The International cargo container depot at sunset , multiple supply chain truck train and cargo ship working service shipping and transportation concept logistic and transport. (The International cargo container depot at sunset , multiple supply chain The International cargo container depot at sunset , multiple supply chain truck train and cargo ship working service shipping and transportation concept logistic and transport. (The International cargo container depot at sunset , multiple supply chain
nicole-verkindt-buggy
Nicole Verkindt
CEO - Buggy

Why Companies Must Update Their Supply Chain Tech Now

Published on

The supply chain tech space in Canada today feels fragmented, specialized, and is, frankly, discombobulated. 

“Supply chains are being handled by a large, disjointed, “on-premise” (which means not in the cloud or connected to the internet) software system.”

Just over 10 years ago (geez, time flies!), I founded a company called OMX. We initially specialized in measuring local content in supply chains and branched out to handle measuring socio-economic impacts from sourcing, including ESG ratings. We sold to large corporations and government and nearly everywhere we showed up, we found the same thing: supply chains are being handled by a large, disjointed, “on-premise” (which means not in the cloud or connected to the internet) software system. 

Supply chain professionals were and often still are forced to be Microsoft Excel experts, constantly uploading and downloading from on-premise software into third-party solutions to make sense of the data, visualize it, or access some supplementary data. It was, and often still is, a lot of “make work.”

The “how” to make the whole system work is often trapped in the minds of a few internal team members who know that should they suddenly leave the department or the company altogether, it would be hard for the next person to know what to do or where to find information. When we would go into organizations to understand how they were handling data, the image of Frankenstein would emerge in my mind – arms and legs slapped on from different places, an impossible-to-understand beast that emerged through experimentation. 

These teams usually used multiple web-based solutions but would have to log into each one separately, none of which could talk to each other. The stresses of the COVID-19 pandemic, I believe, put a massive spotlight on the internal process issues within large organizations. We all watched as supply chains proved themselves to be a lot less resilient than we all took for granted. It was extremely challenging for corporate teams to transition to work from home and we watched as the big winners emerged in the B2C space. Canadian tech darling, Shopify’s stock alone soared by over 347% as it powered thousands of small independent online businesses shipping directly from the manufacturer to the customer. 

Diving Into the B2C Commerce Landscape

So let’s talk about the B2C consumer side of things. For at least a few years now, whenever consumers want something, it only takes a few clicks and the item of their desires almost seems to suddenly appear in front of them. The pandemic highlighted this more than anything, and some strange, very out-of-character items started showing up at my house. 

While essential workers braved the outside world and kept our country working, office workers, for the most part, sat at their desks or on their couches essentially, well, “just pressing buttons.”  Amazon emerged, beating all other retailers online and subsequently invested heavily, betting on the mega warehouse model filled with robotization. Don’t worry, I believe in robots, but I do believe the “mega” factor can slow you down. Instead of hiring employees to deliver, Amazon tapped into a network of existing drivers, which has proven to be their secret sauce as it does not require them to rely on third-party companies like FedEx. 

“Larger corporations seem slow to adopt change and embrace these new ideas.”

In summary, from both B2B and B2C perspectives, there has been quite a lot of change recently, but there is so much more to come in the future. We have some incredible success stories in Canada, including many homegrown tech stars. I do, however, worry that the larger corporations seem slow to adopt change and embrace these new ideas. I believe that large, traditional businesses must partner with the innovation community and that Canadian investors need to continue to invest in new logistics and supply chain tech models that consumers want to use, or Canada will fall behind. 

