The $25M Lunch

HOW LYTICA BECAME A UNIQUE ANALYTICS COMPANY: PART 13

As I write this blog I am also releasing new priced component data into the Component Cost Estimator (CCE) database with a 10 times increase in the number of components (MPNs) covered. This is the first customer impacting output from my advanced technology program in AI that I have reported on in previous blogs. This will essentially double the priced component match rates for many customers and eliminate most of the components not found in our CCE (first) and FBDC (soon after) applications. With this, I am also announcing that our new CCE Mobile app is now available in the Apple Store and on Google Play. If you are interested, there is a 14-day free trial and you can find out more at www.componentcostestimator.com/mobile. The App puts CCE functionality at your fingertips for single component analysis.

This first customer impacting milestone comes with the realization that Lytica has become as much a technology company as a supply chain one. At a time when many Technology Writers are becoming jaded with the potential of AI to deliver on its promise, I am becoming more bullish as I see things being achieved that I could not have done without it.

“I am also releasing new priced component data into the Component Cost Estimator (CCE) database with a 10 times increase in the number of components (MPNs) covered.”

The 10 times increase is just the beginning. Although it falls short of my expectations, it will grow significantly over the next few months. The shortfall is due to our verifications and validations which are much slower than our core technology development. Efforts to automate and accelerate these are in the works, so rapid exponential growth is imminent.

It’s been interesting to watch a band of skilled AI scientists and engineers work shoulder to shoulder with my supply chain specialists to deliver this achievement. Data and AI Scientists are different animals from Supply Chain folks. While their first meeting was not as dramatic as mankind’s first alien encounter will be, it was interesting. The positive was that both teams were inquisitive and enthusiastic. They also possessed great competence in their areas of specialization. We soon discovered and gained a growing appreciation of the high degree of complexity in our task and the level of cross-discipline interaction that would be necessary to deliver the program’s result. Exceptional teamwork was required. I have written before about how the design and layout of the Advanced Technology Center (ATC) facilitated this coordination. This ability to interact enabled a shared grasp of the tasks and the magnitude of the challenge being undertaken.

Early false assumptions about each other’s subject matter soon faded to be replaced with aligned purpose and understanding. Both sides gained insight into the other’s expertise and positively shifted their mindset about each other’s contribution to the project. This is a consistent outcome to what Managers try to achieve by bringing Operations closer to Design. In short, being brilliant and competent in one area of specialization does not make you an expert in another. Uninformed assumptions in areas that are not your space lead can lead to bad decisions by the naive.

This brings me to the $25M lunch.

A friend of mine and current customer – upon reviewing one of our FBDC reports – brought all of his Designers into the company auditorium and showed them the savings lost by not involving purchasing/supply chain in the initial design socket award. That lunch provided by a seasoned Supplier’s Salesperson to a Junior Designer, resulted in design socket awards that previously cost his company millions of dollars. There were many additional examples.

This experience highlights two simple facts:

  • Cross-functional teamwork yields better results particularly when it occurs at the design stage and, in this case, with supply base design and sourcing
  • My friend needed to benchmark and use our price prediction technology to highlight these poor sourcing practice problems and their magnitude

There is a third related fact that our ATC program addresses. With higher component priced match rates, my friend would have had more examples and greater opportunity to achieve higher savings. This is, in fact, the primary and initial reason for the ATC and the AI program. This match rate enhancement is only one of the many achievements we are seeing internally in our program. Although we are not yet achieving the quality levels required for a production release of our MPN cleanser currently in development (see Blog: HOW LYTICA BECAME A UNIQUE ANALYTICS COMPANY; Part 5: The ATC Program), we have seen and verified a 70% reduction in the application’s run time so that we can now cleanse 6,000 Manufacturing Part Numbers (MPNs) in 6 minutes. We expect to see the necessary quality improvements materialize within a month or two, enabling a MPN cleansing service to be available shortly thereafter and a product release in the following quarter.

The $25M lunch highlights the need for cooperation and early involvement of all parties with appropriate expertise and access to knowledge. It was also a dramatic, after the fact action that could be too little too late particularly when practices like distributor registrations limit corrective recourse. Actions like training supply chain considerations for Designers or analytics-based negotiation would be more proactive and yield better results. In any case, I am feeling good about the successes of my AI team and how I am positioned to bring new capabilities to my customers.

Ken Bradley is the Chairman/CTO & founder of Lytica Inc., a provider of supply chain analytics tools and Silecta Inc., a SCM Operations consultancy.

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