The Cereal Entrepreneur
In this episode, Anna Flockett interviews Alan Holland, the founder of Keelvar.
Sitting behind the supply chains serving many of the larger companies supporting the NHS, supermarkets etc. is Keevlar - a SaaS vendor leading a new category of Sourcing Automation for Procurement and working with the world's largest enterprises in achieving best practice at scale.
They will discuss how COVID-19 has affected the supply chain, and how it has pushed Keelvar to rapidly develop and minimise lead times. Looking forward to a new era they will discuss the emphasis of top software tools and how AI & automation has affected these supply chains.
Anna Flockett0:01
serial entrepreneur.
Hello, and welcome to another episode of the serial entrepreneur brought to you by startups magazine. My name is Anna Flockett. And I will be your host. And in today's episode, I will be chatting to Alan Holland founder and CEO of keelvar, a strategic sourcing automation software company that is actually using AI to help suppliers in the middle of the COVID-19 crisis. keep up with demand, as Keelvar assists with procurement through sourcing bots, and who can identify where to find additional resources in just minutes. So very useful currently. Allen is very exciting to have you on the show, first of all, welcome and thank you so much for joining me. How are you?
Speaker 10:49
I'm very good. pleasure to speak with you, Anna.
Anna Flockett0:51
Thank you very much. So I thought today to start with maybe we could just talk a little bit more about Keelvar in general and what you guys do day to day,
Speaker 11:01
Yes, Keelvar we're an Irish headquartered software company. And we're focused on software as a service for procurement and supply chain. So we work with large companies, we see various industries, from food to pharmaceuticals to automotive, and they're all battling different challenges at present.
Anna Flockett1:23
Of course, and where did the idea for keelvar come from?
Speaker 11:27
So previous to my current role, I was a lecturer in artificial intelligence in University College Cork, and I specialised in optimization and Game Theory. So I was looking at trading agents and software systems for improving economic efficiency in internet environment. So, we were building bots for automation of negotiations and the optimization of supply chain in industrial settings.
Anna Flockett1:56
Oh, cool. And when was it that you then founded Keelvar that you then went and took the step and decided to...
Speaker 12:02
So yeah, when I was working in university, I was often approached by various organisations to help them with some challenges they may have had in their supply chains. And we had my various consulting projects. And over a period of time, it became obvious there was there was a market need for more advanced tools to help big companies manage sourcing challenges. So, sourcing or strategic sourcing is when you're going to market for and you're buying a large number of items or services across numerous regions or countries. So if you've got a large spend volume, then it's good to have advanced sourcing tools to help you negotiate good deals and win win deals with suppliers.
Anna Flockett2:52
Of course and how many people are now on your team how you got from when it founded to kind of where you are now.
Speaker 12:59
We have itteam of about about 35 people in total now and we're adding new people all the time. So we have several open positions. And I think by the end of this year, we'll be at 50 plus team members, maybe 60. Even.
Anna Flockett3:13
Wow, that's really, really exciting. And so can you tell me more about the technology and the AI that you use within the company? How does it How does it work?
Speaker 13:23
In short, when, when a big company is going to market and if you're buying goods or services, you're going to have 10s, or hundreds of suppliers offering different things and they want to package things up differently and they want to share their constraints. They want to offer you conditional discounts and winner determination problem in that setting is quite challenging, because you've got to look at what combinations of suppliers you have small, medium and large, you can piece together. So the algorithms for just finding efficient allocation are challenging. So that's why very few software companies can support highly complexed sourcing projects and a our software, our first product was a sourcing optimizer to help big companies manage big sourcing projects. But inevitably that type of kind of advanced sourcing too. It's like the F 16 fighter jet or V sourcing. It's highly complex. And it's more difficult to fly because it needs experts to manage sourcing optimization. So our second product was sourcing bots. These would be software bots, in place of human users to run your negotiations. So what we're arguing is that instead of having a human sitting into your F 16 fighter jet, you now have a robot fly it faster, and it's a step change. It's quite a radical change for organisations. A just considering having a software bot replace a human in buying activities. That's what's changing.
Anna Flockett4:58
Of course, and have you had more many people, you know, there's the whole argument within the industry. They're the robots are taking over human jobs, and they're like putting us out of work. Have you had this conversation and this argument with quite a few customers or people in the industry?
