Hong Kong startup ICW eyes supply chain diversification demand amid trade war

For American importers, finding suppliers these days can be challenging not only due to COVID-19 travel restrictions. The U.S. government’s entity list designations, human rights-related sanctions, among other trade blacklists targeting Chinese firms have also rattled U.S. supply chains.

One young company called International Compliance Workshop, or ICW, is determined to make sourcing easier for companies around the world as it completed a fresh round of funding. The Hong Kong-based startup has just raised $5.75 million as part of its Series A round, boosting its total funding to around $10 million, co-founder and CEO Garry Lam told TechCrunch.

ICW works like a matchmaker for suppliers and buyers, but unlike existing options like Alibaba’s B2B platform or international trade shows, ICW also vets suppliers over compliance, product quality, and accreditation. It gathers all that information into its growing database of over 40,000 suppliers — 80% of which are currently in China — and recommends them to customers based on individual needs.

Founded in 2016, ICW’s current client base includes some of the world’s largest retailers, including Ralph Lauren, Prenatal Retail Group, Blokker, Kmart, and a major American pharmacy chain that declined to be named.

ICW’s latest funding round was led by Infinity Ventures Partners with participation from Integrated Capital and existing investors MindWorks Capital and the Hong Kong government’s $2 billion Innovation and Technology Venture Fund.

Supply chain shift

In line with the ongoing shift of sourcing outside China, in part due to the U.S.-China trade war and China’s growing labor costs, ICW has seen more customers diversifying their supply chains. But the transition has limitations in the short run.

“It’s still very difficult to find suppliers of certain product categories, for example, Bluetooth devices and power banks, in other countries,” observed Lam. “But for garment and textile, the transition already began to happen a decade ago.”

In Southeast Asia, which has been replacing a great deal of Chinese manufacturing activity, each country has its slight specialization. Whereas Vietnam abounds with wooden furniture suppliers, Thailand is known for plastic goods and Malaysia is a good source for medical supplies, said Lam.

When it comes to trickier compliance burdens, such as human rights sanctions, ICW relies on third-party certification institutes to screen and verify suppliers.

“There is a [type of] qualification standard that verifies whether a supplier has fulfilled its corporate social responsibility… like whether the factory fulfills the labor law, the minimum labor rights, or the payroll, everything,” Lam explained.

ICW plans to use the fresh proceeds to further develop its products, including its compliance management system, product testing platform, and B2B sourcing site.


By Rita Liao

Coupa Software snags Llamasoft for $1.5B to bring together spending and supply chain data

Coupa Software, a publicly traded company that helps large corporations manage spending, announced that it was buying Llamasoft, an 18 year old Michigan company that helps large companies manage their supply chain. The deal was pegged at $1.5 billion.

This year Llamasoft released its latest tool, an AI-driven platform for managing supply chains intelligently. This capability in particular seemed to attract Coupa’s attention, as it was looking for a supply chain application to compliment its spend management capabilities.

Coupa CEO and chairman Rob Bernshteyn says when you combine that supply chain data with Coupa’s spending data, it can produce a powerful combination.

“Lamasoft’s deep supply chain expertise and sophisticated data science and modeling capabilities, combined with the roughly $2 trillion of cumulative transactional spend data we have in Coupa, will empower businesses with the intelligence needed to pivot on a dime,” Bernshteyn said in a statement.

The purchase comes at a time when companies are focusing more and more on digitizing processes across enterprise, and when supply chains can be uncertain, depending on the location of COVID hotspots at any particular time.

“With demand uncertainty on one hand, and supply volatility on the other, companies are in need of supply chain technology that can help them assess alternatives and balance trade-offs to achieve desired business results. LLamasoft provides these capabilities with an AI-powered cloud platform that empowers companies to make smarter supply chain decisions, faster,” the company wrote in a statement.

Llamasoft was founded in 2002 in Ann Arbor, Michigan and has raised over $56 million, according to Crunchbase data. Its largest raise was a $50 million Series B in 2015 led by Goldman Sachs.

