SupplyPike, a supply chain SaaS company, took in $25 million in Series B funding to continue developing software so that consumer packaged goods companies and brands are compliant with retailer needs and able to more efficiently deliver products on time.
The supply chain management market is expected to reach $19.3 billion by 2028 after being valued at about $10 billion in 2020. The global pandemic led to a series of events over the past two years, including a shift in consumer behavior, that made the supply chain very unpredictable, SupplyPike co-founder and CEO TJ Sangam told Nob6.
“People started consuming certain goods more than services, so the demand for products shot through the roof as consumption was super high,” he said in a recent interview. “That led to volatility when CPG brands and retailers could not predict how much demand there would be. All of their models are based on historical trends, and it’s like a very different landscape than it was a couple of years ago.”
That in turn led to stiffer competition between retailers to make sure products were always available to customers at lowest prices possible. The only way to do that, according to Sangam, was to put constraints on suppliers to keep up with the demand.
Retailers, like Walmart and Amazon, can impose some 200 different rules on suppliers, for example, to deliver during a certain window of time, with a certain kind of pallet and labeling.
Failure to comply could mean out-of-stocks, compliance fines, deductions and chargebacks and lost sales, he said. In addition, all of those fines, deductions and lost sales can eat away at anywhere from 5% to 20% of a CPG’s bottom line, 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 location at the right time or in the right quantity when the customer wants to buy it. That’s what SupplyPike helps with.”
In an effort to return some of that bottom line, SupplyPike goes in and finds all of the rules, documents them, converts the rules into software and applies machine learning to contextualize the data. Having all of the rules in one location, at the time of shipment, can streamline a CPG’s existing processes by up to 80%, according to the company.
Noro-Moseley Partners and Frontier Growth invested in the four-year-old company’s Series B and investors from there will be joining SupplyPike’s board, which also includes existing investors at Blumberg Capital. This gives the company $40 million in total funding to date.
Driving the new capital need was the company’s growth over the past two years, going from no customers and no revenue to nearly 400 customers and an average of 2x annual revenue growth. SupplyPike is working with large and small brands, including Hanes, Johnson & Johnson, Exploding Kittens and Lola, and powering some $25 billion in retail sales and managing over $500 million in retail inefficiencies.
Sangam intends to deploy the new funds into product development of its algorithms to detect and autonomously fix expensive supply chain issues and scale up go-to-market. In addition, the company plans to add more than 60 jobs across the areas of engineering, product, sales, design, marketing and customer success.
With ships clogging ports and trucks becoming scarce, Elizabeth Stephens, principal at Noro-Moseley Partners, said the supply chain space is “a great opportunity for innovation.” She is one of the investors joining SupplyPike’s board.
“The pandemic really magnified the issues 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 really interesting company, and what they are solving is a very time-consuming, expensive problem for customers. Then there’s this tremendous opportunity for them to really change the supply chain visibility landscape.”