The world's top brands have an Amazon-sized headache. They're coming up against a new generation of agile, fast-moving competitors and they have to find new ways to scale their demand planning. One company that the likes of Unilever, Reckitt Benckiser and Johnson & Johnson are turning to for help in this battle is San Francisco-based startup Aera Technology, which this week revealed an $80 million funding round to fuel its next phase of expansion.
Aera has a bunch of buzzwords to describe what it does and big ambitions for the future — which, full disclosure, I've been hearing all about while creating a white paper for the vendor — but let's put the marketing fluff to one side for a moment. What stands out this week is that global brands are already going on the record about the impact Aera is having on their demand planning.
Even though these comments have been filtered by Aera's communications gatekeepers, they bear witness to substantive traction. Here's Marc Engel, Chief Supply Chain Officer at Unilever, quoted in Aera's press release yesterday:
Our partnership with Aera has been instrumental in our journey to transform our supply chain into a digital eco-system.
In a video interview released this week, Saqib Mehmood, Global SVP Business Solutions & Insights at the RB Hygiene Home division of Reckitt Benckiser, speaks about its use of Aera's intelligent automation to free up its planners from repetitive data crunching and analysis:
We've really now reached the stage where half the business in the US is run without anyone touching it, so it's really the machine that decides what we predict. These teams have more time in terms of taking these peaks and troughs and trying to normalize them, working with customer teams, working with the manufacturing team and making sure that they can use their time for more planning, rather than forecasting.
In another video interview, Neil Ackerman, who heads up Supply Chain Innovation at Johnson & Johnson, discusses its use of Aera along with other partners to improve the accuracy of available to promise (ATP) and capable to promise (CTP) dates from "good" to "great":
We worked with them to create a cognitive platform, a self-driving machine, that takes a bunch of important data pieces ... that come together to create an index. We then put on top of it our own algorithms that we've developed to give us this forecast.
Demand planners can't cope
Aera CEO Fred Laluyaux says these global brands need his company's technology because their demand planners can no longer cope with the speed and complexity of modern supply and demand chains:
The challenge that companies are facing is that the work that is required by their planners [and] the people in their operations — trying to cope with the acceleration in the speed at which business is being done — is such that they cannot cope any more. The human decision making is degrading in many cases.
Digital newcomers are much further forward in their use of intelligent automation, while established brands are held back by a combination of legacy systems that trap data in silos and legacy processes that tie up planners in repetitive data extraction and analysis, he explains.
A lot of companies are seeing a degradation of performance of humans, because to make a decision is becoming overwhelming and the pressure coming from the market is such that the humans are not so good at planning and forecasting any more. They're not so good at doing all this operational work because it's just accelerated too fast and the complexity has increased too much.
Tools can digest vast amount of data and deliver very crisp recommendations while managing a lot of computing complexity. We're coming in and delivering perfect forecasts, promotions, available-to-promise data. It's not even pilot or test, now we have real results and the results are coming very strongly.
The Aera platform takes a different approach than traditional business analytics products. It uses crawler technology to maintain an up-to-date picture of transaction data held in corporate systems, and applies its own proprietary graph to normalize data from different sources in real-time. Artificial intelligence then analyzes the data to make forecasts and provide recommendations, which it either completes automatically or presents to users for a final decision. Aera describes this as a "cognitive automation" platform and presents it as a way of delivering the "self-driving enterprise."
Improve decisions over time
This week's announcements include the introduction of a new addition to the product line called Cognitive Decision Board. This packages up the platform's ability to analyze the effectiveness of decision making over time, as Laluyaux explains:
Some recommendations will trigger an action autonomously, so you want to monitor the impact. Sometimes those recommendations will trigger a message to the user and you want to see how the user will react. All those interactions allow us to capture the moment when someone makes an operational decision.
You want to derive some intelligence from this new dataset. How are decisions being made in our company, with what impact? Companies analyze these things in arrears but here we can analyze them in real time.
The new functionality also helps to build up a corporate memory of how decisions are taken, retaining information that has often been lost in the past when planners move on. RB's Mehmood comments:
The biggest benefit for us is in creating a brain within the company and having an ability to preserve it as people make decisions on top of it. For us, it is not just about making smarter decisions but retaining that knowledge within the company.
This week's $80 million C series funding round brings Aera's total funding to $170 million and is led by prestigious Silicon Valley investor DFJ Growth, joined by NewView Capital, Georgian Partners and some of the company's executive leaders. DFJ has a track record with Laluyaux, having previously led an investment round in analytics vendor Anaplan when he was CEO. The funds will fuel sales expansion as well as the creation of new functionality, in particular expanding beyond the current focus on supply chain use cases.
I've just written about the increasing pressures on enterprises to move faster and become more responsive and engaged with customers. For organizations like Johnson & Johnson, that pressure is keenly felt in the supply chain, where 60,000 of its employees — more than half the total — are engaged in sourcing, making or delivering. These organizations need to harness innovation, especially as new technologies such as the Internet of Things and 3D printing open up entirely new ways of monitoring and satisfying demand.
J&J's Ackerman sees that as an opportunity for supply chain leaders to take on a more strategic role, as he explains in the video interview mentioned earlier:
It used to be that sales and marketing generate revenue and supply chain was a cost center. I want to be really clear that supply chain is no longer a cost center. Supply chain, for those companies that know how to work it, can become your revenue generating machine ...
You don't have to look any further than the major e-commerce companies to know that supply chain actually is a winner, it's an advantage. You need traditional tools but you also need to understand that you can't win without it.
This is the demographic that Aera is targeting — supply chain professionals that see the potential to digitally transform how their organizations address the market. Its traction to date looks impressive, and we'll continue to keep a close eye on its progress.