As manufacturers confront the challenges associated with globalization and the increased speed of business, it is imperative to find technology solutions that address the complexities of the modern-day supply chain and are easy to adopt. o9 Solutions has developed the premier artificial intelligence (AI) platform for integrated planning and operations management using Microsoft Cloud technology. Microsoft’s Colin Masson, Global Industry Director of Manufacturing Solutions, sat down with CEO and co-founder Chakri Gottemukkala to learn how o9’s customer-first approach enables manufacturers to transform business processes and improve outcomes across the enterprise.
Q: What did you do before founding o9, and how did that experience shape your vision for what the platform should offer customers?
I joined a company called i2 straight out of grad school, and my experience there played a big role in shaping what we’ve built at o9. First off, i2 had a culture of giving young talent opportunities to solve big problems. Second, I had the opportunity to work with big retailers and manufacturing companies across the board, where I learned there was a lot of commonality to their problems at a fundamental level. Most importantly, I learned I had to really listen to identify the customer’s challenges and then use the technology i2 had to address their issues and deliver the most value—a lesson I’ve carried with me to this day. Today, there are new buzzwords and technologies, and problems have gotten more complex, but being able to determine the real customer problem is still crucial. At o9, we emphasize focusing on what drives the most value for the customer and shaping our technology accordingly rather than being a hammer that looks for the nail. Also, by the time we founded o9, globalization had taken hold and the internet had accelerated the pace of consumption, making supply chains even more complex. So, we wanted to create a solution that could change supply chain management given the new age of complexity and data availability.
Q: What were some of the challenges you noticed with existing business planning software when you founded o9?
A lot of companies had seen poor adoption of enterprise software because solutions were inflexible and difficult to use, especially in comparison to the apps employees were using in their personal lives. Additionally, employees were reverting to using static spreadsheets, which they were more familiar with, as a basis for their decision-making processes. One of the opportunities we saw was to make enterprise software as flexible and easy to use as consumer applications to help drive adoption of enterprise planning solutions at scale. We believed it should be as easy for an employee to find information on forecasts and supply chain constraints as it was for a person to find the weather on their smartphone. Our hope was to help business decision-makers account for the increased complexity of the supply chain and speed up their decision-making.
Q: What technologies helped you reach your goal of making enterprise software as flexible and easy to use as consumer applications?
The technologies that were exciting were big data and memory technologies, which had advanced significantly. Most stores today forecast thousands of SKUs for thousands of stores every day, and for each store, the forecast is impacted by factors that vary locally. To be able to do this well, they need the ability to acquire massive amounts of data for every zip code so they can generate accurate forecasts daily for every store. Managing these complexities requires technology that’s capable of storing and analyzing large amounts of data. We leveraged the advancements in AI, the ability to capture big data, and new memory technology to develop next generation enterprise software that had those capabilities and could process enterprise data to provide prescriptive answers for planners and management.
Q: What were some customer challenges that you capitalized on, and how did technology drive better outcomes?
A critical aspect of supply chain is improving the quality of forecasts. Before having access to big data and memory technologies, companies would forecast by looking at historical data and making estimates. This was manual and arduous, and most of the time, the estimates were off, which led to issues with inventory and stock-outs. Big data technology, however, enables businesses to automatically capture massive amounts of data and determine what’s driving demand with more accuracy, which improves their ability to replenish inventory and improve sales in each store. Another challenge associated with manual processes is that they generally led to “tribal” company knowledge. Even when promotions and initiatives were run, there was no way of knowing which ones worked, and what kind of change in demand was attributable. Hundreds of decisions are made in organizations every day, so being unable to track such information was problematic—especially when people moved on from their jobs. All this knowledge was lost. Our approach enables companies to create institutional knowledge by tracking outcomes and creating a knowledge base that can be leveraged in the future to make better, more informed decisions. Without advancements in AI and learning systems, this would not be possible.
Q: One of the most interesting aspects of the o9 solution is the Enterprise Knowledge Graph (EKG). Can you tell us more about it and what makes it so unique to o9?
The EKG is the engine of our platform and enables three things. First, it provides the extensibility to model a business from end-to-end. Every business needs to model its products, customers, supply chain, distribution centers, factories, and suppliers. But, from time-to-time, companies may want to model other things such as competitors, consumers, or channel partners to gain new insights and intelligence. EKG is a flexible modeling framework that captures data on all the relationships that describe an enterprise and stores it so that it can be included in new models as-needed. Second, the EKG enables instantaneous propagation. Historically, enterprise information has been siloed due to a lack of end-to-end technology, and takes a long time to flow from one place in the company’s systems to another. Because our solution is end-to-end and the EKG understands all the connections across the business, any change is instantly propagated to everyone who needs to know about it. This enables employees to make informed decisions in real-time, meaning they’re able to predict problems, take corrective actions, and resolve issues faster.
Third, the EKG creates a knowledge base of actions and decisions that enables it to learn from past experiences. As people make decisions using the platform, that information is recorded so that when a similar situation arises, the EKG can surface recommendations regarding the actions that should be taken. This enables the enterprise to collaborate much faster, in real time, as issues happen, and elevates every role across the enterprise in making decisions.
Q: Do you have any customer examples of a time when the traditional supply chain management paradigm was completely broken down because of this new approach to planning?
One example is a leading tire company we’ve worked with. This company sells tires to consumers through different channels—they have their own stores and they also sell through various distributors and retailers. They were seeing inventory shortages for some tire types and excess inventory with others. The methods used to forecast the quantities their factories should build were based on shipments to retailers, which turned out to be the wrong signal. The better signal is what retailers sell to end customers, which is tough to predict since retailers sell different tires depending on the geographical market. What the tire company needed was earlier insight into what retailers would be selling to give their supply chain more time to respond to the predicted demand. We’re helping them take advantage of information, such as vehicle registration data and demographics for different markets, to gain a better understanding of what retailers will sell to end customers as well as what drives end customers’ decisions. We’re also helping them understand the impact of their availability, pricing, and margins compared to their competitors, as these all factor into the recommendations dealers make to end customers. Getting this type of data from the market early provides better visibility into where problems are, which lends more insight into which actions should be taken based on what’s going right or wrong. In the end, this drives more value and money for the corporation.
Q: As you look toward the future, in what other ways are these new technologies going to change how manufacturing organizations operate?
Today, a lot of organizations are highly bureaucratic. Many of them are realizing the need to adjust, but change management is always tough. We believe our approach to planning and management creates new possibilities that improve communication and help drive change in organizations. Technology makes it easier for organizations to use data to drive incentives and change behaviors that benefit the company in the end. We also care deeply about some of the social impacts this type of technology can have within enterprise organizations. For one, enterprises are the largest consumers of earth’s resources, so when they make bad decisions concerning forecasts and the supply chain, there’s an impact that goes beyond the bottom line. The idea that technology can affect positive change with regards to how we utilize earth’s resources is something we’re really excited about. Another thing we’re excited about from a social standpoint is being able to show people the connection between the efforts they put forth every day and the performance of the enterprise. Some survey results we saw when starting o9 showed that somewhere between 70% and 80% of people in organizations are unhappy at their jobs. One might guess that this boils down to compensation, but the root causes were company politics and a lack of visibility into how the job they were doing related to the enterprise’s performance. Our technology helps bridge those gaps and connect people to the enterprise, which has a big impact on individuals and the future of organizations.
O9 Integrated Business Planning, Built on Microsoft Cloud technology, is available now on Microsoft AppSource. Learn more about o9 by trying the solution demo today.