STM Brands Increases Operating Margin by 20% With DemandCaster

Every business begins with a problem—or rather a solution to a problem. That’s exactly what Ethan Nyholm did when he founded STM Brands. Ethan and his co-worker, Adina Jacobs, (pictured below) designed a bag that would not only protect his laptop but do it in a stylishly-casual way. Eighteen years later, his business is booming yet he noticed that the company was spending a lot on costly air-freight to get products to regions where demand was the greatest.

“When we identified our escalating supply chain costs, we knew it was time to find a better way of doing things—that became the catalyst to transform our supply chain planning methods and processes,” said Nyholm.

Moving Away from Spreadsheets to the Cloud

As the costs for air freight rose, Nyholm dug deeper and realized that the root cause was inaccurate (or inadequate) supply chain planning. In addition, spreadsheet-based planning didn’t provide the business an accurate picture of its demand volatility.

“When we started to look at how much of a percentage of sales we were spending on air freight versus sea freight—it turned out to be 10:1, which was clearly digging into our margins,” Nyholm said.

The company had already selected NetSuite ERP to manage its business and was looking to fill in the gap between holistic supply and demand planning as well as cross-functional collaboration.

In searching for a supply chain planning solution, one of the key requirements was it had to integrate with NetSuite because as Nyholm puts it, “there was no chance that I was going to transfer data manually.” The other major requirement was the solution had to be cloud based because the company had experienced the benefits of accessing information, anywhere at any time from any device.

“It was important to go with a true cloud solution as opposed to a hosted solution,” Nyholm added.

Gaining an Accurate Picture of Demand

Nyholm found DemandCaster supply chain planning software through NetSuite’s application ecosystem, SuiteApp, and what initially struck him about the solution was the visual representation of sales data by product, by location, as well as trends associated with those products.

“We always thought about demand on a regional basis, like what is needed in Australia or in the U.S. With DemandCaster, we’re able to look at the entire business holistically, including the movement of inventory between warehouses,” Nyholm commented.

One of Nyholm’s favorite features of DemandCaster has been the demand forecast visualizations:

“Choice of forecasting algorithms on the demand side gives us the flexibility in forecasting and the visualization of that forecast really allows us to see the trends and patterns. This was something that we never had before and something that has proven valuable to us. Looking at the past gives us better insight into what may happen in the future.”

He also appreciates the ability to take a forecast for one product and apply it to another. “One of the significant time savers with DemandCaster is the ability to take the forecast or the past demand of one item and copy it to a similar, new product so I don’t have to start from scratch.”

Making Data-Driven Inventory Decisions

After seeing the wide range of capabilities, Nyholm decided to use DemandCaster for supply chain planning at STM Brands. Once the company looked at demand shifts, which in most cases are seasonal, another bit of insight came to light.

Making data-driven decisions has resulted in an increase of 20 percent in operating margin and a 50 percent increase in sales profits. Freight costs to sales are also down 25 percent year-over-year.