The company generated more than $100 million in revenue and has 650 big customers including Boeing, DHL, Kimberly-Clark and GM, according to company data.

Coupa has been extremely acquisitive over the years, buying 17 companies, according to Crunchbase data. This deal represents the fourth acquisition this year for the company. So far the stock market is not enamored with the acquisition with the company’s stock price down 5.20% at publication.


By Ron Miller

As the pandemic creates supply chain chaos, Craft raises $10M to apply some intelligence

During the COVID-19 pandemic, supply chains have suddenly become hot. Who knew that would ever happen? The race to secure PPE, ventilators and minor things like food was and still is an enormous issue. But perhaps, predictably, the world of “supply chain software” could use some updating. Most of the platforms are deployed “empty” and require the client to populate them with their own data, or “bring their own data.” The UIs can be outdated and still have to be juggled with manual and offline workflows. So startups working in this space are now attracting some timely attention.

Thus, Craft, the enterprise intelligence company, today announces it has closed a $10 million Series A financing round to build what it characterizes as a “supply chain intelligence platform.” With the new funding, Craft will expand its offices in San Francisco, London and Minsk, and grow remote teams across engineering, sales, marketing and operations in North America and Europe.

It competes with some large incumbents, such as Dun & Bradstreet, Bureau van Dijk and Thomson Reuters . These are traditional data providers focused primarily on providing financial data about public companies, rather than real-time data from data sources such as operating metrics, human capital and risk metrics.

The idea is to allow companies to monitor and optimize their supply chain and enterprise systems. The financing was led by High Alpha Capital, alongside Greycroft. Craft also has some high-flying angel investors, including Sam Palmisano, chairman of the Center for Global Enterprise and former CEO and chairman of IBM; Jim Moffatt, former CEO of Deloitte Consulting; Frederic Kerrest, executive vice chairman, COO and co-founder of Okta; and Uncork Capital, which previously led Craft’s seed financing. High Alpha partner Kristian Andersen is joining Craft’s board of directors.

The problem Craft is attacking is a lack of visibility into complex global supply chains. For obvious reasons, COVID-19 disrupted global supply chains, which tended to reveal a lot of risks, structural weaknesses across industries and a lack of intelligence about how it’s all holding together. Craft’s solution is a proprietary data platform, API and portal that integrates into existing enterprise workflows.

While many business intelligence products require clients to bring their own data, Craft’s data platform comes pre-deployed with data from thousands of financial and alternative sources, such as 300+ data points that are refreshed using both Machine Learning and human validation. Its open-to-the-web company profiles appear in 50 million search results, for instance.

Ilya Levtov, co-founder and CEO of Craft, said in a statement: “Today, we are focused on providing powerful tracking and visibility to enterprise supply chains, while our ultimate vision is to build the intelligence layer of the enterprise technology stack.”

Kristian Andersen, partner with High Alpha commented: “We have a deep conviction that supply chain management remains an underinvested and under-innovated category in enterprise software.”

In the first half of 2020, Craft claims its revenues have grown nearly threefold, with Fortune 100 companies, government and military agencies, and SMEs among its clients.


By Mike Butcher

Startups are transforming global trade in the COVID-19 era

Global trade watchers breathed a sigh of relief on January 15, 2020.

After two years of threats, tariffs and tweets, there was finally a truce in the trade war between the U.S. and China. The agreement signed by President Trump and Chinese Vice Premier Liu He in the Oval Office didn’t resolve all trade tensions and maintained most of the $360 billion in tariffs the administration had put on Chinese goods. But for the first time in months, it looked like manufacturers, importers and shippers could start to put two difficult years behind them.

Then came COVID-19, at first a local disruption in Wuhan, China. Then it spread throughout Hubei province, causing havoc in a concentric circle that eventually engulfed the rest of China, where industrial production fell by more than 13.5% in the first two months of the year. When the virus spread everywhere, chaos ensued: Factories shuttered. Borders closed. Supply chains crumbled.

