Elementum Of No Surprise
Elementum's supply graph gives real-time insights into your supply chain.
“Supply chain is the thing everyone will look back on 5 years from now and say, ‘How did I not see this coming?’ Elementum is leading the charge.” – Aaron Levie, CEO of Box
Supply chains are notoriously difficult to manage. Between bullwhip effects, over- and/or under-stocked inventories, manufacturing mixups, and untimely delivery debacles, it is no wonder that supply chain managers are looking for new ways to monitor and control their operations. Enter Elementum, a startup spun out of manufacturing juggernaut Flextronics, that brings together the latest in big data, cloud, and mobile technologies to deliver accurate and real-time supply chain information, optimized for today’s mobile workforce.
Traditionally, OEMs keep loose tabs on their supply chains and lack real-time alerts. Imagine getting an FYI email from a random employee saying
that he’d just seen a news article about a fire yesterday at a Chinese factory your company uses. A panic ensues, numerous emails are sent to your various suppliers to find out if your chain has been affected, and it takes days to get everything sorted out. Fortunately, your supply chain is unharmed. Now imagine receiving an alert on your phone as soon as the fire broke out that tells you exactly which operations have been damaged, which downstream players have been impacted, and that there’s no need to panic because your company wasn’t affected. Just think how much damage could have been done if you had been affected and didn’t find out until days later. Elementum apparently has the solution, and it’s called the supply graph.
Similar to Facebook’s social and LinkedIn’s economic graphs, Elementum’s multi-enterprise supply graph digitally maps the product economy and
serves as a one-stop-shop for managing all of a company’s supply chain partners. Their enterprise SaaS platform serves four main functions:
- Source: monitors over 10 million incidents per day within a global network of millions of suppliers, factories, and key logistics hubs for
potential problems - Transport: provides real-time tracking of every route in your supply chain, allowing users to adjust for delays or bottlenecks before they affect customers
- Manufacture: measures/analyzes critical factory output metrics in real-time so users don’t need to actually be on the ground to assess operations
- Situation Room: streams live data to a dashboard for key personnel to explore together during a meeting
In an increasingly globalized manufacturing environment where components are assembled far from where they are made, the insights Elementum provides to its customers are extremely valuable. Elementum’s software eliminates millions of dollars in license and service costs that OEMs must spend every year to integrate all of their supply chain partners. Following the typical model of annual SaaS subscription and servicing fees, Elementum carves out a slice of those huge savings for itself.
While Oracle and SAP have similar “supply chain management in the cloud” offerings, Elementum’s biggest advantage is its familial connection with Flextronics, the second largest contract manufacturer in the world. Flextronics gives Elementum access to tremendous amounts of relevant data on its operations and customers, something software giants like SAP and Oracle don’t have. Elementum also is very good at building scalable solutions with modern NoSQL document-based databases like MongoDB. Elementum is well-funded and starts with a relatively clean slate tech-wise. Oracle and SAP are slow-moving, lack an entrepreneurial mindset, and tend to build cumbersome, overcomplicated software. Elementum’s data science team is also very strong and brings to bear Flextronics’s decades of data-driven supply chain experience.
A key challenge for Elementum going forward is changing the behavior of resistant supply chain managers. Unsurprisingly, old habits die hard and as painful as it is Excel is still considered the go-to for analysis for most managers. Another traditional misconception they’ll need to overcome is that you need a ton of dials to fine tune your operation. Elementum’s apps are limited and problem specific. According to Elementum CEO, Nader Mikhail:
“You don’t need 50,000 features in your supply chain system to run your supply chain effectively. In every part of your supply chain, whether factory or transportation or inventory management, truly an 80/20 approach works. There are 10 to 15 things you really need to manage.”
He adds, “you go to the business user and say you get real-time information as of the last ten minutes, with a margin of error because the data comes from multiple systems so there’s a slight gap in synchronization – they get it. They valued that much, much, much more because the data is so fresh.”
This is exactly why Elementum is so valuable:
Elementum sounds really interesting. I really hope this (or similar things) take off. I’m curious how they will compete moving forward with SAP and Oracle given that most companies with large supply chains, even if they used Elementum, would still likely use SAP or Oracle for other things. I could envision a scenario where they price Elementum out of the market. With the difficult sales process (to managers who don’t want to change), going directly after established competitors, even with superior technology, seems a bit risky and I’m curious if it will work.
Thank you for the article. My primary curiosity/concern is how Elemntrum tracks the data to perform its supply chain management analysis functions. It appears as though clients would have to have their supply chain companies contribute to the data-sharing process to allow Elementrum to function properly. This raises additional questions regarding the cost and capital to participate in Elementrum’s offerings. Is such a service only valuable for major corporations? Is that market share limiting?