Supply Chain Startup: There’s a platform for that - 2

Editor’s note: This is the second of three blogs focusing on software platforms coming out of the startup community.

“If I only had a brain.” The Scarecrow, Wizard Of Oz.

Does the supply chain software space really need another acronym. We’re already trying to keep track of SCM, ERP, SCE, WMS, WCS, WES, LMS, YMS, TMS, ROS, RES, SCV, IoT, AI, ML, BI, SaaS, RaaS and STD – Okay, kidding on the last one to see if you’re reading.

Alex Ramirez and Reas Macken, the co-founders of CognitOps, an Austin-based startup in the warehouse space, argue that yes, there’s room for WOS, or warehouse operating system. That’s their term for something they describe as “a brain for the warehouse.” That’s a cloud-based analytics platform that reaches into the relevant systems in a facility that impact productivity, shoots the data into the cloud, analyzes and crunches the numbers and then sends back a holistic view of what’s happening on the ground to help operations managers make better decisions. “It’s a force multiplier for everyone on the floor,” says Ramirez.

It’s also an example of the trend towards platforms that I wrote about in last week’s blog about SVT Robotics. The companies share a common early stage investor in Schematic Ventures.

“We sit on top of the WMS, WES and other warehouse systems and provide operators with the context of what’s happening across the entire building,” says Ramirez. “That context is the missing link that prevents you from extracting value from a WES and WMS.”

Ramirez and Macken have pedigrees in the space. Ramirez, for instance, has worked in this space since joining Anderson Consulting, now Accenture, out of college, where he worked on a project for Walmart.com. From there, he worked for HighJump Software, now Korber. In 2009, he joined Reddwerks, then an early entrant into the WES space. He was CEO when the company was acquired by Dematic in 2015. At Reddwerks, he worked with Macken, who led sales, product and professional services teams. The pair remained with Dematic until 2017, “and then we went on our individual walkabouts,” Ramirez says.

In 2018, he and Macken attended a startup pitch, a sort of Shark Tank meets Paris Island boot camp meets Comedy Central Open Mic Night for budding entrepreneurs who are sometimes booed off the stage. Some of the presentations were unmitigated disasters, but there was an energy there that the pair wanted to tap into. “We decided to get together and put ideas on a white board,” Ramirez recalls.

They thought back to their experiences at Reddwerks and asked: Why, after putting in all this automation and software, do warehouses still underperform? When I do something in the WMS, what kind of impact does it have on the WES? And, when I do something in the WES, what happens in the WMS? “What we concluded is that all of those systems were operating in silos,” Ramirez says. “They optimized their area of control – at Reddwerks, we were delivering value in what we did – but when you took a holistic view at the end of the day, the buildings weren’t getting that much better.” They also realized how many of their old customers were trying to solve that problem manually by importing data into Excel spreadsheets and making educated guesses. “They never got real-time feed back or predictions of what was going to happen,” Ramirez says. “Excel couldn’t tell them to move labor from one area to another to balance things out. They needed an instruction booklet on how to best operate the building.” 

If only the warehouse, like the Scarecrow, had a brain. Enter CognitOps, and the concept of the warehouse operating system, or WOS, that acts like the operating system on your computer determining the right resources you need to best run an application. “We take data from silos, centralize it in the cloud, provide analytics, complement that with a prescription and then forecast what will happen if they don’t perform the corrections,” says Ramirez. The company raised its first round in 2018, brought in a chief technology officer and chief data scientist and was underway. CognitOps’ first customer was Sephora, and it closed some other deals in 2019.

“We had momentum on our side until COVID hit,” Ramirez says. “And COVID has increased it.”

Earlier this year, the company went back to the venture capital market for a second round, unsure of the reaction given economic conditions. “To our surprise, we were over-subscribed” Ramirez says. This week, CognitOps announced that it raised another $3 million in a round led by Chicago Ventures.

His biggest takeaway so far. “We realize that automation is important, but at the end of the day, there are plenty of opportunities to leverage a company’s current infrastructure and drive improvements,” Ramirez says. “There’s only so much magic you can get out of a business system. If we can manage buildings better, then we believe we’ll be the platform of choice.”

SCMR’s Supply Chain Startup Blog is published every Friday. If you’re a startup, a venture capitalist or a supply chain practitioner working with startups, and want to share your story, or have startup news to share, email me at [email protected]. Remember that the purpose is not to promote any one firm – and a blog shouldn’t be interpreted as an endorsement of a firm or its technology. Rather it’s to start the dialogue between me, my readers and the people creating the NextGen Technologies that will power tomorrow’s supply chains.