Advanced Supply Chain Planning with Noodle.ai: Plain-Speak for Supply Chain Leaders
I sat down with Mike Hulbert, Vice President of Consumer Business, Noodle.ai, and asked for a digestible, straightforward explanation of our unique value proposition in supply chain planning. Noodle.ai’s uniqueness is driven by our use of advanced artificial intelligence (AI) algorithms and data science to solve chronic problems in supply chains caused by volatility that traditional planning tools are not built to address; solving problems that supply chain leaders have had long before the arrival of today’s complicated operating environment.
Why take this conversational approach? There is so much hype, FUD and FOMO around “AI in supply chain” that an operational leader’s view of our products, as told by Mike, a former Noodle.ai customer who believed in the product so much he joined us, seemed timely. He acts as the voice-of-the-customer for us, which is key to our strong reception in the market and our growth in this crowded space.
Gail: Who is Noodle.ai?
Mike: Noodle.ai is an AI software company that focuses on advanced supply chain planning. Our AI capability sits in the cloud and supplements the planning and operating infrastructure that consumer goods companies have. We address a core issue for these companies, sales volatility, which just got even more challenging in these times of COVID.
We help companies answer, ultimately: What do I produce? How much inventory do I have? Do I have the right inventory? Is it in the right place at the right time?
Gail: What makes Noodle’s offering unique?
Mike: Noodle.ai makes supply chains more efficient by dealing with variability, solving for:
- low fill rates and resulting lost sales
- inventory overages or shortages
- unnecessary expediting of goods to meet demand
Our applications sit on top of existing enterprise resource planning systems like SAP. They don’t replace them, they enhance their performance within the 12-week execution window, something no other supply chain planning application does.
Gail: What are top of mind concerns for planning software decision-makers running complex supply chains today? What’s keeping them up at night? What’s the big problem for them? And has that changed? Is it a new problem? Or is it a problem that’s kind of always existed?
Mike: It’s a set of problems that have always existed, that are inherent in running a company with thousands and thousands of SKUs and quite a bit of demand volatility. But in these times of COVID, it’s gotten even more challenging.
Nearly everyone will quickly say, “We had these challenges before COVID. COVID just made it harder.” The inherent challenge is running a supply chain with thousands of SKUs, lots of sales volatility and relying on planning systems that weren’t really developed with that in mind. They’re very good when things are stable. They start to fall apart when things get really volatile.
The very specific pain points we solve have to do with:
- Low or inconsistent fill rates for customers. So, in a consumer business, they’ll call those “order cuts.” A customer orders 10,000 but they can only fill 9,000 or these days, only fill 5,000 or something that’s dramatically lower. And that’s a really, really big problem when I’m missing a lot of sales.
- Inventory – I just made too much. It’s very common for companies to overreact because they’ve got all this volatility going on. You have humans involved; they see there’s a spike of this product, therefore let’s make more of it. Then, lo and behold, the customer just ordered early, I really didn’t need more, but I made more. And so, even in this time of COVID, a lot of consumer companies still have pockets of their portfolio where they have too much inventory because they haven’t been able to balance against actual demand.
- Expediting charges where I use premium freight or I airship product is incredibly expensive – and the cost drops straight to the to the bottom line. In most cases where we’ve done studies with companies, half of what people airfreight never even goes out to customers, so it was a complete waste of money.
- Planner happiness. A lot of people are worried about planner burnout right now, especially with all the challenges of this current environment. We have executives that are very concerned about their teams. With Noodle.ai’s technology, it’s not unusual for us to take out 50 percent of the clerical transactional work that these planners do; this allows them to focus more on solving problems and delivering more product, especially in these times, because the teams are overwhelmed, we can make the jobs doable again. The term we use in the supply chain manufacturing world is “value added work.” In the Toyota Production System, there’s this concept of “non-value added” and “value added” work. A lot of clerical spreadsheet work is not directly adding value to the enterprise or customers. We’re able to eliminate a huge portion of that kind of work. My organization was made up of a team of 100 planners, and it took half of the work out. It was that ugly work. So, when you talk about planner happiness, they were a lot happier using Noodle.ai.
Gail: What are Noodle.ai’s products for supply chains?
- Demand Signal AI, which is really a demand forecast. Many planners today are having huge challenges with traditional statistical forecasting tools, and this machine learning tool provides a whole different level of capability, which also, maybe counterintuitively, makes it easier to incorporate human intelligence from people like sales organizations, or customers. So, it’s not just a black box. We see lifts of 5 to 25 points of accuracy on a weekly demand forecast.
- Execution Control Tower (ECT) sits on top of the company’s ERP (enterprise resource planning) system and provides a prediction within the execution horizon (0-13 weeks), and it predicts a) where am I going to go out of stock, and b) where am I going to generate too much stock. That’s very unique, no other planning tool does that. When I can predict six, seven weeks from now, that I will have an out of stock or will produce too much, I can start to get ahead of that today, I can allocate inventory differently, I can make different things in the manufacturing plant – there are a lot of things I can do with that kind of lead time to get ahead of it. In those cases, the benefits we’re seeing are in the tens of millions of dollars. Our predictive models compute something called value at risk (VAR), a financial risk metric, which, in a big consumer company, could be a billion dollars of risk on a 12-week horizon. We help them sort, prioritize and action that.
- Athena Insights is really a BI (Business Intelligence) capability so customers can slice and dice data however they want to, out of the kind of the core AI/machine learning (ML) models that we’ve constructed to facilitate the planning process.
Gail: A lot seems packed into Execution Control Towers. Can you break it down?
Mike: For ECT, there are actually three control towers within this application:
- Inventory Control Tower is used by inventory deployers and managers and focuses on finished goods inventory and “how I deploy it through my network.” A big consumer company could have tens of thousands of SKUs and a global network with 60 distribution centers. This tells the planners where they’re going to have issues and where they need to intervene and change plans.
- Production Control Tower is used by production planners and looks at, “where do I have an opportunity to change my production in the 0-13-week horizon to better optimize my sales results?”
- The Demand Control Tower helps the demand planners understand, “If I’ve had a bunch of spikes of orders coming in, is that something real that’s really changing demand? Or is it something that I that I should ignore?”
Certainly, there’s more to learn about Noodle.ai’s Athena Supply Chain AI Suite, our data science, customer successes and how to get started, within weeks, with Athena Insights. Once you install that product, you’ll realize value in weeks and recoup the cost of your initial investment in three months or less. It’s time to take advantage of all the data you’re capturing to significantly improve your attainment of fill rate and other KPIs. This is possible without major upgrades or overhauls, but rather with Noodle.ai’s surprisingly simple integration on top of your existing ERP and/or concurrent planning tool infrastructure.
To learn how, request a demo with our Noodle.ai Supply Chain experts.