Hi everyone,
We’re excited to announce Applico Capital’s investment into Recurrency!
Over the past few years, we’ve gotten to know Sam Oshay, Founder and CEO, the team and the great support system of investors and advisors to the company. Our fund looks to invest in companies that help B2B distributors modernize and digitize – and Recurrency couldn’t play a more critical role in making that vision a reality.
This week, I’ll be at the Reindustrialize conference in Detroit. Give me a shout if you’re also attending!
In other portfolio company news, Loop announced their bill pay partnership with JP Morgan - helping shippers automate freight audit and bill pay.
Unlocking Data Silos in Distributor ERPs
Getting data out of ERPs is hard. Getting it back in is even harder.
Recurrency has built core infrastructure to seamlessly transfer data in and out of ERPs. You could call it the “Plaid for distributor ERPs”.
In order to achieve this, you not only need the “data pipe”, but you also need a data abstraction model that can map data from disparate sources to a universal source of truth. Said in plain English, you have a lot of data from disparate systems. A lot of this data is actually the same type of information, but it is codified differently in multiple systems.
For example, invoice records could be stored in one system as INV - #### and as Invoice ABCD in another system. They are both invoices, but they need to be mapped to a single source of truth for the invoice information to be properly analyzed and modified.
The Need for Modern Demand Planning and Purchasing Software
For nearly all distributors, inventory is the biggest line item on the balance sheet. And for nearly all distributors, the purchasing department is where the money is both made and, if done poorly, lost.
I’ve heard a lot of distributors tell me that they make their money when they buy materials, not sell them.
If a distributor invests in they the right materials at the right price, they can oftentimes know ahead of time that their customers will buy their inventory at a profit. However, if a distributor takes too much risk or doesn’t assess their demand correctly, they’ll burn profit on bad inventory buys that eventually become deadstock and write-downs.
Unfortunately, there has been relatively little investment into demand planning and procurement software that is purpose built for distribution. Sourcing supplies for a manufacturer is very different than for a distributor. And, the procurement software needs to be able to write orders and information back into your ERP - otherwise, it just creates more work and confusion for the purchasing managers.
What Makes Recurrency’s Solution Best-in-Class
Recurrency’s Demand Planning and Purchasing Automation software exists to turn purchasing from an art into a science, while automating the most manual and costly parts of the PO writing process.
Most ERP purchasing modules require a lot of manually-entered and monitored data to be useful. Users need to configure sales history, hub-and-spoke replenishment paths, vendor costing, lead times, safety stocks, review cycles, order cycles, freight targets, minimum order-quantities, internal transfer rules, and more – just to get started!
Recurrency believes in a fundamentally different approach to purchasing. One where AI-powered recommendations are auto-generated from historical data and presented for the user to “edit” rather than manually “write.”
In effect, Recurrency helps users “skip to the PO” while monitoring accuracy all along the way. With modern procurement software that can read/write back into your ERP, the distributor can increase their inventory turns, grow gross profit, and save countless hours.
One specific example: you’d think making an internal transfer would be something that standard procurement software would make easy. Before you buy more of a product, do you already have some of that in an adjacent DC that could be easily transferred?
Nope! Not easy to do. In fact, solving this use case can be extremely cumbersome and confusing for a purchasing manager to not only identify availabilities in adjacent DC’s, but to then execute the transfer in the system. Recurrency solves this challenge and much more.
By the Numbers
B2B Distribution is an $8 trillion industry – and about 60% of that is COGS. That means that distributors buy a lot of stuff. Almost $5 trillion worth of inventory, and growing. But distributors haven’t had a new software purpose-built for their procurement needs – until now.
Recurrency is solving “procurement for distribution” and is continuing to invest in their solution with the backing of some of the best investors in the world. They’ve raised over $25 million from world-class investors like Bessemer Venture Partners, Y Combinator, Contrary Capital, and now, Applico Capital.
We’re excited to be a part of the Recurrency journey, and we look forward to helping distributors of all shapes and sizes level-up using their tools.