Speaker 15:14
Absolutely. That comes up all the time. I'd say that that's becoming a more frequent aspect of our day to day conversations with companies, there's some people would have a fear that is taking is going to take away loads of jobs, and others would see it as an opportunity to have people who are presently overworked focus on activities that machines can't do. There are many things machines will never be good at and humans will always be better at and what we tend to say to our customers is that the work that's to be automated is the type of work that your employees tend not to like doing anyway, because many much of it is operational. It's data manipulation and It can be time consuming, and you're cleansing data Or you may be going through predictable processes, generating the same type of reports, or you know, a things that can be automated probably should be automated. But then other activities like relationship management with suppliers, you can never have made that. And there's rarely enough time investors in bending time to speak to suppliers about what they're innovating terms of product or service development. And if you can understand that better, then you may be well placed to take advantage of some of the added value suppliers can offer. Although the nature of procurement is going to change radically, it's for the better and we don't forecast actors mass layoffs and procurement instead, the nature of the jobs in procurement and supply chain will change for the better.
Anna Flockett6:56
Of course, so it's more like a change of job rather than a loss of job?
Speaker 17:00
Completely and this kind of the skills that require human empathy are going to be come very valuable skills, we're not arguing for a second that relationships are going away. In fact, I would say relationships will become stronger. Because much of the operation or the ad hoc tactical buying will be automated, but strategic negotiations because people working in procurement, a lot of their time will be saved, they will have more time available to actually sit down and talk to suppliers about problems they've had in selling into these bigger organisations, and what new offerings they're planning in their r&d, and how that could help them and as an organisation, because that kind of stuff, it gets left until the very end because most big companies that have to do the operational stuff, they're always firefighting, most of their teams are firefighting all the time. Just getting getting goods and services through an organisation to the people that need them within their organisation. Much of what they're doing there can be automated.
Anna Flockett8:08
Yeah, that's a good thing about the industry that you guys are in. And it's really interesting to see because working with a lot of startup, I have a particular interest in like the engineering and manufacturing and automation, but you don't tend to see very many startup companies coming through in these industries. How have you found it been a startup within this sort of industry? And do you see many other companies starting up and coming through as well?
Speaker 18:33
Yeah. I think the key for startups, your initial market, you serve within these big companies may not be a huge target market, but that's okay. Because you want to get your foot in the door. So you find a niche where you're the best in the world at that niche and they feel they really need you for that. Most big companies have a reluctance to to increase the number of suppliers they're dealing with. There's kind of a natural reluctance on there part to do so, so in our case we focused in on sourcing optimization, which is, I would say the most challenging type of software to develop for procurement because it deals with managing extremely large projects could be 10s, or hundreds of thousands of line items, you could have hundreds of suppliers are bidding on different combinations. So you've got to have a background in advanced optimization to be able to create mathematical models and allow scenario analysis and optimization and based on different objective functions and so on. So you kind of have to come from an academic background just to get into that niche with the the addressable market there may not be huge because it's only the biggest companies would use that software for kind of between 10 and 30 sourcing projects a year so that once you develop a suppose a reputation then and you become the best in the world at that at that specialisation you gain trust, and customers are then open to listening as to what could I do? What else could we do for them? And when we proposed, you know, many of our customers would it would have said, Well, we can't deploy optimization very widely, because we couldn't possibly train up hundreds of users to use this very advanced type of software. And we agreed, and we said, we're going to approach it differently. We're going to build sourcing paths that will fly this on your behalf. And we've talked to you and talk to your experts about how we should automate different categories that have never benefited from optimization before. So there's a kind of completely new type of software solution. And all our existing customers, you know, Coca Cola is to Siemens and BMWs and, and so on. They all said, Yeah, sign us up. You guys have done great work for us with your first product. We are very open to listening to what you can do with your second product and it sounds like you could be even bigger opportunity. So it's about baby steps. You know, you don't you don't try to land into big enterprises and solve all their problems at once you pick up, pick off a subset and make sure you're the best of the best at that and have patience. You know, don't don't rush it, you have to build trust over, it's over a few years and then grow from there.
