IGP Portfolio Company Leadership Q&A
Algo's Erik Bush, EVP Internal Operations, and Founder of Demand Driven Technologies on the importance of creating customer value and cultivating agility
Meet Erik Bush
Innovating for Agility
You have decades of experience to bring to Algo, spanning your time at IBM and then your leadership as CEO building Demand Driven Technologies (DD Tech). What is exciting you now about the opportunity to bring Algo and DD Tech together? What experience(s) do you expect to call on most?
DD Tech was growing at a healthy rate and becoming increasingly relevant for manufacturers in mid-market and enterprise markets. Our growth was driven by delivering tangible value to clients in the form of improved order fill rates with significantly lower inventory levels. We were winning against well-known competitors but also became increasingly aware that teaming with other innovative supply chain providers would substantially improve our long-term growth opportunities.
I had become acquainted with Wayne Sim, who had previously had great success in building Aucerna into the top supply chain solution provider for the Energy industry. After exiting Aucerna, Wayne was looking to leverage his Aucerna playbook by investing in innovative early-stage supply chain solutions as part of a longer-term rollup strategy to bring differentiated value to the market. Wayne and I have deeply shared views of the need to re-invent supply chain planning solutions, as the existing solutions in the market are based in concepts formed in the early 1970s.
The opportunity to team with Wayne and the team at Algo is a major step forward for DD Tech as it provides a broader market presence from both a geographic and industry focus perspective. Algo has deep experience in forecasting and demand planning in very challenging industry settings. DD Tech is the global leader in the application of pull-flow concepts, and the fusion of these two distinctly different planning approaches will yield significant innovations that drive lasting value for supply chain users.
Supply chain planning has been through enormous disruption — COVID, geopolitical instability, now AI. What's the one thing most companies still get fundamentally wrong about how they plan and execute?
The vast majority of supply chains are managed through the principle of developing the perfect forecast and planning supply based on that forecast. While it seems quite logical, it is based on two very flawed assumptions. The first is that the forecast will be accurate at the item level. In reality, forecast accuracy at the item level is rarely above 50%. The second flawed assumption is that there will be no variation — that every supply order arrives on time and every manufacturing work order completes on time. This is rarely the case. The result is too much of the wrong inventory and not enough of the right inventory.
Companies should embrace the reality that their forecasts will not be perfect, and that they will be impacted by variation. By focusing instead on building agility into how they operate their business, companies will prioritize a different set of actions. Building an operating model that allows companies to pace supply and operations to the actual demand in the market allows them to leverage the most accurate signal of demand.
What words of advice would you have for other founders and leaders building businesses now amid rapid market changes?
My advice is quite simple. First and always, ensure that you deliver true value to your customers. Improve their business through the leverage of your offerings and you'll have a solid foundation for growth. Over time, you'll figure out how to deliver that value efficiently and profitably.