Factor raises the seed to streamline a neglected part of the supply chain – TechCrunch
The “last mile” of the supply chain received a lot of attention during the pandemic. Even e-commerce giants like Amazon have struggled to overcome the challenges of product distribution quickly enough to keep up with demand.
But Factor, a startup created in 2018 by veterans of the manufacturing industry Doug shultz and Michael szewczyk, has just lifted a first round to streamline another part of the supply chain process, which he calls the “first mile”. For Factor’s more than 250 customers, mostly manufacturing companies, the “first mile” consists of processes such as ordering raw materials, choosing the ideal supplier for each order, and paying on time, the CEO of Factor Shultz to TechCrunch in an interview.
“Most people look at the supply chain and think of the shipping containers stuck in Los Angeles or the boats outside the Port of Long Beach. What’s exciting for us is that the issues we resolve further up the chain can really help companies avoid these kind of bottlenecks in the first place, ”said Shultz.
The shortage of ventilators at the start of the COVID-19 pandemic is due to inefficiencies in the “first mile” of manufacturing, Shultz said. It took six months for supply to meet demand in this scenario due to “manual and tedious” standard practices in the industry, he added.
“What made it take six months, even with Elon Musk and Tim Cook personally involved, is that inside that process there are 700 components from 200 tier 1 vendors and then hundreds more under this first level. If you think about how companies order products and pay each of these vendors when there are literally thousands of different moving parts, it takes six months, ”Shultz said.
Factor’s product helps businesses manage transaction infrastructure throughout the “first mile” by leveraging artificial intelligence to automate core supply chain processes. It provides payment tools, data to assist with supplier selection, and order tracking and fulfillment functionality to its customers, who tend to manufacture complex products for industrial use in areas such as robotics, medical devices, aerospace and defense, said Shultz.
Companies using Factor bring their own suppliers to the platform, and Factor helps them measure data on each supplier’s performance – for example, how many times a supplier has delivered goods to them on time. Factor is “less of a market, more of an infrastructure to help you make decisions,” Shultz said.
Businesses that don’t use Factor typically use hand tools like spreadsheets to manage their “first mile” processes. Others use enterprise resource planning (ERP) software through vendors like Oracle and SAP, which is more easily customizable but often prohibitively expensive for small and midsize businesses, Shultz continued.
Factor hopes to provide a more reasonably priced supplier management service for these types of businesses, but it also sees its payment features as key differentiators from other ERPs.
The manufacturing industry accounts for more than 20% of B2B payments globally, Shultz said, but many of the industry’s biggest companies still transfer huge sums of money through paper checks. Factor’s platform offers automated payment functionality built on the infrastructure of payment processors like Stripe.
“We overlay this infrastructure with applications that can essentially coordinate the destination of payments and also provide additional value. We have all this data on your order history or your suppliers, and now we can add financial services on top of that, ”said Shultz.
The company, which has seen customer order volume increase 10 times over the past nine months, today announced that it has raised $ 6 million in seed funding to expand its platform. Google’s AI-focused fund Gradient Ventures led the round alongside other investors Xfund, Afore and South Park Commons.
It plans to use the capital to further develop its financial services capabilities by adding new banking partners and offering financing products, Shultz said. He is currently working with a credit provider to develop a credit feature that allows businesses to finance their short-term working capital needs, he added, although he declined to name the credit provider.
Shultz, who hired Factor’s first sales manager a few weeks ago, said he was thrilled to receive the support of Darian Shirazi at Gradient Ventures because of Shirazi’s holistic view of the company’s growth potential. business.
Shirazi understood that “buyers are always suppliers, suppliers are our buyers, and we can activate this viral engine to [become] the basic transaction layer for all of the manufacturing, ”said Shultz.