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Cofactr was co-founded by Phillip Gulley and Matthew Haber, originally as a small PCB assembly house. Recognizing a greater need, they transformed Cofactr into a supply chain execution platform that automates and optimizes manufacturing processes. The company integrates early design data with supply chain information to identify potential issues, provide risk abatement, and streamline procurement.
I met with Phillip at DesignCon and asked him to walk me through the company’s background. He explained how Cofactr helps companies ensure compliance and achieve efficient material management, allowing engineering teams to focus on design rather than logistics.
Marcy LaRont: Phillip, why don’t you share a bit of your background, and explain how you came to found Cofactr.
Phillip Gulley: Sure. I started in the arts. I was in theater and then fine arts, and was really interested in the application of technology inside of artistic practice. That continued to evolve until, eventually, I was doing system design and getting deeper and deeper into prototyping and creating custom hardware.
We had the opportunity to work with Zoox (an autonomous electric vehicle subsidiary of Amazon), and they were facing some challenges around lead time for their early prototype builds, specifically their circuit boards. They had about a one-year lead time to get their PCBA prototypes, which seemed like an unacceptable lead time. My co-founder, Matthew Haber, and I thought: “Hold on a second. We can do better than that.” We had already grown to a point where it made sense to just dive in and try to solve a bigger problem. So, we initially started Cofactr as an assembly house. We were doing PCBA, and in that, we built a lot of software to help automate the supply chain, track the materials, and make sure that we were meeting all the needs as far as being able to manufacture and also address the compliance concerns that come with critical industries.
Matthew and I have been working together for over a decade. Our previous company was an R&D engineering solutions company that we co-founded, bootstrapped, and got through acquisition. We were executives together for a couple of years and then we founded Cofactr together. After about a year, our customers were pretty transparent about the fact that they loved what we were doing in supply chain. They actually preferred that we not manufacture anything because that is a skill that takes time to harness. So, we joyously shut down the line and turned our internal tools outward, offering them to our customers. That was a big transition, but we've seen a lot of success since making that shift.
LaRont: That is an interesting journey, and ultimately, it is really good that you have solid manufacturing experience. When did you launch Cofactr?
Gulley: It was about four years ago.
LaRont: Walk me through the Cofactr tool.
Gulley: The Cofactr tool—we call it a supply chain execution platform—is used to fill a lot of the gaps that pop up in manufacturing processes that are not addressed by existing solutions. We take bills of materials very early in the design process through integrations with PLM or CAD software. We then index those against supply chain data to highlight any concerns that might pop up, like life cycle issues or lack of supply. As you move through and you understand who your manufacturing partner is, we'll take in those requirements as well, understand their attrition and what the lead times are going to be.
Then we automate all of the processes from optimizing your supply chain and your buying strategy, sending out email communications, tracking the actual procured materials, getting them to the locations where they are needed, and then doing the updates of the systems of record. So, basically what we are doing is connecting a lot of software, moving that data around with 100 percent accuracy, and assuring that the outcomes of a manufacturing cycle are successful for our customers.
LaRont: All of those things provide significant value to assembly manufacturers. Can you share a typical use case?
Gulley: Yes, we work with many startups that may not have a procurement team set up yet. A great example is Neros (an American autonomous drone developer). We've been with them since very early in their process. They had a great engineering team, but in building those early units, they didn't have the resources or the time to deal with things like, “Am I buying from the right places? Do they meet my requirements as far as an authorized distributor? Am I grabbing all the necessary documentation for a high-compliance industry?” So, their engineering team adopted us to manage those processes, and the procurement was automated for those first units. The materials actually moved through our facility, as we have a physical facility to support organizations that might not have the infrastructure necessary to handle critical or sensitive materials.
We automated their procurement, received those materials, prepped and kitted those materials for their manufacturers, and then all that they had to do was design, hit ‘buy,’ and they received their circuit boards fully assembled. They didn't have to touch anything in that process. And they've scaled with us. Now, they're doing tens of thousands of units still operating in that same manner, and they've been able to do it reliably without building a large internal procurement function.
LaRont: That offers a huge value proposition. Then, the warehousing and kitting is kind of a complementary business you have to the software piece of it.