The Future of Supply Chain Tech is Small, Agile, Networked, and AI-Powered

1. Small: I believe the first step in being agile is to break it down into thinking smaller. In other words, setting up simplified internal systems that are easy to use. We need to think about B2C logistics in a way that leverages micro warehouses right in the heart of urban centers as opposed to huge mega warehouses hours away. Buggy, the company I am currently CEO of, does exactly that and we are able to deliver core essentials so quickly in the downtown cores, mainly because we can pick and pack orders in under one minute. In addition, instead of one huge warehouse, which would typically be based at least 30 mins out of the city, we have many small micro warehouses located throughout the heart of the downtown core. I am also on the Strategic Advisory Board for a company called Scoutbee, which is a platform that essentially “sits on top of organizations’ various procurement solutions and integrates, enriches, and visualizes the multiple data streams into one dashboard.”

“We need to think about B2C logistics in a way that leverages micro warehouses right in the heart of urban centers as opposed to huge mega warehouses hours away.”

This enables leaders in a B2B environment to log into one solution and immediately get transparency into their supplier data in order to make decisions quickly. On the B2C side, we have proven at Buggy that there is no way to deliver as fast as us (15 minutes or less) with the large mega warehouses even if they are robotized due to our small strategic locations and ability to pick and pack so unbelievably fast. The major value proposition to the consumer is the fact that inventory is stored in such small warehouses that it enables the logistics to be incredibly fast. 

2. Agile: Speed is what it is all about now. Being able to source the hottest product quickly and deliver it to consumers exactly when they want it is how you will need to serve the consumer of the future. These younger, up-and-coming consumers that grew up with a phone in their hands want what they want when they want it. And to compete, companies will need a just-in-time supply chain system that enables the ordering of smaller quantities of inventory, but also the ability to rely on multiple suppliers to ensure that supply chain is resilient. 

“Being able to source the hottest product quickly and deliver it to consumers exactly when they want it is how you will need to serve the consumer of the future.”

Sourcing multiple backup suppliers and constantly communicating forecasted demands to those subcontractors is key to making this work. It is certainly not a new concept. Lean manufacturing became popular in the 1990s and it was the flavour of the day in my operations courses at business school in the early 2000s. But today, it is possible to be so much more accurate by leveraging data and the cloud and having multiple systems communicate with each other. 

3. Networked: Step one (my early years at OMX) was all about digitization and a shift from on-premises (remember: that’s the kind of software that isn’t on the internet). Well, once data moves online, the next step is to connect the various systems. The biggest complaint in the B2B supply chain space now is that managers have to log into 12 different platforms to get the various data sources they need. 

“The biggest complaint in the B2B supply chain space now is that managers have to log into 12 different platforms to get the various data sources they need.”

The next step in this evolution is to connect the various online platforms into a single source of truth. Back to the example of Scoutbee, they are taking an “API first” mentality, bridging data from various sources into one platform, then applying generative AI models to make strategic and proactive sourcing predictions. On the consumer side, even from a distribution perspective, companies are tapping into so many networks, growing their market share just by connecting data.

At Buggy, we are connecting and partnering with companies like Uber Eats, Amazon, and SkipTheDishes to grow our market share and provide the best options for consumers. We have found success by selling through all of the various platforms where shoppers already are. We are also working to integrate directly with DTC brands to help them deliver their last mile by holding inventory in our micro warehouses.

It is possibly one of the most obvious statements to say that we are more connected than we have ever been today. Our supply chain tech needs to reflect that. Connecting directly with brands and being able to receive their products extremely quickly is key for serving the customer of the future. 

4. AI-Driven: AI is essentially what supercharges all of the above. The evolution here is the building of data foundations that connect to and bring in any data point from internal, supplier, customer, third party, or other sources and connect that data to knowledge graphs. Companies can run algorithms to analyze the relationships between these data points to bring out custom conclusions very quickly, enabling the right actions that drive the best business outcomes. 

Predicated analytics on what consumers are about to buy minimizes waste, shortens your cash conversions, and enables you to service customers much better. Now, imagine knowing what a consumer wants right before they want it. “How did they do that?” moments are already happening between consumers and their devices, but wait for it.