“It has had a cascading effect through the entire world’s economy,” says Anja Manuel, co-founder and managing partner of Rice, Hadley, Gates & Manuel LLC, an international strategic consulting firm based in Silicon Valley.

The crisis has caused a drastic contraction in global trade; the World Trade Organization estimates trade volumes will fall 13-20% in 2020. And spinning activity back up could be tricky: Even as China starts to get back online, the slowdown there could reduce worldwide exports by $50 billion this year. When factories do reopen, there’s no guarantee whether they will have parts available or empty warehouses, says Manuel, who also serves on the advisory board of Flexport, a shipping logistics startup. “Our supply chains are so tightly-knit and so just-in-time that throw a few wrenches in it like we’ve just done, and it’s going to be really hard to stand it back up again. The idea that we go back to normal the moment we lift restrictions is unlikely, fanciful, even.”

Getting to that new normal, though, is a job that a number of logistics startups are embracing. Already on the rise, companies like Flexport, Haven and Factiv see a global trade crisis as a setback, but also an opportunity to demonstrate the value of their digital platforms in a very much analog industry.

Information is king

As companies along the global supply chain reel from these fast-moving events, they are increasingly turning to firms that can offer them information — and the options that come with it.

“In moments of lots of volatility, you want to make sure the data you’re looking at is real,” says Sanne Manders, Flexport’s COO. “Where before you could get away with a weekly supply chain update, now you need accurate and timely data every minute. If you don’t, you’re not agile to make decisions.”


By Walter Thompson

Free tool helps manufacturers map where COVID-19 impacts supply chain

Assent Compliance, a company that helps large manufacturers like GE and Rolls Royce manage complex supply chains through an online data exchange, announced a new tool this week that lets any company, whether they’re a customer or not, upload bills of materials and see on a map where COVID-19 is having an impact on their supply chain.

Company co-founder Matt Whitteker, says the Ottawa startup focuses on supply chain data management, which means it has the data and the tooling to develop a data-driven supply chain map based on WHO data identifying COVID hotspots. He believes that his is the only company to have done this.

“We’re the only ones that have taken supply chain data and applied it to this particular pandemic. And it’s something that’s really native to our platform. We have all that data on hand — we have location data for suppliers. So it’s just a matter of applying that with third party data sources (like the WHO data), and then extracting valuable business intelligence from it,” he said.

If you want to participate, you simply go to the company website and fill out a form. A customer success employee will contact you and walk you through the process of uploading your data to the platform. Once they have your data, they generate a map showing the parts of the world where your supply chain is most likely to be disrupted, identifying the level of risk based on your individual data.

The company captures supply chain data as part of the act of doing business with 1000 customers and 500,000 suppliers currently on their platform. “When companies are manufacturing products they have what’s called a bill of materials, kind of like a recipe. And companies upload their bill of materials that basically outlines all their parts, components and commodities, and who they get them from, which basically represents their supply chain,” Whitteker explained.

After the company uploads the bill of materials, Assent opens a portal for the companies to exchange data, which might be tax forms, proof of sourcing or any kind of information and documentation the manufacturer needs to comply with legal and regulatory rules around procurement of a given part.

They decided to start building the COVID-19 map application when they recognized that this was going to have the biggest supply chain disruption the world has seen since World War II. It took about a month to build it. It went into Beta last week with customers and over 350 signed up in the first two hours. This week, they made the tool generally available to anyone, even non-customers, for free.

The company was founded in 2016 and raised $220 million, according to Whitteker.


By Ron Miller

Microsoft and Oracle link up their clouds

Microsoft and Oracle announced a new alliance today that will see the two companies directly connect their clouds over a direct network connection so that their users can then move workloads and data seamlessly between the two. This alliance goes a bit beyond just basic direct connectivity and also includes identity interoperability.

