Supply chain software and the innovation economy

One of the things we hear often in this recession is that small business is the engine for jobs and the source of innovation. Last week, I came across SG Software Group, a small supply chain software company in Sandwich, Massachusetts that is an example of both. Well, sort of.

First, the sort of—the jobs part. The company was founded by a group of guys – the SG stands for Some Guys – who have lots of experience in logistics, distribution and supply chain software and who have either worked together as colleagues or were clients of one another. For instance Jim Fox, the company’s CEO, has worked for Roadway, American Software and Voxware; Mark Lania, the vice president of sales, worked for Kewill; and Warren Engard, the VP of product strategy, worked in operations at Dunkin’ Donuts. You see the connection.

 
Their other common bond: several of the group were downsized during the recession. They have not moved the needle on the Massachusetts unemployment rate, but they’re making a dent in their personal economies. And, let’s face it: starting a business in this environment takes courage and smarts.

Second, the innovation part. They’ve come up with a software application to automate checklists – the kinds of things that get done every day in every plant and distribution center that are primarily done on paper. Better yet, they’re offering it in a Software-as-a-Service format.

According to Fox, he and his colleagues began talking about starting a business about two years ago. Somehow, the idea of a checklist application came up in the conversations and it seemed like a good one. “We did our due diligence and found there was no direct competition,” says Fox.

There were modules for specific checklists, like a checklist before an operator could get access to a lift truck, but they were adjuncts to a broader application suite. Not a simple, stand alone application. “No one did an application that is a framework to generate a range of checklists,” Fox says.

As to the SaaS format, the team’s developer had been working on a SaaS-based WMS, so it seemed like a natural way to manage and distribute the application. What’s more, Fox says, “With a SaaS model, once the infrastructure is up and running, the same six guys can run the company because the application will scale.”

What’s their pitch? SG Software has created a template that allows a company to create an automated custom checklist for whatever it is in their organization they have to check, either for safety or regulatory requirements or some other reason.

Their initial target is the food industry since the group understands warehousing and there’s a fair amount of inspection and record keeping related to regulatory oversight. It’s also because their first customer, Cape Cod Potato Chips, is in the food industry. Cape Cod Chips is using the application to inspect pallet jacks, lift trucks, floor scrubbers and a shuttle vehicle.

The application is very visual, it can integrate with the MRO module in a corporate ERP program and it has some nifty features. There’s the usual alerting capabilities, like the ability to send an e-mail, text or tweet to someone who needs to be contacted about an inspection. Who would have thought we’d see Twitter on the shop floor.

The application also allows a user to send attachments, like a photo of a part or piece of equipment that has just been inspected. Along with running on the usual computing devices, it’s mobile and will run on an iPhone, iPad or an Android phone. Reports can be exported in several formats.

They claim the application is efficient and it can save money. “We have a client who tells us they spent $457,000 a year to inspect 600 units, much of it related to handling paperwork,” says Fox. “They tell us they’re saving about $350,000.”

As to SG’s prospects, Fox has the enthusiasm of an entrepreneur. “You’ve never seen anything quite like this,” he told me before a demonstration. “We’ve been at it for two years, and it finally feels like it’s coming together. We have something that automates a very manual process, improves quality and saves money.”