Supply Chain Start-Ups Are Coming of Age

An industry ripe for digital disruption

For decades the supply chain management and logistics industry has been dominated by giants like UPS, FedEx, or Deutsche Post DHL. These large players typically have a holistic offering that covers a variety of integrated services along the global supply chain. In addition, they frequently act as an integrator that accumulates resources, capabilities, and technologies to provide end-to-end solutions to customers.

As a result, they now house hundred thousands of employees globally, billions of revenue and a significant market capitalization each. Economies of scale – secured via enormous assets – has been their key competitive advantage that typically raised large entry barriers to new players in the industry. This is changing.

Start-ups are capitalizing on disruptive trends

Technological advances, increasing levels of connectivity, industry convergence and digitalization are disrupting the industry. Emerging supply chain start-ups are capitalizing on these trends and often have an Internet-of-Things (IoT), Analytics or Digital related background. Their business model typically builds upon an agile, assetlight, technology driven infrastructure, allowing them to reach scale and often even grow exponentially with a very lean setup and limited risk exposure.

Transportation start-up Uber, and hoteling platform AirBnB are two prominent examples that illustrate that exponential growth is not tied to the amount of assets. This principle seemingly starts to extend to industries such as Supply Chain Management and Logistics as well.

Meeting increasingly demanding customer needs

At the same time, customer expectations are continuously on the rise – convenience is key. Ever faster delivery times, constant price optimization and greater flexibility in terms of modes, pickup locations, or specific delivery windows are expected. This is driving demand for innovative and specialized solutions, especially in the urban delivery and medium-haul segment.

Often young start-ups can take better advantage of their low levels of bureaucracy in coming up highly targeted, innovative and customized supply chain firms compared to their more traditional peers, which historically lack the flexibility and speed in responding quickly to changing dynamics.

Survey of SCM & Logistics start-ups

Deloitte surveyed more than 250 start-ups in the Supply Chain Management (SCM) & Logistics space to make the new market dynamics transparent. In the survey we identified patterns of business models and customer segments. Using these insights, we provide an outlook for both incumbent players and start-ups in the Supply Chain Management & Logistics industry.