How Manufacturers can Guarantee Revenue Streams with Dave Evans

Connect with Dave Evans:

LinkedIn: https://www.linkedin.com/in/evansda11/

Lisa Ryan: Hey, it's Lisa Ryan. Welcome to the Manufacturers' Network Podcast. I'm here today with Dave Evans. Dave is the co-founder and CEO of the digital manufacturing ecosystem company, Fictiv. Since its founding in 2013, Fictiv has manufactured more than 19 million parts for early-stage companies and large enterprises, driving innovation with agility, from prototype to production and ensuring supply chain predictability and success for customers in industries from automotive and robotics to healthcare and aerospace. Dave, welcome to the show.

Dave Evans: Hey, thanks much for having me. I'm excited to be here.

Lisa Ryan: Please share your background and what made you start Fictive.

Dave Evans: Yeah, for sure. I'm your classic engineer who likes to solve problems—I studied mechanical engineering, mechatronics, and mechanical electrical systems. And I'm an auto guy. 

I started my career at Ford, building infotainment systems or dashboards of cars. What we were trying to do there was put consumer electronics into vehicles. So you put your iPhone or iPad these things into the dashboard of a car. And the challenge we ran into at Ford, which is still a problem today, is around development cycles.

A vehicle can take four to six years to build a new platform. Meanwhile, you'll get a new consumer device every six to nine months. And you'll get 12 iterations of a consumer device and the time it takes to launch one vehicle when you get in your plane, land, and rent that Mustang. As you're driving around the one in California, winds blow in your hair, and you go to use the touchscreen, and it's horrible, or it feels ten years old. It's because it is. And from my experience at Ford, how do you increase the speed of building new products?

And what are the barriers to developing that and the thesis developed at Florida, which we've worked on for almost ten years? First, Fictiv was that if you could speed up the development cycle, you could reduce the risk of getting new products to market, and you unlock innovation for many companies to do that.

And we built the company based on how you make hardware, physical goods, and products at the speed of software. We're based in Silicon Valley, don't let all the software folks like Facebook, Amazon, or Dropbox have all the fun. We wanted to build tools for mechanical engineers and physical product companies to build products faster.

So if you fast forward to today, That's what we've built. We've built a system to simplify sourcing and build this operating system. This digital operating system probably makes custom mechanical parts. And we find factories with machines which are idle or have extra capacity all over the world.

And we're allowing engineers and supply chain teams to order custom mechanical components from all these idle machines all over the place. We don't own a factory. I don't have an injection molding machine. I don't have a sheet metal press. I don't have a CNC machine, but we are allowing an engineer at Honeywell to order parts.

From these, it machines through all this digital software we have done. And like you said, Lisa, it's 20 million parts now. So, since we've published that it's up, we built 20 million parts through this network. So, it's not our first rodeo, and I think we are changing how companies think about bringing products to market and driving agility into their supply chain. And I like to believe we are just on day one of that journey because it feels like the work we could do like we just started.

Lisa Ryan: At the beginning, you were talking about driving that car and the wind flying in your hair. Sorry, I'm still there. And then going to that touch screen, that's ten years so. So, what would it look like working with Fictive in that kind of example? Who would you be working with, and how would you get that technology into that?

Dave Evans: Let's talk about classic supply chain products. When I was at Ford, you had three options for how you would make this product. I'm an engineer working on this dashboard, and I designed something up in CAD, and now I want to get it physically made. I have a new way to mount an iPhone 11 into the car. And I want to design or prototype this.

So your options are threefold. First, I could use my internal resource . we had an interior machine shop, a prototyping lab, and some equipment at Ford. The second option is to go to my tier one supply base-people that build components for production and do that, and there are trade-offs there.

And the third option, which many people do, is you build a network yourself. So you have a leased machine shop in Detroit, Jennifer's machine shop in Wisconsin, or I have a shop in Vietnam or China. And I have all these relationships, and you build this network.

And traditionally, I'd go out. I'd get RQs. I'd wait for those RQs to come back. Then, I'd award the work to a supplier. The supplier would make it, and they would ship it to me. And typically, that took eight, maybe ten weeks to go through that process—every time I wanted to build one of these new dashboards.

And to me, that was way too slow because I knew it only took two hours to make my part on the machine. So what happened to the seven-week, six days, and 22 hours between the two hours of making it? And it's a whole bunch of latency that happens. So it's time to say, Hey Lisa, I need a quote. And you're busy, running this machine shop in Detroit, building parts on the factory floor, dealing with something.

So that quote takes a week or two to get back to me. So I award you the work, and I get put in a queue because you have all these orders ahead of mine. After all, you want to keep your machine running all the time. So it's like this artificial cue to be on. And then the part comes off, waiting for a quality inspector to look at it.