Anna Flockett11:19
So of course, and leading on for that you touched on it slightly. But what I've been the main sort of challenges that you've faced along the way?
Speaker 111:26
the main challenges, I would say that biggest challenge initially was just getting known getting a first big customers that kind of had to when you're starting out and day one, you don't have much to show, right. So there's no point in hiring or investing heavily in sales. You kind of got to do the sales yourself first. because inevitably, you're going to market and you're selling yourself more so than your software product because the product is just not there yet. So you've got to be willing to sell professional services coupled with a software product, there might be no user interface in the software product might be a back end kind of just an engine that you can use when coupled with consulting work that you can deliver value. So in our case, that was our approach to things that we sold professional services coupled with a software solution, and had that morph into a self service solution over time, for every company, that kind of iterative cycle is different. And you got to find the path and the steps that work for you. But in our case, that's what worked.
Anna Flockett12:35
Yeah, definitely. And do it in the right order, of course. Well, I guess with the current situation like the COVID-19 crisis, there's no sort of planning or right order to do things in and I believe that you explain to me the businesses that are able to survive in the current climate, those that have agile responses and sourcing automation is one of these things that allows businesses to quickly respond in short alternative supply faster than competitors, for example, so how has Keelvar and sourcing automation in general helped within the crisis?
Speaker 113:11
Yeah, so this crisis is causing a bit of chaos in various markets. You know, you just yesterday we saw how oil prices have turned negative. The similar chaos in logistics markets a market for air, freight, ocean freight and road freight, they are extremely volatile. And what we're seeing is we deal with big blue chip companies who normally what, what they do on an annual basis is they lock in rates. So they might have $5,000 in destination pairs for let's say, their ocean phrase or their air phrase. And when they need to move goods there, they just draw down from a rate card. But now what they're finding is that those rate cards they negotiated in these annual or multi annual deals, they're not being honoured. Everything is turning to the spot market. But that that's very difficult for a large enterprise to to just try and manage the high volume of spark buying they need to do now, Do we try and move air freight cargo from Brussels to New York? Or do we send the by road to Paris and go by Paris to Boston and by road from Boston to new, so you have all these routing considerations and as well as pricing considerations and supply chains are somewhat chaotic. And the nature of the difficulty for you depends on whether you're a food company or an automotive company or pharmaceutical or medical device company, that you need to prioritise different things. And if you're selling COVID-19 test kits, then your speed is of the essence or if it's PPE, you know, speed is also of the essence. But if it's grain, then you know, it's it's more price oriented. So, so having soucing bots that can go to market and Hoover up more information and make the assessments based on algorithms that you give to the sourcing bot. You know, you specify the algorithm for deciding what a good solution and how you want to balance, price versus speed, for example, and the bot will negotiate on your behalf by putting out requests to market asking for the best offers during this scenario analysis reporting back this is the best scenario and asking for approval. If you have a source in bottom place, you can delay factor that's occurring in procurement just to just to buy the transportation service to get your goods from A to B, you kind of removing that because the bots can do it 10 times faster, and they can find find better deals as well. So the agility that sourcing automation is bringing to some of our customers who are in the pharmaceutical space and if space ducts proving extremely valuable to those and retailers another.
Anna Flockett16:06
Of course, yes. And I guess people don't really think about it like when you think now of Covid crisis, you kind of just think the NHS and the doctors and the nurses. But this is just as important to get things to them and to get food to people. And like you said, like test kits and stuff. How important is this sort of technology and this system working for us right now?
Speaker 116:28
Yeah, no, it's actually sitting behind your supply chains. And many of these companies who are serving the likes of the NHS, or tesco's, or your hardware store, that many of the companies who are manufacturing the goods, or even transporting the goods, or warehousing the goods are relying on sourcing automation to dynamically re orchestrate their supply chains according to day to day market conditions. So your decisions that used to be taken on a, let's say, an annual cadence, or even slower are now happening on a weekly or daily basis. Things are changing so fast. So kind of lives depend on it. And I would say that's it's that important.
Anna Flockett17:18
Yeah, definitely. Especially when the whole COVID-19 thing first broken, everyone just went to the supermarket and bought every single bag of pasta.
