Using software to track the movements of goods through global supply chains is one of the last areas to move to the cloud. The task is daunting–supply chains continue to get more complicated and now need to function in real or near-real time.
Now, Flextronics International Inc.–a Singapore-based company that provides design, logistics and manufacturing services in several countries and is second in size only to the iPhone manufacturer Hon Hai Precision Industry Co. (FoxConn)–has decided to give it a try.
Flextronics has spun off a software startup, and that company, Elementum, has raised $44 million to help companies track their supply chains in real time.
Elementum Chief Executive Nader Mikhail said the startup was inspired by rapidly growing cloud software companies such as Salesforce.com Inc., which created the market for cloud-based customer relationship management software, and Workday Inc., which makes cloud-based HR and financial software and is now valued at nearly $15 billion.
Flextronics Chief Executive Mike McNamara sits on Workday’s board. “I’ve seen the power of what Workday is able to do with the right solution and software architecture and speed of innovation. I can apply that across the supply chain, and it’s a much bigger market,” Mr. McNamara said.
Flextronics began incubating Elementum in 2012 after Mr. McNamara asked Mr. Mikhail, a former Flextronics vice president, to build a software platform that would help Flextronics’ customers, which run global operations whose supply chains are becoming increasingly complex. They were relying on outdated software to do it.
Last year, the two decided Elementum needed to be a separate company so that non-Flextronics customers could use the software too.
The software can be deployed in weeks instead of the months or years required by older supply chain software, Mr. Mikhail said. It uses a big-data infrastructure–including Hadoop—to deliver a common view of the data and run what he calls “modern, bite-sized (mobile) apps” to manage specialized areas such as transportation or manufacturing.
“Most players have looked at this space and said, let’s build a big system to help you run your supply chain. We say, there are 50 unique problems that an OEM has to deal with, and each one deserves a bite-size app,” Mr. Mikhail said.
Early customers include Dyson Ltd. and Enphase Energy Inc., but because Flextronics can refer customers, Elementum has more potential customers right now than it can handle, he said. The new money will be used to build up engineering and sales.
The funding round, a Series B, was led by Lightspeed Venture Partners at a post-money valuation of about $220 million, Mr. Mikhail said. Lightspeed Partner Chris Schaepe is joining the board. Flextronics provided Elementum’s Series A round and participated in the Series B, taking the company’s total funding to about $60 million.