And then now it has to get shipped to me. All of this is kind of do time. If you fast forward and say, how do we do this eff active? That quote happens in a minute. You use our online software. You're uploading that CAD file and getting instant pricing and DFM designed for manufacturing feedback. You can then collaborate with your purchasing manager teams using our software on any needed changes within a minute. Finally, you can purchase that just like you would buy on Amazon, like an eCommerce experience for buying.

Custom mechanical component. From there, the part gets scheduled to an idle machine. So that's going to make it like the same day. I know that Lisa's machines are entirely at capacity, but Jennifer's machines in Wisconsin are open and available today. And that park gets routed to Jennifer, and it goes on, the machine gets made, comes off the machine tomorrow, gets inspected by our digital QMS quality management system. So we have physical, effective people looking at those parts digitally and sometimes in the factory. And then it gets shipped back to you in a matter of, say, two, three days. So you take a process that was eight weeks at four, and we've compressed that down to 2, 3, 4 days.

Think about how many cycles you can go through in that iteration, all to let your hair flow better using the dashboard, driving down the one.

Lisa Ryan: And to put it in terms that I can understand, and the simpler term is that, if I have a project that I need some market research done or something, and I go to Upwork, and I put on a job of precisely what I'm looking for data mining for this list of people, and then within three to four minutes, usually within the first hour I have about 40 people that have subscribed to that. And then I can check them out. I can read their reviews, then narrow it down and pick the one I'm going to work with. So it sounds that from a product basis, that's pretty similar. You're putting it out there. And then people are saying, Hey, pick me. I have the capacity, and this is what I can do. And then you can check them out.

Dave Evans: it's that's very close. Your other analogy people use it's like Uber. You get out of the airport. You could stand at the taxi line and are there taxis? Maybe there aren't taxis because they're busy.

Maybe the queue is a hundred people long, and you're going to wait, and you just got to IMTS, or you just got the CES, and you're going to wait in that line forever. But in Uber, you get off the plane, connect your phone and say, give me a car. It shows up in five. And Uber is doing all the quality for you.

Oh, do you want a black car? Okay. You can do that. Oh, do you want an Uber X? You can do that. It's a five-star rating. They kick people off and manage all those networks of drivers. All that's done for you. You have a better riding experience than getting in a taxi, and there's no accountability.

You don't know how long you're going to wait. It's this Uberization or Upwork. If people have used that. For the manufacturing world, what we know is like Lisa's machine shop, Jennifer's, or whoever it's out there like there's enough capacity in the world. What's more, how do you find it?

Vet it, manage it and digitally do that. And let's get away from email. Let's get away from PowerPoint. Let's get away from the Excel docs required to launch products. Instead, we want to build better digital tools to reimagine how manufacturing is done.

Lisa Ryan: One and just looking at manufacturing utterly different because we're in this realm of that, of course, it's going to take eight to 12 weeks to get a part because of everything you explained before. But you're also giving people opportunities. As you said, it goes in a queue. Number one, you don't know if that purchasing agent is on vacation. And if they're ever going to get the quote and get back to you in a couple of weeks, it brings you that immediate Gratification that you have people jumping on that.

So how do you build the relationships with those manufacturers to deliver these 18 million parts? What's the process that you go through for that?

Dave Evans: I want you to think that we are your bolt-on supply chain team. Just as your supply chain team has global supply chain managers, quality engineers, and project managers, I have that same structure here. It's just my people aren't using PowerPoints and emails and spreadsheets. They're using Silicon valley software tools to manage all the relationships. So, for example, we inspect the factory, not once a year or once a quarter, as we did at Ford or most places. Still, every day, we have data from our 250 manufacturing partners on their quality, their acceptance rating of any defects that happen, and all that's happening through our digital QM.

Then on top of that, we have supply quality engineers in China, India, and the US that are physically inspecting these factories or you. This is all to give you confidence when ordering something. So we have the highest quality, not just managed through a system like software, but managed through world-class experts.

I call them our SWAT team. That's like diving in and inspecting it for you. And what that does is it gives you leverage. Because imagine if you're a small product company, you have an idea. You don't have supply quality engineers, TPMS, or project managers. You don't have any of that stuff. Or maybe you're a big company, and you do, but your network's too large.

We act as that bolt-on supply chain for you. So you have peace of mind that you'll always get the highest quality product. And that's how we've produced these 20 million parts by building this combination of software plus humans to drive best-in-cost automation.

Lisa Ryan: And the other thing that comes to mind, though, again, you're working with manufacturing that is slow to change. I'm thinking about people listening to the podcast who may be stuck in that and just having the conversation when you are approaching different people to get into the fictive supplier chain that can be included in those quotes.

And in that field of people. So how do you explain it to them? And the benefits that open up again, completely changing that mindset of how they've worked before through the whole quote process and everything.

Dave Evans: Yeah. Generally, this will probably resonate with everybody listening here if you run a factory, a service bureau, or a CNC machine shop. Most owners or operators didn't start the business because they love generating quotes, PDFs, and discussing design permits. Most of them did it because they love making physical parts. They love running the factory, working with machines, and doing all that creative work.

