Logistics: Unsexy but critical

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Miscellanous / Thursday

Being an Industrial Engineer, I have taken some foundational classes on how supply chains work and how to optimize them in ideal scenarios. As I have found this summer, classes often downplay what’s important and emphasize what’s not.

Through my internship and conversations with people in some of the merging companies in the logistics industry, I have learned that a good supply chain can be one of your strongest moats if you’re running a company with physical products. Even in the age of drop shipping – where it seems every Tom, Dick, and Harry is buying things from Aliexpress and putting it on Shopify – the location, the scale, the timing, and the rates at which you procure your materials is critical.

The reason why I suspect why this is boring to talk about is because it often is. Most of the companies in the space have existed since the start of the 20th century. There are a simple rules that seem to govern the industry – the more you order, the cheaper your products are, China is the best place to get things, and shipping is a nightmare when customers expectations have been distorted by Amazon. So I understand when people look at the COO as a person who only brings in bad news, usually something along the lines of “This won’t be possible because we can’t do it at a feasible scale, timing, and rate.”

But what is exciting is that there is a whole new age of companies that trying to disrupt this century old industry. Some of them that I have explored are Flexport, BlueCargo, Viaopt, and GoShippo. They are a part of the cohort of companies that are trying to bring together the world of software and hardware – of bits and atoms – together. No wonder VC’s are going crazy over them.

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