Many Logistics Firms Can’t Afford the Software to Manage Their Supply Chains, So These Founders Built It

Did you know that Apple sources parts from over 200 manufacturers to assemble just one iPhone¹? The parts ship from all over the world: South Korea, China, Taiwan, Germany, Japan, India, and more. And Apple isn’t the only business with such complex supply chains.

Akhil Oltikar created his affordable supply-chain and logistics management software, Omnics, after working for over twelve years at one of the world’s biggest electronics suppliers. While there, he managed supply chains for global hardware businesses like Apple.

Akhil noticed that small-to-medium-sized businesses couldn’t afford the same software that the likes of Apple used to manage its supply chains. Despite manufacturing products equally as complex, these smaller companies had to use spreadsheets to organize global shipments.

After years of observing this problem, Akhil took action. He joined forces with the team of programmers and designers he’d worked with across multiple companies and pitched a business with no product to their professional network. Dozens of businesses agreed to trust his industry experience, paving the way for affordable supply-chain and logistics management software.

Today, Akhil and his cofounder and CTO, Matvey Kazakov, run a 13-person team and earn $600,000 ARR. Omnics has grown roughly 82 percent annually since inception, not including a massive 300 percent spike in 2021. I spoke to Akhil about how he continues to grow his business slowly and sustainably and how other founders can emulate his success.

How Corporate Supply Chain and Logistics Works

In 2001, Akhil was helping establish the Finnish startup Remix Oy’s North American operations in New York. In the same year, Remix Oy was acquired by Flextronics (now Flex), a tech solutions company out in San Francisco.

For the next twelve years, Akhil worked in a corporate role at Flextronics, first as a Product Manager at an internal supply-chain business called SimFlex Group and eventually as Senior Director. Here he met his future cofounder, Matvey, a fellow Project Manager in SimFlex. By the time they left the company in 2014, Akhil was helping improve the supply chains of Blackberry, LG, Huawei, HTC, and Google. Matvey was the R&D director.

While at Flextronics, Akhil and Matvey noticed a problem: Smaller hardware companies struggled to manage their supply chains and logistics, mainly because they couldn’t afford the right technology. 

“We had the privilege to work with big names like Apple and Cisco,” says Akhil. “They can spend money on complicated solutions. However, SMEs and hardware startups don’t have the budget or the time. They were falling back to spreadsheets.”

A Flextronics industrial plant

Akhil believes that’s a sure way to lose data and insights into your operations – research has shown almost 90 percent of spreadsheets contain errors². 

“Spreadsheets are manual, cumbersome, error-prone, and time-consuming. I realized we could provide simple, affordable solutions to these companies,” he says.

The cofounders knew they could find clients among their contacts from their long years at Flextronics. They also knew where they could find top-notch software developers: Akhil’s team at Remix Oy followed him to Flextronics and worked alongside him for twelve years. He invited them along again for a new project and they agreed.

Once Akhil had assembled his team, the only thing left was to create a product. Rather than build a prototype, Akhil and Matvey asked their existing network if they would be interested in the product first.

“The team already had a certain reputation,” says Akhil. “We built many of our relationships with our clients from our professional networks. We did not have a product to show our first customer, but we showed them our vision and then they got on board.”

Bringing Order to the Chaos of Supply Chains

Akhil says the average consumer is unaware of just how important and complex supply chains are for businesses.

“Supply chains affect everything around us. You are wearing headphones – those have a supply chain. We are using computers – those have a supply chain. The coffee we drink has a supply chain too. Every company needs supply chains and supply chains need planning. That planning has to be done quickly, easily, and intelligently in terms of what to order and where to place the inventory.”

Right now, everything in supply chain and logistics is siloed and not talking to each other. Soon everything will turn into a huge digital network.

Complex products like iPhones and drones require a staggering number of operators who need to communicate with each other to assemble a finished product. At the same time, when these products are technologically complex, there is less room for error. 

“Right now, everything in supply chain and logistics is siloed and not talking to each other. Soon everything will turn into a huge digital network. That’s what we’re going towards,” says Akhil.

