As many companies move supply chains out of China in response to the uncertainties of geopolitical tensions and Beijing’s “zero COVID” policy, Fictiv is consolidating its outpost in the country.
San Francisco-based Fictiv runs a platform that aims to simplify the hardware sourcing process and connects hardware companies with vendors around the world. When it comes to sourcing high-end parts for products like medical equipment, surgical devices, and even rockets, there’s probably no better place than China. That is why Fictiv installed an office there to be closer to its provider network. In five years, he has grown the team to 60 people in the southern industrial hub of Guangzhou.
Despite the challenges around COVID restrictions and geopolitics, “China’s manufacturing base is not going to go away,” Fictiv founder and CEO Dave Evans said in an interview with TechCrunch. “Thirty years ago, Shenzhen was a fishing village and now it is the center of the world for manufacturing. It will take a while for other third-party ecosystems to really catch up,” he said, adding that Apple and its contract manufacturer Foxconn have offered a solid playbook for a generation of factory owners in the country.
Digital sourcing is especially helpful in times of COVID. The conventional way, according to Evans, is a manual process that relies on face-to-face encounters: In China, you’ll need to find a shifu, a skilled Chinese craftsman, who will sit down, have some tea, and then I’ll slowly tell you. from their 30 years of molding experience to change this and that in your 3D drawing. Fictiv is using AI to replace that arbitrary human interaction by allowing product developers to run simulations on 3D designs and get a quote and estimated manufacturing time.
Despite its focus on digitization, Fictiv highlights the importance of teams on the ground at its sourcing destinations. Evans used to travel to China every quarter or so, but hasn’t since the COVID outbreak, which has led to strict inbound travel restrictions. Huaqiangbei, the world’s largest e-commerce marketplace located in the heart of Shenzhen, used to attract floods of foreign hardware manufacturers. Now foreigners are a rare sight.
“Because China is so difficult to access in recent years, the value that we have in the combination of software, technology and all the AI that we build with the boots on the ground right next to our manufacturing partners has created an offer really attractive to all customers because they can’t fly to China,” said the CEO.
While China remains an integral part of Fictiv, the company is also diversifying. “When the next big thing happens, how is your business going to change? And that’s what I would say to all the founders who are thinking about this: are you building a truly resilient supply chain?” Evans asked.
That’s partly why Fictiv recently opened an office in India, which “is very strong and getting stronger every month” thanks to “a large population, relatively low costs and the growing talent there.”
The firm has built a global network of 250 vetted manufacturing partners, a third of which are in China, where production capacity is typically higher. The rest of its suppliers are from India and the US. To date, Fictiv has produced some 20 million pieces for thousands of customers. He leads a team of just over 300 employees around the world.
An operating system for product developers
Nine years after its launch, Fictiv is carving out a new line of business. The company’s selling point has been to enable early-stage product development, that is, long-tail volume that Foxconn would consider too small. Instead of contracting factories to make tens of thousands of units, it works with companies trying to go from 10 to 1,000.
The company’s new service is a collaborative work platform for everyone involved in the product development lifecycle. Unlike its sourcing platform, which has its markup built into the manufacturing model, the service charges an annual membership fee. Using the software, the engineer can upload a product design with specifications on the material used, etc. The supply chain specialist can then come in to estimate lead time and target price, followed by the QA person who provides further feedback. Finally, the manager will approve the price before the buyer proceeds with the purchase.
The idea is to capture the conversation and QA process of product development in one integrated platform instead of having it scattered across emails and spreadsheets, which is how communication used to happen.
“For engineers who have a team, it’s almost like a 3x improvement [on productivity] for all the tasks you’re deleting. For design companies or people who manage many clients, [the software] It helps them organize a lot of their workflows, and that gives them an easier way to complete and keep track of all the different projects that are going on,” Evans said.