Arelion: “We Believe In The Power Of Our Technology!”

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Arelion's new kind of optimization software has helped big players to save time and money. Business Development Manager Markus Fochler explains how it works. Learn more:

Describe Arelion in 50 words or less.

Arelion has developed a new kind of optimization software to optimize plans along the entire supply chain.
Optimization sounds like mathematics. But that is not our world. We are software engineers. We do it quite different. Nonetheless our technology really rocks!

Why did you decide to pursue your own dreams rather than someone else’s?

To be honest it wasn’t our dream! It just happened. Since several decades there is a research cooperation between Siemens Munich and the Johannes Kepler University here in Linz, Austria. 2001 Siemens said, that they want a new, powerful, self-learning optimization engine to deal with complex and dynamic data. It should be easy to use, very fast and quality of solutions should be high. At that time optimization tools were impractical. Until 2010 we developed our new powerful optimization engine, the Arelion Optimization Core (AOC). Siemens gave us the chance to market the new technology.

Describe your typical working day from coming to the office to leaving it.

I start my day between 7:00 and 8:00 a.m. with reading emails and industry news in the office. I try not to do that at home. Then I schedule my sales and partner activities for the day. Normally I make a plan for the next week each Friday. Countless urgent tasks have to be done in the meantime, e.g. reviewing documents or supporting our marketing department by extracting email addresses out of our CRM for newsletters.

Unfortunately I have to do also unloved stuff, e.g. documentation for our existing investors. But the most popular work is to write invoices. A normal office day ends at about 5 p.m. To chill out in-between I take  10 minutes of training time every day to beat my Rubik’s cube record of 2m 40s. In January we got our newly designed cube. The new one is more difficult than the old, so I got quite a challenge going.

7 years from now: How did your startup change the world?

Three things are important to us:

  1. Users should recognize that optimization is not equal optimization. There are so many suppliers on the market (WMS, MES, APS…), even big ones, who tell their customers that they can optimize their plans. In truth they even scratch the surface of optimization with their “non-intelligent” optimization algorithms. They provide a valid plan; additionally they implement some standardized optimization algorithms (e.g. forward scheduling) and say to their customers that is optimization! But that’s not true. With an intelligent optimization algorithm you can go much further. We have invested approx. 30 man-years of R&D into the AOC. Where common optimization ends, we start our work!
  2. No planer should have the idea to take an algebraic optimization tool to optimize complex, dynamic data. It is waste of time and the results will not be good enough.
  3. Integrated planning (2 or more plans at the same) should become standard. It doesn’t make sense to optimize only my production planning. It is necessary to optimize my entire supply chain, e.g. also my warehousing, my transport routes etc. to find the best solution for the entire company. Classic algebraic optimization methods couldn’t do that. This is a very complex task and takes a lot of time. It is uneconomical. We have the tool to do this.

In what ways do you measure your success and how do you make sure you don’t lose track?

In speed and in cooperations with established market players!

ArelionOur first customer in the field of integrated duty and block planning for busses needed more than 330 hours to calculate a block plan and then a duty plan. He used an algebraic optimization method from a very well-known big international company. Now, with our optimizer he needs only 3 hours to calculate both plans after pressing the start button. Not bad, right?

To sell licenses we are dependent on our customers (ERP, WMS, MES… producers/system integrators). We have screened the market players in the above mentioned sectors and are talking to them or will talk to them. No one has a comparable optimization algorithm inside his software. That makes it very easy for us to be better in a first benchmark.

Already pivoted? Did customers use the optimization plans like you imagined it in the beginning?

Yes, they do. But they have also new ideas for using the AOC. There wasn’t any strange optimization request yet but we’ll see what the future brings 😉

Bootstrapped or financed: What fuels your startup now and what will in the future?

Financed! Siemens Technology Accelerator is our main investor since the beginning. We received seed financing from the Austria Wirtschaftsservice (aws), the Austrian federal promotional bank. This year we want to open up an office in Germany and also want to adapt our optimization technology to SAP HANA. Therefore we are looking for fresh capital. Do you know a potential investor for us? 🙂

What were the biggest challenges you faced building your startup?

The cooperation with Siemens’ lawyers proved to be an 18th month long challenge, that we overcame. Due to the fact, that it was their first foundation of a company in Austria it was a tough fight. German company law is very different compared to the Austrian; the participation and partnership agreements are very extensive. But I think we will benefit from these agreements.

With ferocious competition and a booming trend to build new companies: How do you make sure you don’t get lost in the shuffle?

We believe in the power of our technology! We tackle problems were we know we are better than our competitors. Simple optimization tasks are not our world. Until now we have satisfied every customer. And satisfied customers are the best advertising.

arelionWhat do you look for in team members?

In addition to his/her professional expertise he/she must be a team player with a strong personality. We are looking for enthusiastic people, who are willing to shift limits, who are unsatisfied with the status quo and looking for new ways. Taking a joke is also very important. If somebody is able to bake a tasty cake the chances he or she will get the job are not bad.

Why would a talent join your team?

Software engineers will get really challenging tasks and our sales and business consultants experience many interesting things and see many different places. On the one hand loud, dirty, hot productions plants and on the other hand clean IT-companies. Sometimes when I see a “thing” in the supermarket or on the street I can say that I have seen the place where this “thing” came from. That is really exciting.

What was your most memorable moment so far?

There were two of them:

First customer: “I do the same thing as you since 20 years! Your algorithm will not work! But I will give you a chance!” We invested one week and saved him one tanker per week which ships LNG from Europe to America. I do not know the cost of one tanker per week but I think that will be much more than € 5.000 (cost of the prototype).

Second customer: After we have finalized a very complex optimization task (integrated planning of blocks and duties for an Australian bus company) the CEO said: “If I was a former Austrian Formula 1 racer, I would lift my red cap. Congratulations! With your support we will enter the Champions League of integrated block and duty planning! I’m very impressed!”

What advice would you give fellow founders for their startup?

Fight for your dream, have a good finance plan for the first three years, hire new staff as late as possible, enlarge your network and it is important to learn from setbacks!

 

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