A startup founded by an executive team schooled in the sweet art and science of supply chain planning and execution this week unveiled plans to offer a suite of predictive applications driven by event data gleaned from a variety of collection points, including RFID networks.
The company, TrueDemand Software Inc. (Los Gatos, CA), is led by CEO Eric Peters, a former senior executive vice president of supply chain software vendor Manhattan Associates Inc. Funded to the tune of $6 million by Silicon Valley venture capital powerhouses Bay Capital and Mayfield Partners, the startup's applications will use specially designed algorithms when they are released in the fourth quarter to recognize and predict supply chain patterns to help manufacturers reduce out-of-stocks and excess inventory.
Among TrueDemand's co-founders are vice president of business development Raymond Blanchard, who was SAP America's Auto-ID business development director within its Manufacturing Business Solutions Group; director of product management Jie Weng, who from 2000 to 2004 was an SAP research scientist working on the company's Auto-ID Infrastructure (patent issued); and Dr. Hau Lee, who is a professor of management science and engineering at Stanford University's Graduate School of Business, and is acting as an advisor to the company.
The core development team is comprised of former i2 Technologies' programmers, who had been responsible for overhauling that company's SCM platform. They are led by vice president of engineering Suresh Kuppahally, who previously was vice president of global product development for i2's SRM Business Unit, where he managed 200-plus developers.
"We have 17 people at the company -- half are PhDs," Peters proffered.
Steve Banker, a supply chain analyst with ARC Advisory Group (Dedham, MA) believes TrueDemand is taking a unique approach to supply chain optimization, but is equally impressed with the startup's pedigree. "... I'm not sure I'd be paying that much attention to them if it wasn't for the team."
And it will take smart people to make good on TrueDemand's promise: to transform supply chain management from today's manually intensive, long-term planning exercise into a near real-time, proactive activity. For many consumer products manufacturers, supply chain planning requires a cross-functional team to pull factory capacity planning data in batch form from their ERP systems and develop a strategy that matches supply with demand -- normally using weeks' old, nosy data from retailers. It's a problem not easily solved through linear programming, Peters said.
Enter TrueDemand's algorithmic approach, which Peters likens to pattern recognition programs used to decipher election polling. The company's algorithms help manufacturers determine at what point to trigger a refined supply forecast -- and what the organization needs to do to with inventory to accommodate demand.
"Rather than tell you that something is out of stock, or ask what you want to do about it when it occurs, we are going to help predict what will happen to prevent [bad things] from occurring," Peters said. Think of it as "an integrated demand and replenishment application suite," he added, noting that the software is also aimed at informing and guiding inventory requirements tied to promotional campaigns.
The advent of RFID, for instance, changes the equation in terms of data immediacy, although TrueDemand is not tying its fortunes exclusively to this type of Auto-ID data. Event data such as information collected from warehouse management systems or barcodes can also do the trick. RFID data, however, provides visibility as goods move from the warehouse through the distribution center to the store's backroom and into the retail shelf, providing a "multi-echelon view" of inventory in supply chain.
The problem is that earlier adopters of RFID are deluged with data and need assistance filtering out the noise to hear meaningful demand signals that can inform the supply chain planning and execution processes. "[Manufacturers] need to find the right pieces to build a forecast," he said. "[Our] patent pending technology can filter the right data to see how it influences the production forecast or to do something to change the forecast."
Peters declined elaborate on the company's "secret sauce," noting that additional technology details would be available when TrueDemand's applications are officially launched and reference accounts revealed at the EPCglobal conference in mid September in Atlanta. Pricing, which will resemble traditional packaged application licensing fees, will also be disclosed at that time.
The applications are being beta tested at a number of consumer products companies, which Peters declined to identify. "We're focused on Fortune 100 -- that's where the money is -- in large consumer goods companies," Peters said. "CPG, Pharma and consumer electronics -- because they all move products on pallets."
TrueDemand believes it is targeting a market that the major enterprise applications vendors merely pay lip service to. Yet, the company also realizes that it must interoperate with these major enterprise applications if it wants to convince wary manufacturers to give technology created by a startup a try. For instance, the company is working on ways to integrate its applications with SAP's demand planning or APO module, Peters said.
Meanwhile, it is ensuring interoperability by paying attention to emerging Web services standards. That's why it built its application suite to run as a portal on a service-oriented architecture based on IBM's Websphere, which is the middleware technology many consumer products companies use to connect their SAP applications to other enterprise systems.
ARC's Banker doesn't see SAP, Oracle or other best-of-breed SCM applications vendors taking an approach similar to TrueDemand's. "Historically these companies have not been on the cutting edge of optimization," he said.
"I've not heard of another solution like TrueDemand ... predictive analytics using RFID and other event data," Banker continued. "I listen to messages of all value propositions and TrueDemand appears to be the only one talking about it."
That may be what has attracted a "who's who" of manufacturing CIOs and technology industry veterans to the company's advisory board. Key advisors include: David L. Anderson, a retired managing partner from Accenture, where he helped to build the firm's multi-billion dollar North American and European supply chain management practice; Steve David, retired Chief Information Officer at The Procter & Gamble Co, (Cincinnati, OH); and Jon C. Stine, who since 2000 has overseen product development for Intel Corp's worldwide Retail and Consumer Packaged Goods Industry solutions group.