Home / News / Business Of Life /  What it takes to build a supply chain and logistics tech ecosystem

We tend to think of e-commerce or food delivery and other on-demand services when we talk about logistics and supply chain innovations. But it cuts across every industry, from manufacturing and retail to healthcare and small and medium enterprises (SMEs). This has accelerated during covid which has pushed businesses to restructure their supply chain and delivery models. An investment firm that has focused on this space is Gurugram-based Lumis Partners, which has set up a platform called Supply Chain Labs connecting startups, investors and corporations.

“We look at supply chains as one of our core domains where we keep reminding ourselves that we want to be inch-wide and mile-deep. While that narrow focus plays as domain strength development, the advantage is that the supply chain domain extrapolates to pretty much every industry," says Rohit Bhayana, co-founder and managing partner, Lumis Partners.

B2B (business-to-business) tech, where Lumis’ interests lay from its inception in 2006, meant deepening involvement with global supply chains of multinational companies like GE and Philips. The idea was to build technology in India that could be scaled in global markets. Then, three years ago, the firm decided to bring its expertise to bear on supply chain bottlenecks that were like a millstone around the neck of the Indian economy.

There wasn’t much that startups could do about the physical supply chain involving infrastructure like roads, railways and airports. That’s for the government to fix. But when it came to the digital supply chain, which translates into the financial and information supply chains, startups could leapfrog on the back of technology. This was the thought behind Supply Chain Labs, which has an India focus.

Carving a niche

The idea was to build a tech supply chain ecosystem, instead of standalone investments in a few startups in the space. So, apart from a six-month fellowship programme for selected startups followed by investments and collaboration for scaling of innovations, Lumis goes into specific supply chain domains like food or pharmaceuticals to develop strategies. For example, genealogy has gained importance in the post-covid world, as buyers want to know more about provenance and quality, especially in food and pharmaceuticals.

Innovations in these supply chains can play into the strategic focus. Thus Qzense joined Supply Chain Labs last year with a solution using IoT (internet of things) devices to track the internal quality of fresh food. The appearance of mangoes, for instance, can be misleading because they often rot from the inside. Sensors capturing the smell of mangoes then become a vital quality input.

Another startup from the 2020 cohort is Statwig, whose blockchain-based supply chain platform has become pivotal for traceability in the massive distribution of covid vaccines this year. The value proposition of a blockchain system comes from the visibility it provides to multiple stakeholders as vaccines or other pharmaceutical products made in hubs like Hyderabad in India get distributed to entities around the world.

A different area of innovation is the financial supply chain. Xpedize from the first batch of Supply Chain Labs in 2019 has created a platform that helps SMEs underwrite their receivables, thus solving a big cash flow problem for them. On the platform, an SME can use invoices from its big clients to get credit from financiers who can factor the receivables into their credit risk.

Going places

The startup graduated from the fellowship programme, which included a stint at Massachusetts Institute of Technology, at the start of 2020. Thereafter, it got investments and a new roster of clients. “Last year their revenue went up 5x, and that year had covid in between. So it had tremendous growth," says Bhayana. “Part of what we do is help make the technology robust and think through the commercial structures and go-to-market strategy."

Sandeep Sinha, co-founder and managing partner of Lumis, traces the evolution of its model to an award for startups that it instituted 10 years ago in partnership with TIE (The Indus Entrepreneurs). Several of the startups that were recognized by these awards at a formative stage went on to become unicorns and listed companies, such as MakeMyTrip.

“We realized that the value of a portfolio of around 30 companies that got those awards would today be $13 billion," says Sinha. “If we were to do that journey again, we would run the same rigorous selection process, but we would also go ahead and make investments in these companies. So the depth of the work that we did with the TIE-Lumis awards has translated now into an initiative which has huge value commercially." In that sense, the Lumis model is a combination of a selection process, fellowship programme, academic and corporate partnerships, and investments. The platform approach it has taken with Supply Chain Labs extends to its other core domains of interest, including the future of work, aging societies, and venture debt.

Malavika Velayanikal is a Consulting Editor with Mint. She tweets @vmalu

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