Speaker 117:27
Yeah, that's it. And that causes these kind of ripple effects, then up up the line, and his supply chains haven't been used to that type of disruption. And it's still the case you just see you see feeding through now to oil. That's that's the latest example of a commodity that's, that's going to have knock on effects into renewable energies as well. So there's all of these primary effects and then secondary effects. You know, we'd have customers in the oil and gas sector but also customers in the renewable energy sector, and they're all being affected in different ways.
Anna Flockett17:57
Definitely, and I guess you've touched On this slightly, but are there any other advantages that you can think of that sourcing automation presents to businesses that we haven't obviously already covered, maybe more of like a general life as well as obviously the COVID-19 crisis situation.
Speaker 18:13
Another good example is that some of the large fmcg companies are reliant on outsourced service providers to run tactical buying, and they're very often offices with several hundred personnel working in close proximity in in Eastern Europe or Asia. Typically, a lot of those shared service centres have been shut down because just as in call centres, you can't be working in close proximity. But in some of those countries, there isn't necessarily broadband as well. It's a procurement operations itself have been a detrimental. It's been very badly hit by this pandemic. And there's a sudden kind of realisation that it was a weakness in the whole system is having in large numbers of people working in close proximity in these types of shared service operations and the nature of BPO is going to change. And business does business process outsourcing, we would argue Akira that sourcing automation is going to radically change how BPO is done. And there's going to be more coupling of human plus machine type of operations, where there's going to be a smaller number of people working in those type of environments. But that'll be working with bots, the bots doing much of the heavy lifting there. And then back at HQ, in many of these enterprises, there will be more people recruited to do doing supplier relationship management, or training AI systems to continuously improve. So the nature of that work in procurement is changing radically,
Anna Flockett19:52
Of course, and have you guys personally at Keelvar had to change and adapt in the sense of like remote work in cell phones. has it affected your business in any way?
Speaker 120:02
Or do you think we're, we probably aren't in terms of the spectrum of those heavily affected those least effectors, we're closest to the least effectors. As a software as a service company, we're lucky that we can do all our work remotely, all the tools we use are all in the cloud, the product that we're building is hosted in the cloud. So we can continue working from home and I would say nearly one quarter to one third of our staff were all working from home before this crisis ever started. So now it's 100% working from home, and I would say it's it functions it functions fine. It wouldn't be my preference in the long run. I think that there's a lot of benefits and you know, softer information that's shared when you're in closer contact, and some of that will be missed, but I suppose we're doing our best to ensure that we have good daily sync ups and good Turning to communications. But we're very lucky in that respect and and others are faced bigger challenges.
Anna Flockett21:07
Definitely, and is it fair to say that the last two months have been a lot busier for you guys and with the wholesale sourcing bots and sourcing automation process trying to help the companies? How would you describe the last two months or since it all kind of blew up? How would you describe the experience for Keelvar?
Speaker 121:24
Do it it's the first time we've had very large enterprises turning around to us and saying, can we get a bot up and running within the next week for this category and usually, these big enterprises that we serve the tend to be in the fortune 500 they never aim to do anything within a week you know, that's almost like completely unrealistic timescale and their view No, it's it's achievable. Because nature of SAS, these days, things are can move much faster. But up until this crisis, we've always been the ones telling our enterprise customers, look, you can actually do things much faster than you're used. In bygone days, and it's always been us pushing them. And now it's turned around and they're saying, Look, guys, can we have this up and running next week? So they're actually starting to push on us and say, Okay, can we do it even faster? And so I think that's, you know that that's good for us because it's kind of it's pushing pushing us a bit to to get these solutions out there faster. But yeah, and that is like sectors like food and pharmaceuticals that have that real urgency to, I would say, rapidly evolve now.
Anna Flockett22:30
Of course, and obviously, it's kind of pushed you or excels you guys in a way, what do you have planned for the future? I guess, short term for the the rest of the crisis because it's unknown when it will technically finish and I you say it'll have a ripple effect. So even when the COVID-19 crisis kind of starts easing up? The ripple effect, I guess, will still continue for the industry for a little while?