Gulley: Yes, and it is an unusual thing to be a venture capital backed software startup that has a warehouse, but it's just so helpful to our customers to provide a practical solution to their needs. It also just keeps our hands in it. We don't believe that we should be trying to fix supply chain challenges without being part of the supply chain. It gives us a viewpoint and a practical application to make sure that what we're building is working, not just conceptually. We are really being our own internal customer.
LaRont: That’s great. The old ivory tower software approach, “Trust me; I know what you need” doesn't necessarily bear out.
Gulley: It does not. I think we have a very defensible point of view that if you're trying to solve a large and complex problem, going the first step and then walking away is not enough.
LaRont: I'm assuming that AI plays significantly into your software and your tool. Can you talk about that a little bit?
Gulley: It does. We have a very boring use case of AI that is super practical. When you are initiating a procurement event there are a lot of communications.
These could be engineering questions, confirmations, alerts of delays or partial shipments. That is a lot of information, especially if you're dealing with hundreds or thousands of individual lines that you are procuring. We use AI that runs on AWS (Amazon Web Services) GovCloud, where we can take in those communications, many of which do hold sensitive information, and can obfuscate away that sensitive data. We can apply a template to that email where we understand the nature of it. Then we can extract the relevant data so that the updates to your actual material and its movement in the world can be surfaced. And that's very boring, but very practical.
LaRont: It's not boring. It's just AI. Achieving that practicality more easily and efficiently is really what we're using AI for right now, which is saving us a lot of time with better accuracy.
Gulley: Then there are some other things in the works that, I think, are a little bit more exciting, getting us to alternate recommendations if a part falls into a supply chain pinch and to help engineers in more of a hands-on way, to get better outcomes earlier in product design phases, and also dealing with issues that pop up unexpectedly. Those are all tools that we're excited to launch in the future. But there's definitely going to be more and more AI in our software, and everyone else's. That's the one thing we know for sure.
LaRont: Cofactr is also working on something more directly manufacturing-centric as part of the business. Is that correct?
Gulley: Yes, we do a lot of material management. Warehouse management software is something that we have developed internally for our own use case. We are investing a lot into it, making our warehouse management and inventory management solution more of a first class citizen to our customers. There have been many requests to utilize Cofactr in their facilities, and we're excited to make that a lot easier, being in more of our customer’s facilities, supporting them by making sure that their inventory is accurately managed and in a genuinely holistic way.
LaRont: That is exciting, and support that I know so many of those companies greatly need.
Gulley: Yes, the world is complicated, and supply chain has just gotten more and more complicated.
LaRont: So, what's been the most fun part of Cofactr’s journey so far? What have you learned?
Gulley: The most fun thing has been that our customers are amazing. When I do a site visit at a customer, they're building satellites and rocket ships and robots and development at an incredibly rapid pace. Getting to see this technology and talking to engineers about how they are doing the amazing things they're doing, it's incredibly cool. It’s like I get to sample the future. And that is mind-blowing. The fact that we get to support these critical industries is very cool.
Our approach to building Cofactr was not, “We have an idea, and we want to give it to the market.” No, we were seeing problems in an industry that we would like to solve. That has given us incredible opportunity and enabled a culture where our customers will come to us proactively saying, “There's something that I think you could do that would make my life better.” So, we are really growing at the request and pull of the market and being given opportunities to really understand the pain points, and then to solve those pain points. This is the best way I could imagine to build a venture-scaled business. We literally have someone say, “I would give you more money if you did this thing because it is super painful and inconvenient.” And then we get to build that thing. It's great!
LaRont: What are you most looking forward to? What's next?
Gulley: As a business, we started in electronics and we're very proud of that. It's where we came from. And we were solving part of a problem. And it’s not only electronics products that are procured. There are a lot of other materials that need to be procured that go into a final assembly.
We have expanded beyond electronics into mechanical, electromechanical, and all other direct material needs, which presents a whole new opportunity. Our goal is to achieve the same level of agility for our software, solutions, and data that is found in electronics when using Cofactr. By applying this system to custom-manufactured parts, we believe it will lead to an exciting journey and significantly enhance our value proposition. All of a sudden, it's not a niche solution; it's a solution for anyone building things.
LaRont: That is very exciting. Phil, it’s been great speaking with you and the Cofactr team.
Gulley: Thank you, Marcy.
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