How Advotics took on the complex problem of supply chain management in Indonesia

Early in its journey, Indonesia-based Advotics got an encouraging sign that it was on the right track. Its solution for the Indonesia operations of food product MNC Danone won top honours in an international competition, pitted against entries from all over the world.

It was vindication for the young team at Advotics, a firm which specialises in supply chain solutions for enterprises as well as medium-sized businesses. The founders had given up jobs in large established companies to turn their attention to a vexing problem: helping brands across categories understand, monitor and manage a complex supply chain in Indonesia, a market heavily skewed towards traditional retail.

Further vindication came in May 2019, when Advotics raised $2.7 million in a round of seed funding led by East Ventures. Speaking about the firm at the time, Willson Cuaca, managing partner of East Ventures said, “Advotics has really nailed down the core problem of supply chain monitoring in Indonesia. The solution helps corporate monitoring the movement of workforce and goods. Data points collected have been used to understand product distribution heatmap and supply chain efficiency. This is just the beginning of supply chain transformation in Indonesia.”

Part of the inspiration for Advotics came from the family backgrounds of the founders. In an interview with DealStreetAsia, CEO and co-founder Boris Sanjaya said, “Our families were traders. We were raised in these markets – we have seen how they used to be and how they are today. But through our professional careers, we have worked in global companies and seen firsthand how technology helps solve problems.”

Apart from Sanjaya, the founding team at Advotics included his former collegemate co-founder and chief technology officer Hendi Chandi. They were joined a year later by one of Sanjaya’s friends Jeffry William Tani who came on board as chief product officer, after being part of the R&D team at global oil company Schlumberger. Sanjaya had previously worked at GE and the Boston Consulting Group; while Chandi moved from Amazon.

The diverse skill set of the founding team helped to shape the Advotics’ offering. For instance, Tani has a PhD from MIT and counts reviewing PhD theses as a hobby, besides being an expert at deploying technology to address business problems. Chandi left Amazon with two US patents and his strengths are in software development: a critical skill in solving the pain points of supply chain management. Sanjaya’s own background in strategy consulting gave him experience working with clients and locating supply chain problems in a larger business context.

Cracking the supply chain problem in Indonesia

The complexity of Indonesian retail was a problem waiting to be cracked. Brands in the country typically sell to regional distributors who then supply retailers. An average client of Advotics has anywhere from 30 to 200 distributors and sells to hundreds of thousands of retailers, across Indonesia, including mom and pop stores or warungs, as they are known locally.

Sanjaya said, “We envisioned Advotics as a platform or command centre, where companies, brands, distributors and traders can collect data and manage their business – everything from trade promotion, field force activities to the chain of market inventory. In my experience as a consultant, a company that can manage this systematically and do a good job at it, is likely to win.”

Relying on QR codes and the ubiquity of mobile devices, products like Advotics’ digitalization manager help track inventory every step of the way through the supply chain. Other issues that the platform is capable of handling include accurate responses to questions about merchandising, sales activities and how engaged a distributor’s salesforce is: the number of visits they make every day.

For example, Advotics has applied itself to resolving complications surrounding restocks. While distributors have traditionally served as connective tissue between brand owners and a retailer, an unreported or undetected stockout could seriously impact performance and allow a rival to quickly fill the void.

Sanjaya said, “Having information on this market readily available, without waiting for the distributor is very critical for brands. With this knowledge, you can create promotions, or customise them for a particular market. The technology that we are building here allows brands to do that. They have traditionally done this, but on a semi-annual basis.”

It hasn’t been all smooth sailing, though. Sanjaya said, “When applying technology to a very traditional complex supply chain, a lot can go wrong. Sometimes, that does not mean the idea is incorrect: you just need the patience to convince the stakeholders. Most importantly, have resilience to see through the implementation.”

Advotics’ own products have gone through a lot of tweaking, creative problem solving and agile development, before client stakeholders could see the value. But having a working model in place instantly improves client confidence, and it becomes easier to apply across business units and industries. Besides consumer products, Advotics has been able to expand its portfolio to the automotive and construction materials market sectors – cement, ceramics and piping.

The COVID-19 experience at Advotics

The pandemic has brought its own opportunities. For one, it has made it a lot harder for brands who still depended on traditional sources of information like a travelling salesman or field force. There has been a huge spike in interest around Advotics’ solutions in areas like distribution and retailer management.

Many of the firm’s clients have accelerated their supply chain transformation. Advotics has also landed a new contract to implement an end to end supply chain digital transformation, according to Sanjaya.

He anticipates a surge post-pandemic, especially from companies that have used this time to put systems in place. He said, “When the epidemic first hit, there was a slowdown because companies were uncertain about what to do – particularly potential clients.” But now, they see the opportunity clearly, and what’s more, have been shepherded through implementation of the systems. This leaves them in a position to gain disproportionately, once the pandemic-imposed changes no longer apply.

The road ahead

The seed round has helped Advotics focus more on product development. Sanjaya said, “We have hired engineers to build the solutions, always keeping in mind the vision of the platform – to connect the dots on what’s happening with the brands.”

He however admitted that the firm has barely scratched the surface of digital transformation. Asked if expanding beyond Indonesia is on the horizon, Sanjaya said: “We are humbled by the opportunity to be trusted by MNCs like Danone. We can see if what’s working here can be tweaked or even if it can be directly applied to other markets, where it will fit perfectly. The ability, knowledge and experience in solving these problems, will help address the same issues overseas too. But before we expand too aggressively, there’s a lot of work yet to be done.”

The ambition is the same as it was – to become the platform of choice when it comes to supply chain management.

This article was created in partnership with East Ventures. Please visit the Advotics website for more information on its supply chain management solutions