Like many companies shift supply chains from China in response to the uncertainties of geopolitical tensions and Beijing’s “zero COVID” policy, Fictiv is strengthening its outpost in the country.
Based on San Francisco fictitious operates a platform that aims to simplify the hardware sourcing process and connect hardware companies with suppliers around the world. When it comes to purchasing high-quality parts for products such as medical devices, surgical devices and even missiles, there is probably no better place than China. That is why Fictiv has established an office there to be closer to its network of suppliers. Within five years, the team has grown to 60 people in the southern industrial center of Guangzhou.
Despite challenges surrounding COVID restrictions and geopolitics, “China’s manufacturing base is not going away,” Fictiv’s 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 time for other third-party ecosystems to really catch up,” he said, adding that Apple and its contract manufacturer Foxconn have offered a strong roadmap to a generation of factory owners in the country.
Digital sourcing proves especially useful in COVID times. The conventional way, according to Evans, is a manual process based on face-to-face encounters: in China you have to find a shifu – a skilled craftsman in Chinese – who will sit back, drink some tea, and then slowly tell you from his 30s. experience in casting to change this and that on your 3D drawing. Fictiv uses AI to replace that random human interaction by having product developers run simulations on 3D designs and get a quote and estimated production time.
Despite its focus on digitization, Fictiv emphasizes the importance of local teams at its sourcing destinations. Evans used to travel to China quarterly, but hasn’t been since the COVID outbreak, which has resulted in strict inbound travel restrictions. Huaqiangbei, the world’s largest electronic commerce market in the heart of Shenzhen, used to attract flooding from foreign hardware makers. Now foreigners are a rare sight.
“Because it has been so difficult to access China in recent years, the value we have in combining software, technology and all the AI we’ve built with boots on the ground alongside our manufacturing partners, has a really compelling offering for all customers built up 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 big thing happens, how is your business going to change? And that’s what I would say to any founders thinking about it: Are you building a truly resilient supply chain?” asked Evans.
That’s partly why Fictiv recently opened an office in India, which is “very strong and getting stronger by the month” thanks to “large population, relatively low costs and growing talent there.”
The company has built a global network of 250 vetted manufacturing partners, with a third in China, where production capacity is often greater. The other suppliers come from India and the US. To date, Fictiv has produced some 20 million parts for thousands of customers. It has a team of just over 300 employees around the world.
An operating system for product developers
Nine years after its launch, Fictiv is developing a new business line. The company’s selling point was to allow for early stage product development, i.e. long-tail volume that Foxconn would find too small. Instead of contracting factories to make tens of thousands of units, it partners with companies trying to get from 10 to 1,000.
The company’s new service is a collaborative platform for everyone involved in the product development lifecycle. Unlike the purchasing platform, whose profit margin is built into the production model, the service charges an annual membership fee. Using the software, the engineer can upload a product design with specifications about the material used and the like. Then the supply chain specialist can come in to estimate lead time and target price, followed by the quality controller who makes further comments. Finally, the manager approves the price before the buyer proceeds with the purchase.
The idea is to capture the conversation and quality control process of product development in an integrated platform instead of spreading them over emails and spreadsheets, as communication used to be.
“For engineers who have a team, it’s almost a threefold improvement [on productivity] because of all the tasks you eliminate. For design agencies or people who manage many clients, [the software] helps them organize many of their workflows, which gives them an easier way to fill out and track all the different projects that are going on,” Evans noted.