For some people, running a business just comes naturally.
Nader Mikhail is one of those people. By the age of 13, Mikhail was a top salesmen at a local Champs Sports, a job he got by faking his age. In high school, he ran 5 different startups, one of which he later sold when he was 21.
That was enough experience to get him into Stanford Business School right after college. From there, he got a consulting gig at McKinsey, where he spent the next 4 years on its cloud computing team.
But even after all those years running a startup and analysing some of the world’s biggest companies, Mikhail found one huge area that was almost impossible to manage efficiently: supply chain management.
“It was clearly a black hole, like why wasn’t anyone tackling this?” Mikhail told Business Insider.
A fiendishly complicated problem
Most companies that sell physical products have to deal with thousands of suppliers, manufacturers, and distributors.
For example, if you’re an auto manufacturer, you would get the tires from one supplier and the seats from another. Or if you’re Apple, you’ll have to make sure every component is shipped to Foxconn, who will manufacture the iPhones for them, before distributing to the rest of the world.
The problem is when you have that many companies involved in your supply chain, spread all over the world, it becomes extremely difficult to have a bird’s eye view of the entire process. If one of the factories in China gets hit by an earthquake, or if one of the shippers suddenly goes on strike, you could face unexpected delays and a huge blow to your overall cost.
Mikhail says a lot of companies still rely on archaic internal software — or worse, spreadsheets and phones — to keep track of their supply chain, which causes slow communication and lots of inefficiencies. What ends up happening is companies spend millions, if not billions, of dollars building up a massive inventory that will help them last months in case anything unforeseen happens. Reducing the inventory by just a tiny fraction could save these companies millions of dollars, Mikhail says.
“Today, there’s not a good solution to help understand what’s happening with all your partners and where all your products are,” Mikhail said.
Mikhail’s startup, Elementum, wants to solve this problem. Launched in 2012, Elementum sells cloud software that provides real-time supply chain information. It allows all the suppliers, manufactureres, and distributors to be on the same page — and quickly respond to any emergencies when needed.
For example, it lists all the shipping companies and warehouses involved, the materials and products stored, and then combines that with public information like flight traffic or weather hazards to tell companies how to make better decisions on supply chain management.
“It’s very hard for anyone in the organisation to know who needs to know what. What our software does is fill that gap,” he said. “We effectively act as the Waze or the Google Maps of the supply chain, and inform if their shipments are going to be late.”
The next Salesforce or Workday?
If anyone is fit to solve this problem, it would be Mikhail. He spent years as head of innovation at Flextronics, a company that designs, manufacturers, and distributes products for other companies, like Apple, Microsoft, and Intel. It was there that he realised the need for better supply chain management software.
“Sales and customer facing software had taken off with Salesforce, HR and finance had taken off with Workday, but supply chain [software] never took off,” he said.
Flextronics, based in Singapore, was also the first international client of Workday. That relationship has led Dave Duffield and Aneel Bhusri, the billionaire cofounders of Workday, to invest in and sit on Elementum’s board. Yahoo cofounder Jerry Yang and Box CEO Aaron Levie are also investors. Elementum has raised $US65 million so far, and was valued around $US225 million as of Feb 2014.
Mikhail says Elementum has dozens of customers, including Microsoft, Tesla, and Johnson & Johnson. Considering they are multi-billion dollar companies, each customer could generate millions of dollars a year for Elementum, he says.
It’s why Mikhail believes he’s just scratching the surface of what could be a billion dollar opportunity. He sees Elementum doing what Saleforce did in sales, or Workday did in HR, for supply chain management.
“If you’re running a product company, you should be able to run it using 3 pieces of software: Workday, Salesforce, and Elementum,” he said. “Five years from now, people are going to think supply chain is far more sexier than some of the other ones,” he said.
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