This article was originally published in DC Velocity by Ben Ames.
Logistics tech firms have launched a slew of innovative solutions in recent years. But parlaying those breakthrough ideas into business success often has as much to do with sales strategies as with the technology’s merits, entrepreneurs say.
Agentic artificial intelligence. Humanoid robots. Drones that can count inventory in the warehouse. Autonomous trucks. Exoskeletons that help workers lift and move heavy loads. Clearly, the logistics sector is a hotbed for emerging technologies and innovative startups.
But that’s not to say that any company that develops a revolutionary new tool automatically has it made. According to many tech vendors, coming up with a groundbreaking technology is not enough to guarantee that a startup will be able to make a go of it. In fact, they say, building a successful company in the supply chain space often has as much to do with sales strategy as with the nuts and bolts of technological innovation.
So in addition to a groundbreaking idea, what else does it take for a company to succeed as a supply chain startup? To learn more about what’s involved, we turned to some players that have first-hand knowledge of the process and the challenges.
Be Relevant
To begin with, if you want to build a successful company, it’s not enough to simply develop a dazzling new tool; any product or service must first and foremost solve a real problem in the industry. Indeed, when the supply chain thought leader Art Mesher and the Council of Supply Chain Management Professionals (CSCMP) launched their Startup Excellence Award this year, the key criterion was that the innovation “drive real change in supply chain operations.”
This year’s winner, Gather AI, certainly has star-quality technology. Its AI (artificial intelligence)-driven software integrates live data from drones, forklifts, and connected equipment with analytics to provide a real-time digital twin of the warehouse. But that’s not what made Gather AI rise to the top of the judges’ list.
“Gather AI stood out for its ability to solve a critical industry challenge with both ingenuity and measurable results,” said Mesher.
All of that impressive technology was aimed at solving a very mundane and messy problem: inaccurate data on inventory in the warehouse. Also known as “inventory distortion,” this problem is costing the global supply chain over a trillion dollars a year, according to the research and advisory firm IHL Group. The truth is that manually gathering information about warehouse inventory is time-consuming, tedious, and riddled with errors.
Gather AI solves that problem by gathering data about what is happening in the facility through computer vision hardware, which can be embedded on autonomous drones and/or existing equipment such as forklifts, wearables, or static cameras. It then uses that data to create a digital twin of the warehouse that contains real-time information about where inventory is. Its platform also creates dashboards for users, who can ask questions about the inventory data through Gather AI’s “CoPilot” natural-language AI assistant. Gather AI says its solution has been implemented by more than 30 brands and third-party logistics service providers, which are now seeing 99.7%-plus inventory accuracy levels.
Solve the Right Problems
It’s not only important that the startup’s technology be able to solve real-world problems, it’s also important that those problems are ones that exist in the market today, not ones that existed in the past, says Anders Lillevik, CEO of Focal Point, an Atlanta-based developer of procurement orchestration software. Before becoming a tech entrepreneur, Lillevik was chief procurement officer at Fannie Mae, the federal mortgage lending giant. That is to say, he once spent a lot of time buying and deploying new software for procurement, until his new job placed him on the other side of that equation, where he now serves as a supplier of such products.
Drawing on his own company’s experience to illustrate his point, Lillevik notes that the goals of procurement platforms have changed in recent years, so a successful product needs to offer solutions for the problems of 2025, not 2020. “The goal was always to save money, but now, it is also to save the world’s environment, to support diversity and inclusion, and to cope with supply chain disruptions like a ship stuck in the Suez Canal. The one thing you can’t predict is the future, so you need agility,” Lillevik says.
Know Your Customer
Logistics startups also have to be flexible in their business terms so as to make it easy for prospective customers to experiment with their products, Lillevik says. For example, that might mean donating engineering services to convince a potential user to try out the product, even if it puts a strain on a small company’s budget. “People often say they want to do a pilot project, whether it’s paid or unpaid, to ‘try before they buy’ a new product. But [with procurement software], they don’t realize that it’s not that easy; we need access to their data and integrations to their enterprise resource planning platform,” he says. “If they expect that to be done for free, it is difficult.”
The same holds true for startup firms that pitch their products or services to potential clients through the request for proposal (RFP) process, a formal step-by-step method that many buyers use to solicit and evaluate bids from potential suppliers. According to Lillevik, some potential buyers go into the RFP process with clearly defined goals and objectives, while others begin with only a vague idea, which then requires bidders to spend significant time and money to help those buyers clarify what they need and demonstrate how their solutions will benefit their operations. “Some people really do know what they need, and others don’t,” he says. “As a supplier, these can be a pain, but often the lengthiest processes will ultimately be the most successful.”
The Value of Quick Wins
Finally, startup firms can enhance their chances of success by helping build their customers’ confidence that they have picked the right product. Sometimes that might mean slowing down the installation of their technology by breaking it into smaller steps. Under that strategy, instead of fully implementing a new software platform in, say, a four-week blitz, the supplier might instead introduce the solution “one brick at a time,” providing some quick wins and confidence-builders to show the buyer’s boss that the new technology can provide the desired return on investment (ROI).
“Most people are afraid of making the wrong decision,” Lillevik says. “It doesn’t always come down to money; it also comes down to change management. If you have 30,000 users, you’d better make sure that they change their work process just once. Making them change it two or three times is very expensive, particularly with a leader’s political capital.”
In the complex world of supply chain disruption and global turmoil, logistics startups provide crucial solutions to ever-changing problems. But however brilliant their innovations may be, those firms also have to study lessons from the business world to win new customers and boost their chances of lasting success.
Editor’s note: A video of this year’s Startup Excellence Award competition is available on the **ital{Supply Chain Xchange} website. You can watch it at www.thescxchange.com/video/cscmp-edge-2025/edge-startup-excellence-award.
