Predictive Analytics Startup Transmetrics Transforms Logistics Leaders’ Mindset On Innovation

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Launched in 2013, predictive analytics startup Transmetrics is already working with 3 Fortune 500 companies, and delivering results like 25% cost reduction for their clients. CCO & co-founder Anna Shaposhnikova on challenges & opportunities in the logistics industry:

How would you describe Transmetrics in a few words?

Transmetrics is the next generation of ERP – Enterprise Resource Prediction. We offer an end-to-end solution for cargo transport companies based on big data and predictive analytics. Our SaaS generates highly accurate demand forecasts based on historical data and external factors that influence shipping demand (e.g. public holidays, weekdays, industrial seasonality, customer-specific shipments fluctuations, weather, industrial events, product launches etc.), after which the solution offers predictive network optimization weeks in advance.

Transmetrics’ tools allow companies to make better, data-driven decisions, while forecasting and optimization modules allow the continuous monitoring and improvement of network performance. Our approach is based on advanced statistical methods, machine learning, and deep cargo industry knowledge. We are already working with world’s leading logistics companies, including three global Fortune 500 companies.

How did you come up with the idea for Transmetrics?

Working previously together with the CEO of Transmetrics, Asparuh Koev, in his IT consulting firm for the logistics sector, we were often approached by our customers with the problem of matching supply and demand. This mismatch, which is typical for the industry, is happening due to what we call a “visibility paradox”. Transporters are getting their orders “just-in-time”, without advanced notice and coming up with the optimal transport plan takes weeks.

Being consultants we couldn’t provide our customers with the ready solution, only with the advice to seek predictive optimization tools on the market. And then we realized that such predictive analytics solution for the transport and logistics (T&L) sector did not exist! That’s when we decided to do it ourselves.

Predictive Analytics Startup Transmetrics Transforms Logistics Leader's Mindset On Innovation

Transmetrics co-founders, Anna Shaposhnikova and Asparuh Koev

You launched in 2013, and are already working the leaders in the transport and logistics industry. What were the biggest learning points for you?

The biggest learning point was that, indeed, the data is BIG but it’s also quite “dirty”, inconsistent and with a lot of gaps. This situation is true for almost all transport companies even for the biggest and the most successful ones. So before even starting to think about implementing forecasting models for our customers, we need to go through a laborious and complicated process of “massaging” the existing data. However, the results are mostly very positive. And what is encouraging, is that our customers can already gain their first benefits after we complete the process of data cleansing. It gives them a real picture of the loading factor of their vehicles and what the real measurements of the existing shipments are. It helps to set the right KPIs for their warehouse team and adjust the pricing policy towards certain end customers.

As predictive analytics become more spread throughout the industry, competition is growing at a fast pace. What makes Transmetrics stand out of the crowd? What is the key differentiator?

The industry of predictive analytics for logistics has very high barriers to entry. To build such a complex product takes a lot of time, effort and expertise in different fields including data science, software development, and deep industry knowledge. It also has to be validated with the industry players and adjusted to their specific needs. We see a lot of examples of really good startups that have brilliant technical capabilities, and who enter the industry with great ideas but fail due to the lack of deep understanding of the T&L industry and its needs.

At Transmetrics we spent the first 2 years of hard work building our product and we built it with real data coming from our pilot customers – the leaders of the T&L industry. While building the product, we were validating it with our clients at the same time. Transmetrics’ team has a unique combination of skills: data scientists, software developers and deep industry experts with over 15 years of experience. We also have a strong support from our advisory board consisting of forward-looking champions of the industry.

Big data is an innovation area with great potential, especially in the logistics industry. Where do you see it going, what else do you think can be achieved?

I think a lot can be achieved with data analytics. As the World Economic Forum Report of 2016 estimates, approx. EUR 500 billion can be saved in operating costs only for road freight companies over the next decade by using data analytics. But the results of data analytics depend on the data. A huge amount of data became available recently in the logistics sector but it’s all distributed among different players. Collaboration between these players would be extremely important to achieve better results. We already see number initiatives like that: smart ports, assets sharing platforms, sharing platforms for warehouses etc. But it shall go further.

Sharing’ is a big story for logistics. The whole sector is redefining collaboration right now. The final step would be the realization of the concept of Physical Internet – an idea focused on the physical realization of the digital internet to create an open global logistics system of physical, digital, and operational connectivity. It promises great things for the sector, coming along with increased standardization in logistics operations.

What is the biggest challenge that the company has faced?

One of the biggest challenges we met, especially in the beginning (2013-2014), is the inability and unwillingness of the decision makers in the logistics industry to change their mindset on innovations and new solutions. Due to the nature of the industry, companies were hesitant to change and adjust to the technological developments and trends towards sharing and collaboration. Luckily, there is a very big progress in this direction during the last couple of years. Customer expectations are increasing greatly. Both individuals and businesses expect to get goods faster, with more flexibility, and – in the case of consumers – at low or no delivery cost. The way to respond to the changes and to stay competitive is for transporters to embrace the power of data analytics, and more companies are starting to realize this.

If there is one thing you could wish for in improving the European startup ecosystem – what would it be?

Compared to the situation in the US, it is very challenging to find private capital in Europe. Transmetrics received funds from an accelerator in Bulgaria and private capital (mostly from Belgium), but it is difficult to access necessary capital in Europe.

Transmetrics has applied for the SME instrument as part of the Horizon 2020 project several times, with high scores above the threshold, but due to budget depletion were not successful. Even with the availability of the EU funding programs, it is still quite challenging to actually get funding for startups like us due to the lack of transparency of the evaluations and unnecessary bureaucracy. EU funding programs should consider examples of startup accelerators and VC funds application process to make funding more accessible.

What’s one piece of advice you can give to fellow founders for their startup?

I can offer a couple, if I may. Validate your idea based on the CUSTOMER feedback. Have a focus and stick to it. If you realize that your idea is not valid for the industry – fail fast! Have the right people to form the backbone of the company and choose them carefully from the start. Find the right type of shareholders; a lot of VCs want a rapid return on investment by trying to influence the company to select the projects that bring fast money but are not strategically the right ones in the long term. And last but not least, if your idea is validated by the market, go for it and never give up!

Predictive Analytics Startup Transmetrics Transforms Logistics Leaders' Mindset On Innovation


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