation outcomes through advanced algorithms that analyze market conditions and supplier capabilities.
Other startups are dedicated to alleviating the burden of cumbersome compliance tasks. For example, Traide provides its consumer goods clients with an artificial intelligence (AI)-based customs compliance system that streamlines processes, driving efficiency and significantly reducing errors. This system saves time while mitigating the risk of costly penalties.
Future trends in supply chain technology and investment
Technology investments in the supply chain today are still mainly being driven by the need for cost savings, lead time reduction, and enhanced operational agility, with leading players viewing their supply chain as a strategic asset and harnessing technology to combat disruption. Many corporates, however, are missing the mark on innovation by focusing on customized, large-scale software rather than agile, best-in-class solutions. And both large and small firms have issues to overcome in adopting new technology: Larger firms often face internal resistance, while smaller firms lack resources and talent. Supply chain tech startups must be able to adapt to both ends of this spectrum.
For European venture funds, supply chain and logistics are on the agenda and increasing in importance. Venture fund investment activity is expected to pick up steam again in the next three years, after falling in 2024 due to difficult economic conditions and international crises. The average funding round size for earlier investment stages has increased, and there appears to be high competition among investors for higher quality deals (Exhibit 2). Key supply chain segments that are trending for venture capital funding and new startup activity include sustainability, procurement, and planning.
Next steps in supply chain innovation
Our assessment of supply chain disruption drivers and the European supply chain startup ecosystem leads us to several perspectives for retail and consumer goods supply chain leaders to consider. First, they need to see technology as a key component of their supply chain strategy and as a strategic asset to achieve competitive advantage. Large software vendors often promise fully integrated solutions that will solve all problems but seldom possess leading-edge technology. Retailers and consumer goods firms also need to focus on building a strong data backbone and adding best-in-breed technology, including from the startup ecosystem, to make the best use of the breadth of technology available.