Forecasting has always been weird science at best, and risky business at worst, even though predicting future trends based on historical data seems like the smart thing for a company to do. This is especially true when it comes to inventory management — the closer a business can get to calculating the exact amount of anything it needs to have or not have, the better aligned your budgets and bottom line become.
But, instead of just looking at a company’s past orders and assuming future business will automatically be repeated, Atlanta-based Demand Driven Technologies takes the novel approach of using software logic to tie production directly to actual demand.
“The company exists to create value for its customers, period,” says Demand Driven Technologies CEO Erik Bush. “To me, far and away the most critical thing we do every day is ensure what we’re doing is making things better for the people who use our solutions. And I’m really, deadly committed to this.”
According to Bush, Demand Driven Technologies takes a different look at how to address manufacturing through better management. He says the company is able to provide measurable value because many companies make a critical assumption that is frequently incorrect: they’re going to have an accurate forecast.
“The fundamental difference,” Bush adds, “is by adopting a cleaner signal — the actual orders from customers — we’re able to give customers much better results. You’re doing exactly what the market is ordering, not just forecasts.”
The signal comes from material requirements planning, or MRP, in manufacturing and production. It consists of planning, scheduling, and inventory control, which usually exists in the form of software a company uses to manage their manufacturing processes.
Demand Driven Technologies runs simulations for clients, using their existing data to show how much improvement they’d see if they were using the systems, Bush says.
“This is critical, because given the bias they have from the software they have, which didn’t work, we have to have a compelling value-add proposition, to provide a clear view of the gain they’d be able to realize.”
The software works with a company’s existing ERP, or enterprise resource planning systems, which manage the company’s business processes. Bush says Demand Driven Technologies then “turbo-charges it,” putting the ERP’s master data into their logic framework, which then gives rules, provides order recommendations, and repeats these steps on a daily basis. And Bush says that, in addition to raising capital, the company has been able to find success and grow because no one else offers this type of logic.
“We start with a cleaner demand system, and we can advise companies to hold inventory based on algorithms, levels of demand and variation. Here’s the amount you should be holding to make sure you’re able to address that level of demand in real time. It’s a much better way to have constant availability of the materials and re-supply orders. We learn a lot about their environment, so we’re able to be good advisors.”
Demand Driven Technologies bootstrapped in its early days, before its simulations started getting the attention of major conglomerates. “When a company like Michelin says ‘we want to do several pilots,’ it’s an indication that the mass market is starting to arrive,” Bush says. Before then, he says, “it was really hand-to-mouth.”
He says the company plans to announce a new funding round in February, and intends to scale the direct sales team to accelerate business and develop more tangible relationships with clients.
The company now has more than 100 enterprise clients, including big names like Coca-Cola of Africa, and partnerships with major consultancy firms like Tata and PwC. Bush says these partnerships show the effectiveness of the company’s solutions, and also the maturity of the company, but he’s still pushing his team to greater heights.
Bush says he’s famous for telling people repeatedly that “it’s just that easy.” He quotes the Chinese proverb that “a journey of a thousand miles starts with a single step.” Even the Demand Driven Technologies conference room is called “The Everest Room.” Clearly, he sees the sky as the limit.
However, he says, “You’re never gonna get there if you don’t start marching. Keep it in balance.”