But what happens is to run a successful service bureau or business. There's all this upfront administrative work that you have to do. Talk to any machine shop owner and say, how much do you like chasing down past due invoices? So how many hands raise? This many? Zero. How many times, what's your percentage of things that you quote versus you win most is about 20%. 

Meaning for every ten quotes you send out, only two of them will you going o get awarded? What about those other eight that are lost productivity for you? When you work effectively, what we're doing is all that front office work for you. And we're basically like money on a tree. That's just you can pull down as much as you want.

So you have this guaranteed revenue stream for your factory. Theft is prevented. Standardized work orders, standardized payment terms, and improved cash flow. And you have consistent revenue. If you work with a customer, they'll make a product, and then they go away because they're shipping it and selling it. We will always be making products because we're consolidating all this demand from many industries.

And what we see is that we are a strategic partner, not just a customer, but a partner for these manufacturing part plants, service bureaus, machine shops, and that it's a kind of those values of, it's predictable revenue, it's a strategic partner and software development. And then it's all around payment terms.

Lisa Ryan: Are some industries better for this, or what areas do you specialize in and find that you're hitting these home runs with?

Dave Evans: I think that complex mechanical components are where we win the most. If you're ordering a block with four holes, You probably don't need a lot of sourcing expertise to get a block with four holes.

You don't need a lot of people. A lot of people can make a block with four holes. Some avenues do that. But suppose you have tight tolerance and complex mechanical parts. In that case, there's a lot of back, and forth in how you quote it, design for manufacturing feedback, the invoicing around it, how you do reorders, like all this complexity.

And that's where our digital systems shine both for the customer. 

Someone at Ford or Honeywell, but also for the manufacturing partner, the guy or gal producing, and that's where, I think that in the ecosystem of custom mechanical manufacturing, the complex parts is where we shine.

Lisa Ryan: I think about product prototypes and then the complex parts. Do you do anything, or do your suppliers do anything with like 3d printing and that type of development? Or is it more machining?

Dave Evans: We do pretty much all custom mechanicals. Machining is a big portion of it. 3d printing and additive are another huge portion of it. Injection molding is probably the fastest growing highest utilization for us because of all the constraints in that market today.

So I'd say those are probably the three big ones, but then there's a long tail of other services.

Lisa Ryan: And again, when we're starting to change the conversation and look at how manufacturing is just different today, and evolving with all of this new technology, what are some of the biggest mistakes that you're still seeing manufacturers make, and what are, some ways that they can take a look at those mistakes and maybe improve their process.

Dave Evans: Listen, we are in the most challenging period for the supply chain in the last 20 years, 50 years. How far do you want to go back? When you take global trade wars between us and China, with an ongoing pandemic, a war in Europe, and the Suez canal. And now we're talking about different diseases that are coming up even beyond Covid. So all these are causing disruptions in the supply chain, and everybody's hurting on the demand side and the supply.

And we see the common pitfalls that I see when I talk about simplifying sourcing, it's this whole process of how do you plan what you need? How do you source it? How do you make it? How do you deliver it? And how do you ensure the quality of it? These kinds of five things. That's what sourcing is.

And then we see two people get. We see folks get hung up on this idea of agility and resiliency. 

Get out your notepad now as you're listening. Agility is the ability o sense and respond. Like in your supply chain, if you have agility, you can see that something will mess up and react quickly.

That is, I would ask you to rate your supply chain on how good your agility and ability to sense something are. And when that happens, respond to it. Resiliency then is the ability to adapt to change. So you can have a very agile supply chain, meaning you can sense things will happen, but if you don't have resiliency, meaning once you've sensed it, are you going to make a change?

So Hey, I know a global trade war will happen with China. Okay. That would mean you got agility. But do you have a backup plan that would be your resiliency to move things out of China? If that's the case, I'll take another one. We know hurricane season is coming up in the Florida region, which is great. I have the agility that I can sense and respond, but you have a resiliency that you can move production out of the Southeast of the US when that happens. So what's your resiliency plan? And this is why we're talking with many companies today, both factories and the companies, the demand side, and OEMs. Say, how much agility and resiliency do you have in your factory?

If you're a factory listening to this and run that, let's talk about a labor shortage. That's a big one. We always hear, what are your indicators of how much agility you have around your hiring plans around retention and how you find talent? But if that doesn't work out, what are your resiliency plans?

How are you going to adopt and change to a new hiring strategy? s it around training? Is it culture? Is it wage increases? Is it labor practices? These are all plans that I would implore everybody to listen to. What's your agility? And what's your resiliency plan in your supply chain today?

And I would bolster those if you're not already.

Lisa Ryan: Awesome. If you had, we talked about that agility and resiliency. Any other tips that you find helpful, or have you worked with your clients within manufacturing?

Dave Evans: Yeah. We'll probably get to this because whenever we connect with Lisa, we talk about culture a lot....