Akoya Inc. software helps cut purchasing costs for manufacturers
Posted on February 24th, 2006
Tuesday, February 21, 2006
By Steve Tarter
of the Journal Star
PEORIA - It's a tale of two start-ups, high-tech brothers that both spun from Caterpillar Inc. about three years ago.
One flies high in the public eye, recently receiving a hefty military contract while being linked to reforms that could revolutionize the transportation industry.
The other toils in relative anonymity, doggedly pursuing efficiency in fields such as procurement cost management.
Yet both start-ups have achieved success in their own way: Firefly Energy, with its efforts to produce a lightweight lead-acid battery that packs extra power, and Akoya Inc., the low-key spinoff that's starting to make noise with major firms around the country.
Like Firefly, Akoya has offices at Illinois Central College's North Campus, 5407 N. University St., where it expects to house 34 employees by year's end, said CEO Ted Greene.
There are 10 employees at Akoya, up from the two - Greene and Chief Operating Officer Brett Holland - that started the firm in 2003, he said.
The infusion of new employees is indicative of the rapid expansion taking place at Akoya. "Last year we put all the pieces together to take Akoya to the next level," said Greene.
The pieces are part of what Greene calls "a brain in a box" in reference to the business software that helps companies cost out direct materials.
Conceived by Caterpillar employees Shamala Srinivasan and Nelson Jones, Akoya's software allows firms to cut costs without having to conduct exhaustive research, said Greene.
Jones, a technical services manager at Caterpillar, said he and Srinivasan came up with the approach as a way for a manufacturer to save money.
By analyzing thousands of different castings that are used by a company such as Caterpillar, software was devised that allows for comparison of the features and dimensions of those parts, he said. "You come up with a 'should cost' as a reference tool," said Jones.
"It's like buying a home. You look at other homes with similar features to get a comparative idea of what you should pay," he said.
Akoya's ability to provide a cost figure for parts is good news for companies looking for ways to reduce expenses, said Greene. "It's a tool for line managers. What previously took months can take just weeks," he said.
"Data mining algorithms" allow companies to better analyze their direct materials, he added.
"We're going directly to the big players," he said of major automakers and aerospace firms, potential clients that can make use of cost savings.
"We're seeing a resurgence in manufacturing around the country with a lot of firms facing challenges. The auto industry, for example, is realizing that it needs to be more progressive," said Greene.
Understanding that cost analytics don't rank high in "Google sex appeal," the field is "more exciting than it first appears," he said.
Akoya's success is definitely exciting, said Greene, acknowledging the start-up firm is ready to break out of its cocoon.
"For three years now, we've been trying to fly under the radar. Now with the latest round of investment ($1.7 million), we look to have a positive impact on manufacturing in the Midwest," he said.
New versions of the company's software will be rolled out on a national stage in 2006, said Greene.
One company waiting anxiously for some of that software is Morton Metalcraft Co., the Morton-based part supplier that racked up more than $200 million in sales last year to companies such as Caterpillar and John Deere.
"Akoya's software works off the actual (specifications) of a company's parts. It's a much more sophisticated process than any others I know of," said company Chairman William Morton.
"That's why American industry will succeed. We'll find ways to be more efficient," he said.
Akoya wants to make a good first impression with clients, taking advantage of the firm's position as a front-runner, said Greene.
"We're the first mover into our market. We look for competition to be more intense down the road," he said.
Industry is getting more familiar with the benefits Akoya's software can bring, said Greene. "We're getting good coverage within the industry. Higher-profile vice presidents of purchasing are getting interested," he said.
As for the possibility of Super Bowl commercials or other public promotions in the future, Greene plans for Akoya to remain a business-to-business venture.
"People won't see us on the side of a blimp," said Greene, who looks for Akoya to be a high-flying enterprise just the same.