Omnics tries to solve information silos with simple, affordable, and flexible supply-chain software. The result is a system that can plug into each component of supply chains and give customers a bird’s-eye view of their operation.

“We help them figure out things like their demand forecast, inventory supply, and where they should place their inventory. Considering all that has happened to supply chains in the last two or three years, we also play with different interruption scenarios.”

After a company signs up for Omnics, it integrates into every part of its supply chain. That includes entities like factories and last-mile providers. Omnics even integrates into enterprise resource planning (ERP) software so it can tie supply-chain issues directly to transaction data.

“For example, Omnics might see that at this particular warehouse of a tech company a certain chip will run out of stock,” says Akhil. “If they can’t meet demand for that item normally, Omnics might suggest that they expedite their next shipment using air shipping or transfer it from another warehouse.”

How Omnics Creates Affordable Software

Omnics has two major revenue streams. Currently, they charge a base fee for implementing their software and then a small monthly subscription fee on top.

“Every time a customer implements a module there is an implementation fee because we have to come in and hook up everything to the backend – that can take six to eight weeks and though it’s non-recurring revenue, it is pretty good money for a startup. Last year was $850,000 in total revenue from implementation fees alone. Once it goes live, the monthly fees start.”

As a software solutions business, Omnics has unlimited upside potential with add-ons, upgrades, new tools, and features. “We have built the Omnics platform like a Lego kit,” says Akhil. “There is an upsell opportunity with every customer. If they see the value in what we do, they’ll ask for another brick to tackle another part of their supply chain.”

However, even though Omnics is highly customizable, Akhil is careful to qualify they are not a solution for every problem.

“There are cases where customers ask for certain things and we tell them that’s not what we’re here for. We’ll recommend they go somewhere else. Software is not an end, it’s a means to an end. You don’t buy a drill just so you can have a drill. It’s for making a hole. You’re not just implementing software to use software. You need to have a reasonable goal as well.”

As you might expect from COVID, Akhil claims Omnics has done exceedingly well – especially considering they only have eight customers. “Last year (2021) we grew 300 percent compared to other years. I think there will be more growth but not necessarily at that level. We aren’t trying to grow super quickly. We currently average 82 percent average growth year over year.”

Don’t Build a Company Just to Get Investors

Besides creating a groundbreaking supply-chain product, Akhil has also built a system to hire better talent: a specialized internship program in partnership with local universities.

“We are tying ourselves up with academia,” he says. “We believe that’s where the next generation is coming from. Some students come in with internships and then if they like us they join full-time. Professors in San Diego and Washington send people over to us.”

For other founders, Akhil’s number one piece of advice is to stay focused on solving problems – not finding solutions to problems that don’t exist.

Don’t think about building a company for investors. You’re building for what you believe in.

“After 20 years I will never say I know everything about this, but we started with the problem. Don’t think about building a company for investors. You’re building for what you believe in. 

“The second thing I’ve noticed is people at startups focus so much on daily tasks they don’t step back and think about their mission. The third thing is you should create an operating structure that adapts to market changes. For a few months during COVID, we thought things were going to end. The way we set up our company let us adapt very easily.”

Akhil’s success is largely from his ability to spot a target market few others could see. By working at a top enterprise, he identified a small but growing group of tech companies unable to buy the best services but too big to use those that startups used. That led him to achieve two goals every founder wants: a great price point and very little competition.

References:

¹https://gesrepair.com/where-are-iphones-manufactured/#:~:text=More%20than%20200%20companies%20around,need%20to%20produce%20the%20phones.

²https://gesrepair.com/where-are-iphones-manufactured/#:~:text=More%20than%20200%20companies%20around,need%20to%20produce%20the%20phones.


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Andrew Gazdecki
Andrew Gazdeckihttps://microacquire.com
Andrew is an award-winning serial entrepreneur with three exits. He’s the founder and CEO of MicroAcquire, the world’s most founder-friendly startup marketplace, and its rebellious child, Bootstrappers, which gives voice to the entrepreneurial underdog. When not building businesses, he writes for Forbes, Entrepreneur, and now, Bootstrappers.

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