This kind of alliance is relatively unusual between what are essentially competing clouds, but while Oracle wants to be seen as a major player in this space, it also realizes that it isn’t likely to get to the size of an AWS, Azure or Google Cloud anytime soon. For Oracle, this alliance means that its users can run services like the Oracle E-Business Suite and Oracle JD Edwards on Azure while still using an Oracle database in the Oracle cloud, for example. With that, Microsoft still gets to run the workloads and Oracle gets to do what it does best (though Azure users will also continue be able to run their Oracle databases in the Azure cloud, too).

“The Oracle Cloud offers a complete suite of integrated applications for sales, service, marketing, human resources, finance, supply chain and manufacturing, plus highly automated and secure Generation 2 infrastructure featuring the Oracle Autonomous Database,” said Don Johnson, executive vice president, Oracle Cloud Infrastructure (OCI), in today’s announcement. “Oracle and Microsoft have served enterprise customer needs for decades. With this alliance, our joint customers can migrate their entire set of existing applications to the cloud without having to re-architect anything, preserving the large investments they have already made.”

For now, the direct interconnect between the two clouds is limited to Azure US East and Oracle’s Ashburn data center. The two companies plan to expand this alliance to other regions in the future, though they remain mum on the details. It’ll support applications like JD Edwards EnterpriseOne, E-Business Suite, PeopleSoft, Oracle Retail and Hyperion on Azure, in combination with Oracle databases like RAC, Exadata and the Oracle Autonomous Database running in the Oracle Cloud.

“As the cloud of choice for the enterprise, with over 95% of the Fortune 500 using Azure, we have always been first and foremost focused on helping our customers thrive on their digital transformation journeys,” said Scott Guthrie, executive vice president of Microsoft’s Cloud and AI division. “With Oracle’s enterprise expertise, this alliance is a natural choice for us as we help our joint customers accelerate the migration of enterprise applications and databases to the public cloud.”

Today’s announcement also fits within a wider trend at Microsoft, which has recently started building a number of alliances with other large enterprise players, including its open data alliance with SAP and Adobe, as well as a somewhat unorthodox gaming partnership with Sony.

 


By Frederic Lardinois

Linux Foundation launches Hyperledger Grid to provide framework for supply chain projects

The Linux Foundation’s Hyperledger Project has a singular focus on the blockchain, but this morning it announced a framework for building supply chain projects where it didn’t want blockchain stealing the show.

In fact, the foundation is careful to point out that this project is not specifically about the blockchain, so much as providing the building blocks for a broader view of solving supply chain digitization issues. As it describes in a blog post announcing the project, it is neither an application nor a blockchain project, per se. So what is it?

“Grid is an ecosystem of technologies, frameworks and libraries that work together, letting application developers make the choice as to which components are most appropriate for their industry or market model.”

Hyperledger doesn’t want to get locked down by jargon or preconceived notions of what these projects should look like. It wants to provide developers with a set of tools and libraries and let them loose to come up with ideas and build applications specific to their industry requirements.

Primary contributors to the project to this point have been Cargill, Intel and Bitwise IO.

Supply chain has been a major early use case for distributed ledger applications in the enterprise. In fact, earlier today we covered an announcement from Citizens Reserve, a startup building a Supply Chain as a Service on the blockchain. IBM has been working on several supply chain uses cases, including diamond tracking and food supply protection.

But the distributed ledger idea is so new both for supply chain and the enterprise in general that developers are still very much finding their way. By providing a flexible, open-source framework, The Linux Foundation is giving developers an open option and trying to provide a flexible foundation to build applications as this all shakes out.


By Ron Miller

Citizens Reserve is building a supply chain platform on the blockchain

Citizens Reserve, a Bay Area startup, has a broad goal of digitizing the supply chain. Last fall, the company launched the Alpha version of Suku, a Supply Chain as a Service platform built on the blockchain. Today, it announced a partnership with Smartrac, an RFID tag manufacturer, based in Amsterdam, as a key identity piece for the platform.

Companies use RFID to track products from field or factory to market. Eric Piscini, CEO at Citizens says this partnership helps solve a crucial piece of digitizing the supply chain. It provides a way to trace products on their journey to market, and ensure their provenance, whether that is to be sure no labor was exploited in production, environmental standards were maintained or that the products were stored under the proper conditions to ensure freshness.

