Part 1: A unique approach to Supply Chain
The origin of Lytica and our products has been covered in blogs such as The Genesis of “Bradley’s Law” and others that can be found on SCM Roundtable. Our history, formed from deep technology roots, has given us a unique perspective on supply chain issues which yields distinctive solutions. The story of how Lytica developed its hyper growth strategy is timely as many companies are fighting to cope with the accelerating pace of business. This is a chronicle of technology and productivity being applied to issues that impact all of us working in the electronics supply chain.
It is also the story of how Artificial Intelligence and its application in Machine Learning can solve chronic supply base problems. Currently, Artificial Intelligence is following Amara’s Law, “We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run.” The term Artificial Intelligence (AI) emerged in the mid-1950s and, until recently, AI endeavours have failed to deliver on its promise. Today AI and Machine Learning are having a major impact in many fields, and the unprecedented automation capabilities that they enable are likely to transform half of all jobs in the next decade.
However, we are still in the early days and the application of AI and ML today is still a high-risk, labor intensive activity that requires specialized expertise; it lacks the WYSIWYG (what you see is what you get) layer which hides complexity to make it as easy to use as a Microsoft Office-like tools.
That said, as an information services company, we are on the front-line of those who will experience these shifts. We understand that ML and AI will dramatically change our company and our industry will benefit from innovative new solutions to supply base problems
I entered the field of supply chain late in my career and at an executive level; CPO of Nortel Networks. Earlier in my career I worked as an engineer in semiconductor technology; research and development on discrete semiconductor components and integrated circuits in silicon and more exotic III-V materials like gallium arsenide and gallium nitride. This explains my interest in components. I like the way a material’s electrical, mechanical and thermal properties can be manipulated to do really cool things and produce useful products to enrich our lives. As my career progressed, I rose through the management ranks at Bell Northern Research and Nortel Semiconductor, in technology and operations roles, to hold positions like VP & GM Nortel Semiconductor, San Diego and VP & GM Nortel Semiconductor, Ottawa. These were followed with responsibility for VLSI technology transfer to China, the negotiation of 3 joint venture companies and a role as Managing Director (President) of Guangdong Nortel Telecommunications Switching Joint Venture. Then came my first supply chain job as CPO for Nortel’s global direct and indirect procurement.
Clearly I was not given this job because of my supply chain prowess. I was presented with the challenge of analyzing and changing sourcing practices as far too many manufacturers were entering the supply chain on technical merit alone without enough consideration of aspects other than design needs – cost, security of supply and compliance. Rather than being schooled in supply chain and enriched with many years of experience, I had to approach the problem from first principles. I learned quickly, listened to my peers and team, but also questioned all advice in order to understand why their suggestions made sense in the current environment. Cost, security of supply and compliance seemed to me to be three equal first priorities of supply chain design. Because of my component bias and assignment, I preferred to think about supply base design rather than the more complete supply chain design. It was in this role that I discovered that no one really knew what we should be paying for components. Not Nortel, not the high priced consultants and sometimes not even the suppliers. I’ll have more to say on this later as it was the genesis of my Freebenchmarking.com idea.
I also discovered differences – some cultural, some not – between my semiconductor experience and my supply chain/procurement reality. Semiconductor was fast paced whereas supply chain was hectic. Semiconductor was technical, requiring deep contemplation and consideration whereas supply chain often followed rules of thumb, 80%-20% rules and practices that had always worked in the past. Semiconductor was full of innovation whereas it was mostly lacking in procurement. Don’t misunderstand me – there has been plenty of innovation in supply chain with quality, lean and other initiatives – but where the acceptance of change in semiconductor was ingrained, in procurement it was incidental, mostly avoided and sometimes feared.
I succeeded in my CPO role and retired from Nortel, leaving with a deep respect for supply chain and, particularly, the procurement profession. I had also developed a strong belief that technology could enable great strides in supply base design and procurement.
After founding Lytica, our first technical breakthrough was finding a solution to the problem of what one should pay for a component. This solution was the basis of our Freebenchmarking.com product. Now our sights are set on using technology to solve other problems in risk management and compliance. New approaches to traditional challenges, such as instantaneous benchmarking and statistical predictions for component cost, are needed to stay ahead of the competition in a fast paced, ever changing world.
This is why I am building an Advanced Technology Center within Lytica. We have amassed the world’s largest dataset of electronic components with real customer pricing which contains vast amounts of information. We built this dataset to allow customers to pragmatically (yet instantly) benchmark their electronic cost base against the market. Using our unique solution, customers now benchmark their e-component supply with the same rigor that they’ve benchmarked other facets of their operations for decades. This data can also be mined and combined with other information to reveal new insights and solve problems related to security of supply and compliance as well as to improve and expand our price prediction capability.
Like everyone else, we face too many things to do each day with less time available to do them. We need to make changes in how we create technology and deliver new products and features. We have no option – we must make huge productivity gains. Lytica’s roadmap contains many existing product enhancements which, amongst others, pertain to match rates, component search capability and prediction accuracy. We’re also creating new products for BOM optimization, cleansing and trend reporting. I am targeting a 7000 times productivity gain over the next 12 months (but will be happy when I get to 3000 times); this is not possible with traditional approaches or thinking.
My plan for an Advanced Technology Center (ATC) focuses Artificial Intelligence (AI) applications on the supply chain. The ATC is under construction with a planned grand opening in October 2017 and our first AI projects are already yielding dividends. Lytica is a supply base analytics company with an enormous amount of data on components and manufacturers. I need to use AI to mine and transform this data into usable information or, better still, answers for existing and new customers. The ATC will establish Lytica as the expert in creating AI applications which, in turn, will underpin all of our new product capabilities. By design, ATC work can be aligned with and driven by customer priorities while also accommodating periods of co-development with customer engineers on site.
This is the first in a series of blogs that will document the progress; we invite you to follow our exciting journey via our posts on SCM Roundtable.