Finding a Clear Lane for Digital Transformation in Logistics
Our investment in ClearMetal
What does it mean to digitally transform an old-line industry? Let’s take logistics, a sector synonymous with decades-old cargo ships, diesel-powered freight trains, cargo planes and 18-wheelers.
Yes, the self-driving trucks and delivery drones are coming. But with shipments still being tracked via spreadsheets and phone calls, as most are today, supply chains will remain shackled by their past.
Today, we have a deluge of geographic and timing data that can be culled to track cargo in real time. Combine that with the power of software and machine learning to aggregate, analyze and translate all the data into actionable insights, and now you have a truly modern solution.
That’s where the company ClearMetal comes in. In the age of Amazon, everyday consumers expect instant delivery and constant updates as packages make their way to the home. The large commercial and industrial companies that ClearMetal serves deserve no less.
Yet, the industry standard for freight tracking today doesn’t deliver on those expectations. Many shippers still rely on the aforementioned spreadsheets and phone calls to figure out where their goods are and when they might arrive. They have to contact many different sources because information is siloed, and this detective work often ends up yielding conflicting or static data points.
What’s at stake here is massive. Global cargo represents a $15 trillion market. For ocean alone, 200 million containers are shipped globally per year. To an individual company, limitations in supply-chain visibility can end up costing millions of dollars in lost revenue, increased expenses and tied-up cash.
Let’s take the practice of “buffer stock,” where companies buy and store surplus product in part because inaccurate or incomplete information about their shipments prevent them from planning ahead. Globally, the value of products locked up in buffer stock is $3 trillion. Reducing that by just 10 percent — by giving companies reliable and real-time data — represents a decrease in excess inventory amounting to $300 billion.
San Francisco-based ClearMetal harnesses the power of cloud computing and machine learning so that companies can a) better predict when shipments will arrive, and b) respond in real time when, for instance, cargo gets held up at some distant port because of congestion or striking dock workers.
This increase in efficiency benefits company bottom lines and the environment. ClearMetal found that a Fortune 500 importer that uses its platform avoided more than 1,800 metric tons in CO2 emissions because of warehouse energy savings and fuel not used for ocean transport.
We’re excited to partner with ClearMetal because of its founders and their vision. Adam Compain, Will Harvey and Diego Canales launched the company in 2014 with the goal of solving inefficiencies in a huge legacy industry. They first spoke to customers to understand their true pain points, and then they assembled a team to develop the technological solution.
The different modes of freight delivery are land, sea and air. When we started working with the founders, they focused on ocean transport because it represented the most static and challenging mode that could benefit from ClearMetal’s data science and technology solution. ClearMetal’s approach also sets itself apart from the competition — all of whom are battling it out in an industry estimated to represent $12 billion in value.
What’s given rise to this is the gradual realization that supply chains are no longer a sub-function of manufacturing and sales. “Logistics operations are becoming a part of the customer experience,” Compain recently told the Wall Street Journal.
Call it the “Amazon effect” if you like. According to ClearMetal, nearly 40 percent of Americans expect free two-day delivery, and almost a quarter expect same-day delivery. Shipping providers like UPS and FedEx have also responded by accelerating deliveries and giving consumers the ability to track them in real time via text and email.
Imagine if Amazon’s customer experience relied on the kind of point-in-time snapshots that large companies, suppliers and manufacturers traditionally have to track shipments. You would only know where your package was last week, and if the product you bought was out of stock, you wouldn’t find that out till after you purchased it.
ClearMetal’s use of machine learning and data to transform the global supply chain will allow companies to be more adaptive when problems arise, more responsive to customer expectations, and ultimately, more competitive because of optimized business operations.
