[A version of this article appeared in the Jan/Feb edition of DEMM Engineering and Manufacturing Magazine]
Inventory forecasting software StockTrim is finishing 2020 having proven itself effective in a year which tested supply chain resilience.
The dour year was reflected in the Emerging Out of the Pandemic Supply Chain report from Reuters and CalAmp. Published in July during the peak of COVID-19 lockdowns, the report called demand forecasting software “critical,” noted that Just In Time lean inventories came at the cost of robust supply chain management, and found costly consequences and supply chain bottlenecks were occurring where businesses failed to match siloed data between sales, operations and inventory.
“If the pandemic has shown us one thing, it is that those unwilling to embrace digital technologies must rapidly change their outlook, before it is too late,” report author Jeff Newman found.
Any wholesaler using inventory forecasting software like StockTrim would have found 2020 a lot easier.
By the time COVID hit, the inventory optimisation software-as-a-service had been available for three years, picking up followers worldwide.
Integrating with stock management software partners Cin7, Shopify, Unleashed, TradeGecko, MYOB and Xero, StockTrim looks at past stock behaviour and future demand to help wholesalers save money.
StockTrim was designed by NZ software engineer Paul Simpson and launched in 2017.
Simpson, who had worked for corporate IT companies such as Datacom, realised there was a market opportunity for a SaaS which would plug into inventory management systems, meet lean manufacturing needs and solve the problem of poor stock-buying decisions.
“Where I worked, inventory planning was a manual process – people were painstakingly bringing up sales reports or doing guesswork,” Simpson says. “I thought it would be really good if a system could use a machine learning algorithm to read through the data, make sense and tell you what to do.”
“Over time it learns the best factors that predict demand for every individual business.”
Users simply connect their inventory data, then StockTrim provides analytics to save money and eliminate human error. The result: Trial customers in a range of countries are reporting savings of up to 40% of working capital.
This is because customers told Simpson from the get-go exactly how much stocking mistakes were costing them. A survey of trial customers found $NZD 750000 p/a average over-stocking for each business (working capital which could otherwise be saved) and $NZD350000 p/a average under-stocking (risk in missed sales – sum of margin for each item).
Looking at the numbers, Dom Sutton was convinced inventory forecasting SaaS had a bright future and joined Paul as co-founder in October 2018.
Sutton had formerly owned an importing and wholesaling business and learned first-hand how much Slow and Obsolete inventory (SLOB Stock) can cost.
“I lost $1.2m by not using a $4-a-day inventory planning software,” Sutton says. “I bought a struggling toy business that, on the surface, looked like it had a lot of potential. But only two years later, I was forced to sell it at a fraction of what I invested. There was stock sitting in the warehouse that had zero chance of selling. I had to use the business’s cash flow to pay for the junk stock and I was forced to keep reordering products because we always had to have new toys on the shelves.”
Sutton urges any business sitting on stock in 2021 to run their numbers through inventory forecasting software.
Simpson and Sutton are today 50/50 partners. With sales increasing in the US, UK and Australia, StockTrim spent 2020 completing a capital raise and heads into 2021 with plans to scale up, saving thousands for businesses worldwide.