Supply Pikea SaaS supply chain company, has secured $25 million in Series B funding to continue developing software to help consumer packaged goods companies and brands meet the needs of retailers and be able to deliver products more efficiently on time to deliver.
The supply chain management market is expected to reach $19.3 billion by 2028, after being valued at approximately $10 billion in 2020. The global pandemic has sparked a series of events over the past two years, including a shift in consumer behavior, making the supply chain highly unpredictable founder and CEO TJ Sangam told ukbusinessupdates.com.
“People started consuming certain goods more than services, so demand for products shot through the roof when consumption was super high,” he said in a recent interview. “That led to volatility when CPG brands and retailers couldn’t predict how much demand there would be. All their models are based on historical trends and it is a very different landscape than a few years ago.”
That, in turn, led to increased competition among retailers to ensure that products were always available to customers at the lowest possible prices. According to Sangam, the only way to do that was to restrict suppliers to meet demand.
Retailers, such as Walmart and Amazon, can impose some 200 different rules on suppliers, such as to deliver within a certain time frame, with a certain type of pallet and labeling.
Failure to comply can lead to out-of-stock, compliance penalties, deductions and chargebacks, and lost sales, he said. Plus, all those fines, deductions and lost sales can take anywhere from 5% to 20% of a CPG’s profits, he said.
“Not understanding the supply chain can lead to a lot of friction because there is a lot of sub-optimal supply chain,” Sangam added. “The fundamental problem is that the product is not in the right place at the right time or in the right quantity when the customer wants to buy it. SupplyPike helps with that.”
In an effort to return some of that bottom line, SupplyPike goes in and finds all the rules, documents them, converts the rules into software, and applies machine learning to contextualize the data. By having all the rules in one location, at the time of shipment, a CPG’s existing processes can be streamlined by up to 80%, according to the company.
Noro-Moseley Partners and Frontier Growth have invested in the Series B of the four-year-old company, and investors from there will join the board of SupplyPike, which also includes existing investors at Blumberg Capital. This gives the company $40 million in total funding to date.
The new capital requirement was the company’s growth over the past two years, going from no customers and no sales to nearly 400 customers and an average of 2x annual sales growth. SupplyPike partners with brands large and small, including Hanes, Johnson & Johnson, Exploding Kittens and Lola, driving approximately $25 billion in retail sales and managing more than $500 million in retail inefficiencies.
Sangam plans to use the new funds for the product development of its algorithms to detect and autonomously solve expensive supply chain problems and scale the go-to-market. In addition, the company plans to add more than 60 jobs in engineering, product, sales, design, marketing and customer success.
Of ships clogging ports and trucks are becoming scarce, Elizabeth Stephens, principal at Noro-Moseley Partners, said the supply chain space is “a tremendous opportunity for innovation.” She is one of the investors on the SupplyPike board.
“The pandemic has really magnified the problems and how outdated the systems are,” Stephens said in an interview. “I met TJ at the beginning of the year and thought SupplyPike was a very interesting company, and what they solve is a very time-consuming, expensive problem for customers. Then there is this great opportunity for them to really change the supply chain visibility landscape.”