Speaker 122:53
Absolutely, I think that the world has changed and we won't be going back to the previous Normal, I think we're entering kind of a new era of deglobalisation where there's more barriers to travel, there's more barriers to working together in close proximity. city centres won't be as busy as they used to be. And there is an emphasis in this new normal of working with the best software tools you can get your hands on, because that is becoming the critical differentiator between those that adapt quickly and survive, versus those that lack agility and could die,
Anna Flockett23:32
Of course, and will it affect you guys like long term after the crisis? What do you think you have planned for the future in that sense?
Speaker 123:39
Yeah, it will. It will affect us to you know, just before this crisis started, we were looking at new office space in Cork, and I think we're reassessing our plans completely now, I wouldn't say we have a clear plan, but I think it's whatever we come up within the next two or three months it will be very different to what we had anticipated, just in February this year. So think we'll be looking at a situation where a higher, much higher percentage of people work from home, that option will likely be there for everyone so that it wouldn't feel right ever compelling people back to working in an office situation, if they felt uncomfortable on health grounds reasons, you know. So that's, I think that every business is going to face that challenge. Now, as people are working from home some some people prefer it, some people don't prefer so I think it will be more options embedded into kind of employment and working arrangements. And employers need to become more flexible to accommodate. So yeah, there's a new normal. No one can say for sure what it looked like. But I think this pandemic it's not going to go away quickly. We're going to have it this year for at least and how much next year we don't know. I just don't know.
Anna Flockett24:55
The unknown really, isn't it? Scary? Well, fun. My last question to you that today, Alan, would be do you have any advice for other startups that could be, you know, in your kind of industry of the sourcing and automation area or just in general to startup founders? Do you have any advice for anyone else out there?
Speaker 125:16
Yeah, I would say you know, set your ambitions appropriately in year one. So you know, set give yourself goals that are achievable, and find a way to incrementally build from those you know, your longer term strategy needs to be be focused on a reasonable target objective in year one, and something you can build from and know your target market. You know, what, what is the type of company you want to serve, and be willing to turn away those who don't fit the bill or aren't part of a coherent plan. That's one thing where I'm glad we did do is actually know our customer, I know who's not our customer, because sometimes you will get approaches from businesses who are asking you to feel that small Companies will bend and adapt what the product they're building to suit a company's needs. And sometimes bigger companies try and influence product roadmaps too much. So you do have to know what you're willing to bend to accommodate, and what you're just not willing to accommodate. Because it's not part of your strategy is different for every company. But that important thing to try and stick to
Anna Flockett26:23
Definitely, kind of like staying true to yourself?
Speaker 126:26
Yeah, absolutely. Because then it becomes somebody else's vision, right? It's if somebody is trying to persuade you that you should build this or that and it suits their their company's needs as a customer. Well, how do you resell us to others? You know, is there a large enough addressable market to make that attractive for others don't let others drive your roadmap too much. You've got to take a view of the market itself and find what each customer you know what you could build for that for them that you could sell out for right and that's that's the key and then you try to try and keep all your customers happy as long that path you doing it. So if you do take onboard customers that you feel their intrinsic needs are just too different from your other customers in your cohort, then you're facing big challenges and you're going to be to the work you're doing, you're getting too stretched, and it won't work for anybody, including yourself.
Anna Flockett27:18
I couldn't agree more. That was really insightful. Thank you. Thank you, Alan. And thank you for talking with me today. It was great to learn and expose more the other industries that are helping the COVID-19 crisis and how everyone's pulling this in together.
Speaker 127:32
Yeah, there's one thing I forgot to mention is that we're going to be hosting contests later on this year where we're going to have a human plus machine contest where there's a bath, we compete against a human experts buyer. We'll be posting something about that in the coming week or so. And we'd be inviting people to join a live streamed contest where we'll have Garry Kasparov as a guest speaker, we would see this contest as a sequel to Kasparov versus Deep Blue in chess, but for real industrial setting.
Anna Flockett28:00
Wow, that sounds amazing. We'll make sure to keep an eye out for that.
Speaker 128:03
Yeah, we will have to post a post up about that in the next week or so.
Anna Flockett28:06
perfect. And I will make sure that we share it for all our listeners and readers to be exposed to that as well. Well, thank you so much, Alan, for finding the time to talk with me today. It's been a really interesting conversation. And thank you very much.
Speaker 128:19
Thank you. Bye for now.
Unknown Speaker28:23
serial entrepreneur.