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Navigating the complex dynamics of supply chain with Arun Samuga – Elemica

At the Reuters Supply Chain Europe Conference in Brussels on October 24-25, Josh Brazil talked to Arun Samuga, Chief Innovation Officer at Elemica, an enterprise technology company driving supply chain connectivity.

 

Brazil: How has globalization impacted competition in the supply chain tech industry?

Samuga: Internet-enabled globalization has allowed companies to produce goods anywhere. This has led to increased competition, particularly in national markets where internationally operating companies have gained market shares.

But opportunities have also opened for smaller and more nimble companies to occupy niche spaces. At the same time, larger companies are identifying features they do not have and where a potential market could exist. The outcome has been a constant push for feature enhancement and product portfolio expansion.

Large tech companies such as Meta, Google, Microsoft, and Amazon have played a significant role in the push for feature enhancement and niche market creation by hiring top talents and driving software development forward.

In all this, the clear focus has been on resource availability, production, and software development in low-cost countries.

 

Brazil: What reasons do you see for the high level of consolidation in the supply chain tech industry over the last couple of years?

Samuga: The supply chain tech industry is characterized by both broadly based and niche players. One key development in recent years has been that the broadly based players have shown an interest in entering specialized markets – to occupy niches varying from ERP to logistics visibility.

Consolidation has been driven by a desire for market dominance and the need to supply end-to-end service to globally operating companies. The outcome has been aggressive growth through acquisitions.

I think there are two main reasons for these acquisitions: companies either want to enhance their product features or functionality, or gain market shares.

However, we’ve also seen that excessive consolidation can lead to challenges in integrating the acquired company and even to customer attrition.

 

Arun Samuga ElemicaBrazil: What is the end customer’s perspective on tech consolidation?

Samuga: Customers may well prefer working with companies that have an end-to-end strategy as opposed to going for a mixed best-of-breed strategy. However, what’s clear right now is that the market is characterized by a constant battle between end-to-end providers and best-of-breed solutions.

 

Brazil: How do you see the role of tech innovation in this current scenario?

Samuga: The impact of the pandemic has been to pivot many products toward commoditization. The iPhone is now a commodity, e-vehicles are moving that way, and even software development is being commoditized.

But innovation is still an ongoing global phenomenon that is being driven by customer needs, not least in the customers’ desire for greater sustainability, more social and environmental responsibility, and measures taken for the good of society.

 

Brazil: What are the critical economic factors in the supply chain industry right now?

Samuga: Even digital transformation is becoming a commodity these days – a problem solved, if you like, because firms know how to do it even if constraints mean they haven’t implemented it yet.

But what’s not solved is business transformation. As a result, there’s going to be a stronger push towards omnichannel fulfillment strategies to enable a consumer to know exactly what’s going to happen – where they don’t even have to worry whether a company that was traditionally a B2B company is now doing B2C.

That’s commoditization from a company’s perspective – and I’d say that the gap between B2B and B2C is going to continue to be bridged.

Other factors of significance include cost optimization and resource availability. In my view, everything starts with the customer. There are going to be more alternative sources of supply and routing based on consumer choices.

In all this, there needs to be the right software that’s going to provide support and manage all of this. One of the key questions here is how you can reduce risk and increase resiliency in the supply chain.

By ensuring you have alternative sources of supply, you can optimize transportation in real-time in such a way that you can also look at your inventory position – so to say, draw from here or pull from there.

And finally, there’s the sustainability factor because companies need to invest there. That’s why there’s going to be a push for manufacturers to have sustainable business practices, even though they might not yet have a budget allocated to it.

 

Brazil: What key technology trends will influence supply chains in the next decade?

Samuga: Artificial Intelligence and the Internet of Things. I chiefly see AI as a way to free up time and resources and enhance prediction tools. For the supply chain industry, AI is more of a broad bucket, whereas IoT will be more specific – like how can I look at all my containers?

IoT will enable me to trace and track them, get more relevant data, aggregate that data, and add the learning factor. That’s where you’ll see AI in action in the supply chain industry, e.g., in enabling sustainability to get maximized. Generally speaking, I expect IoT to play a significant role in infrastructure and equipment management.

 

Brazil: Any other specific trends you see on the horizon?

Samuga: In the supply chain industry I predict that there’ll be a shift from process automation to process orchestration. By this, I mean that a company will be able to weave together multiple sub-processes through smart data to orchestrate a single process.

And that will enable a company to make proactive decisions and optimize its supply chain operations.

 

What was clear from several sources at the Reuters Supply Chain Europe Conference is that they expect the supply chain industry to pick up again in the second half of 2024. That, at least, is a ray of hope in today’s troubled politico-economic climate.

(Note: answers were edited for brevity and clarity)

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1 COMMENT

  1. Adapting to supply chain disruptions will also be a very important trend in 2024. This is no easy task in a time of geopolitical instability. Many companies felt this in their operations due to changes in the global logistics system during the COVID-19 pandemic. Then there was Russia’s aggression against Ukraine. And now the situation in Palestine and the Red Sea is complicated. This calls into question many planned projects related to transport and logistics within the Middle East. I know that companies are already using technical innovations of artificial intelligence and quantum computing in their planning, which greatly simplify the project development system and help the optimisation process. But of course, the latest technologies still cannot calculate all geopolitical risks in the process of global long-term planning.

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