A more efficient way to manage inbound inventory with Factor
We sat down with our CEO and Co-Founder, Doug Shultz, to learn from his experience, how he came to found Factor, and the inventory planning problems that Factor is solving.
Q: Doug, can you tell us a little about your background and experience before starting Factor?
A: I worked for six years in a manufacturing company that was the biggest producer of seats for cars like Toyota, Nissan, etc. In a separate business line, they also manufactured commercial HVAC equipment.
During the last two years of my time there, I was in the manufacturing organization working on the day-to-day operations. One of my key responsibilities was achieving scale—we had 20 factories and hundreds of supplier partners that were manufacturing similar products and we were trying to share learnings across the factories. Data was very siloed and I was tasked with setting up the system to enable collaboration between plants.
I realized that there was a technology problem that limited our ability to collaborate. Processes were built around incomplete technology solutions, which made the processes extremely manual. Employees needed to take a full day out of their week just to update the system. And even then, those updates were usually incomplete because of the system’s limitations. It was really frustrating. There were a lot of important pieces missing in the current system. So I dug into it more and asked myself, why was that?
The main software used in manufacturing is an enterprise resource planning (ERP) system. ERPs are great for distributing information inside a site, but were painful to update and bad at communicating with external suppliers. We were already spending millions of dollars and many FTEs’ time every year on these technologies and there was no more capacity to do next-level things like create custom integrations for better collaboration or create a common data model across suppliers. Given the sheer number of plants we wanted to include, collaboration was always an afterthought because the cost and time were prohibitive.
I wanted to develop a different model for collaborating instead of the traditional ERP approach, which was just way too slow and time-consuming.
Q: So then what happened, how did you come up with the idea for Factor?
A: After I left that job, I went to business school and while I was there, I did some manufacturing contract work for a few hardware startups. The biggest difference was I was a team of one, versus in my previous company where our team was several thousand people. So I was now tasked with doing all of this work by myself: BOM management, inventory management, production planning, and vendor management. All of this was done manually and honestly, I had no idea how challenging it was going to be. I made a lot of mistakes.
This is when I really came up with the idea for Factor. I recognized that for scaling companies, like the ones I was working with, there was no way they were going to implement an SAP or Oracle ERP system due to the time and cost. Planning and collaborating with suppliers is critical to get new products launched and without these systems in place, this became even more challenging. The work was hard and there was no data or tools to help you if you’re starting from scratch as a startup.
Q: What problems does Factor help solve?
A: Factor helps manufacturing teams maximize production capacity by feeding real-time data from suppliers into the production plan, and flagging problems like delays that cause shortages or potential quality problems. This is one of the best ways to streamline the production process and mitigate supply-chain risk. Inaccuracies in data are one of the biggest challenges for procurement, supply chain, and manufacturing teams. When the data is incorrect or outdated, it has a cascading impact on the forecasts and build plans, costing companies time, resources, and money.
For example, one of our customers used to have to regularly expedite and rush order parts when supplier delays caused shortages, which was very costly—at least 40% more expensive. However, after working with Factor they eliminated the need to expedite parts because they have more data and insights into when parts are delayed and where their ERP data is inaccurate, saving them crazy amounts of money and time. We’re also helping customers like Vecna Robotics better proactively manage their supply and All Safe Global to save 60 hours on order tracking every month.
Q: How do you know if Factor is right for you?
A: Well, I think that question is about the ROI, right? The question is how much faster could you be growing or hitting your KPIs if you could operate at full capacity and have all of the materials you need when you need them. For example, if I am trying to build twenty robots a week but I am actually only building twelve right now because I’m working through material shortages—that is an extra 40% revenue boost I could be earning. You can assign a dollar value to it.
The other way you can look at it is to understand how much you are spending on inventory carrying costs when you have too much inventory on hand, or how much you are spending on operators to come into work when they don’t have clear-to-build orders to work on. If you don’t have parts for your employees to work on and they’re just waiting around not doing anything, that is costly.
By looking at all these costs you can figure out if Factor is right for you.
Q: What’s next for Factor?
A: We’re excited to share that we just launched the ability for our customers to benefit from the power of new AI capabilities. This AI solution allows users to automatically get the data sitting in their email parsed and entered into their ERP. For example, let’s say a supplier reaches out to communicate a delivery delay, or provide an advance shipping notice. With Factor, those messages can be read and the order record in your ERP is updated accordingly.
Going forward, we are not only developing AI solutions to read and parse emails, but also attachments. This could be a PO confirmation PDF, a failed inspection report in Excel, and more.
These solutions will allow supply-chain and procurement teams to grow their supplier base (i.e. dual sourcing, adding localization) without having to double or triple the size of their teams. It also enables the team to spend more time on strategic goals like relationship development, forecast accuracy, and more.
Looking for a better way to inventory plan? Click here to learn more or request a demo today to see how Factor can transform your operations and help you get better data from your suppliers to save money and time. Our supply chain experts are ready to provide a tailored walkthrough focused on your specific challenges and goals.