One of the big issues in track and trace on the supply chain is simply identifying the universe of items in motion across the world at any given moment. RFID tagging provides a way to give each of these items a digital identity, which can be placed on the blockchain to help prevent fraud. Once you have an irrefutable digital identity, it solves a big problem around digitizing the supply chain.

He said this is all part of a broader effort to move the supply chain to the digital realm by building a platform on the blockchain. This not only provides an irrefutable, traceable digital record, it can have all kinds of additional benefits like reducing theft and fraud and ensuring provenance.

There are so many parties involved in this process from farmers and manufacturers to customs authorities to shipping and container companies to logistics companies moving the products to market to the stores that sell the goods. Getting all of the various parties involved in the supply chain to move to a blockchain solution remains a huge challenge.

Today’s partnership offers one way to help build an identity mechanism for the Citizens Reserve solution. The company is also working on other partnerships to help solve other problems like warehouse management and logistics.

The company currently has 11 employees based in Los Gatos, California. It has raised $11 million, according to Piscini.


By Ron Miller

This startup got $2.3M to identify physical objects using diamond dust

Imagine coating an expensive part with a layer of diamond dust the width of a human hair, capturing its light pattern as a unique identifier, then storing that identifier in a traditional database or on the blockchain. That’s precisely what Dust Identity, a Boston-based startup is trying to do, and today it got $2.3 million in seed money led by Kleiner Perkins with participation from New Science Ventures, Angular Ventures, and Castle Island Ventures.

The science behind Dust Identity was nurtured inside MIT, but the company has been at work for two years trying to build a solution based on that idea after receiving early support from DARPA. What these folks do is manufacture extremely tiny diamonds. They dust an object such as a circuit board with a coating of this and capture the diamonds in a polymer, company CEO and co-founder Ophir Gaathon explained.

“Once the diamonds fall on the surface of a polymer epoxy, and that polymer cures, the diamonds are fixed in their position, fixed in their orientation, and it’s actually the orientation of those diamonds that we developed a technology that allows us to read those angles very quickly,” Gaathon told TechCrunch.

For all the advanced technology at play here, Dust Identity is truly an identity company, but instead of identifying an individual, its purpose is to provide a trusted identity for an object using a physical anchor — in this case, diamond dust. You may be thinking that diamonds are kind of an expensive way to achieve this, but as it turns out, the company is actually creating the coating materials from low-cost diamond industrial waste.

“We start with diamond waste (for example, [from] the abrasive industry), but we developed a proprietary process (that’s of course highly scalable and economical) to purify and engineer the diamond waste into dust,” a company spokesperson explained.

The idea behind all of this is to prove that an object is valid and hasn’t been tampered with. The dust is applied at some point during the manufacturing process. The unique identifier is captured with some kind of commercial scanner and stored in the database. It provides a physical anchor for blockchain supply chain solutions that’s currently lacking. When the part makes its way to the buyer, they can run the part under a scanner and make sure it matches. If the dust pattern has been disturbed, there’s a good chance the piece was tampered with.

Finding a way to create uncopyable tags for physical objects is a kind of supply chain holy grail. Ilya Fushman, a partner at Kleiner Perkins says his firm recognized the potential of this solution. “We have a pretty strong hard tech practice. We understand the value of supply chain and supply chain integrity,” he said.

The company is not alone in trying to find a way to attach a physical anchor to items in the supply chain. In fact, you can go back to RFID tags and QR codes, but Gaathon says the security of these approaches has degraded over time as hackers figure out how to copy them. IBM and others are working on tiny chips to attach to objects, but the diamond dust approach could be the most secure if it can scale because it works with an entirely random light pattern that can never be reproduced.

The startup intends to take the money and try to prove this idea can be commercialized for government and manufacturing use cases. It certainly gets points for creativity here and it could be onto something that could transform how we track the integrity of items as they move through a supply chain.


By Ron Miller