New Attention To Supply Chain Risks Prompts New Spending

One enduring logistics lesson of 2019, or really of any year, is the potential upheaval that can face supply chains, whether it be geopolitical, environmental or financial. And that is prompting more investment in firms that try to mitigate that risk. 

Last year the U.S and China's back-and-forth trade war forced shippers to find new, tariff-less sources for goods; unprecedented rainfalls throughout the U.S. Midwest left billions in damaged crops and miles of crippled rail lines; international shipping containers were delayed after a container ship was the scene of one of the biggest drug busts in U.S. history; and a slower freight market pushed many trucking companies to bankruptcy, forcing shippers to find new carriers.

This year is starting with a spate of deals for companies that measure and monitor those risks. Paris-based EcoVadis rates company supply chains on their environmental sustainability and corporate governance practice, covering some 60,000 firms. 

Last week, EcoVadis received a $200 million investment from private equity firm CVC's Growth Partners. The 12-year-old EcoVadis plans to use the investment to scale up its operations.

Co-founder and co-Chief Executive Frederic Trinel said the move to grow its business comes as new regulations and initiatives "are putting a new and urgent spotlight on the supply chain – and creating an immense and growing market for our solutions." 

Separately, DHL Supply Chain also announced plans to grow its risk-management software product Resilience360 this year with a $22.7 million investment that includes Columbia Capital and Greenspring Associates.

Incubated by DHL in 20111 as a way to help Japanese customers understand the impact of tsunamis on their supply chains, Resilience360 became an independent operating company in 2018 following a $21 million investment from Columbia Capital.

The new million investment will go toward the acquisition of RiskPulse, a software-as-a-service provider of predictive analytics for supply chain risks and disruptions. (FreightWaves is a business partner of RiskPulse).

RiskPulse dashboard

David Shillingford, chief executive of Resilience360's holding company Rising Tide Digital, said the acquisition of RiskPulse is part of the broader focus now on what risks face far-flung supply chains in today's modern world. 

"It's hard to have a conversation with anyone about the build-out of a supply chain without making risk management a central component," Shillingford said. 

He said the combination of incident monitoring and mapping capability from Resilience360 with the predictive analytics from RiskPulse will make risk management a clearer piece of the supply chain rather than an anecdotal afterthought.    

"Most of risk management is focused around observing risks, but where it becomes valuable is where a risk observation is actionable," Shillingford said. "What we are doing is bringing risk analytics right into the operational workflow."

Shillingford said RiskPulse is particularly strong in cold chain logistics, such as helping shippers determine whether to use a dry or refrigerated van due to weather. Shillingford said companies that run beverage and pharmaceutical supply chains are major customers of RiskPulse.

"You are either going to be exposed to a load being outside a certain temperature range or paying more for refrigeration during that period," Shillingford said.

"There are solutions in the market that will give an ETA once an asset is moving," Shillingford said. "But RiskPulse does it during the planning phase."

Among other major risks that Resilience360 customers are tracking are the ongoing fallout from the trade war and the search for new low-cost suppliers. Likewise, customers involved in food and beverage supply chains are monitoring weather events along with water scarcity in food-growing regions.

The combined company will have 60 employees. Thanks to the growing attention paid to risk management, Shillingford said Resilience360 saw "significant growth in the last year."

"I would say what we are planning for is much more growth with the combination of the platforms."

Image by Foundry Co from Pixabay