At Buggy, we already have all of the data necessary to train models and we are leveraging that (and will continue to as we generate more and more data) to generate consumer insights and optimize the entire supply chain. Because we are working through B2B partnerships with large grocers and major delivery apps, providing AI-driven insights to B2B partners helps them adjust their strategies to grow.

Imagine a world where, driven by AI, every screen you open as a consumer is dynamically re-arranged based on the model’s learned behaviour of you as a consumer, to maximize the potential for you to build a basket you didn’t even know you wanted, as big and fast as possible. From a sourcing perspective, AI will drive significant waste out of the system, especially in fresh grocery, as its predictions will become more and more accurate with more data and training.

“Imagine a world where, driven by AI, every screen you open as a consumer is dynamically re-arranged based on the model’s learned behaviour of you as a consumer.”

As an aside, Scoutbee has been focused on large language models (LLMs) since 2017. CEO Gregor Studer said “Procurement and Supply Chain has an increasingly complex Data and System Landscape to manage, working with high information volume at high signal to noise. Disconnected data results in wrong and/or slow decisions. Generative Ai and LLM in particular can help contextualize data streams and drive ideal decisions at speed.  Procurement and Supply Chain teams should start building out their AI Foundation, connect data streams, and start training their system. Companies not doing so will drift into a sustainable AI Disadvantage.” Again, I think about large Canadian companies’ mindsets on this topic and whether or not they will do the right thing and invest in AI to ensure they are not left behind.

Canadian Companies Must Update Their Supply Chain Tech

Canada has a real opportunity to lead on the AI front. Often referred to as the father of AI, ​​Geoffrey Hinton is a Canadian professor from the University of Toronto who recently stepped down from Google to take a stance on ethics in AI. We have had and still have some unreal Canadian AI startups and support from specialized AI in supply chain superclusters like Scale AI

“Our federal tax policy should be altered to encourage risk-taking by entrepreneurs, investors, and corporate leaders.”

For me, the calls to action from a policy perspective are related to how we innovate more and win in certain sectors. As a Canadian entrepreneur and tech operator, I don’t believe that the government should be picking winners. I believe our federal tax policy should be altered to encourage risk-taking by entrepreneurs, investors, and corporate leaders. An example of this could be providing tax credits directly for angel investors instead of providing funding for a bureaucratic angel organization. 

Another idea could be enabling tech investment to work like flow-through shares, which we have seen work in Canada to drive massive funding toward the mining sector. If policymakers want to add additional funds into the tech ecosystem, then it would make more sense to have a fund of funds and invest in VC funds that can make those decisions and do a fund-matching program that makes the math all that much more attractive for investors. 

“We will need to come up with a governance structure that would allow Canadians to be more comfortable with data sharing.”

In the much longer term, I believe we are indeed looking at drones and self-driving cars and a whole lot more infrastructure in terms of supply chain tech (remember that smart city we were supposed to build in Toronto?) that is built on the foundation of data. To make this happen, we will need to come up with a governance structure that would allow Canadians to be more comfortable with data sharing. I, for one, look forward to a day when my car drops me off and instead of parking, goes and drives someone else while picking up all of the things I didn’t even know I needed and handling my pesky errand running, allowing me to focus on the things I love to do.

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nicole-verkindt-buggy
Nicole Verkindt
CEO - Buggy

Bio: Nicole Verkindt is the CEO of Buggy. She is also the Founder of OMX, a supply chain tech business that is now a part of Morningstar. Nicole is on the Board of the Canadian Commercial Corporation and is a Strategic Advisor to Scoutbee, a leading global supply chain AI business. She is a frequent technology commentator on CBC and was a “Dragon” on CBC’s Next Gen Dragon’s Den, dedicated to early-stage technology businesses.

Organization: Buggy is a rapid retail logistics company that enables customers to order groceries and essentials online or through their app in as fast as 15 minutes. In the summer of 2022, Buggy opened its very own stores where they source all their food and essentials at wholesale prices.