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MacroFab CEO Misha Govshteyn explains how a digital manufacturing platform connected to a network of vetted partner factories can help eliminate a lot of variability from the fabrication process.
Barry Matties: Hi, Misha. Can you give our readers a brief overview of what your company does?
Misha Govshteyn: MacroFab is a digital manufacturing platform. We help customers produce electronics products. It’s very similar in value proposition to traditional EMS providers. We are the ones who take the order and guarantee quality, but that’s where the similarities stop. We’re really a digital-first company. Customers interact with us through both people and software and can place self-service orders; we’re there to help them answer questions and make sure that their concerns are addressed.
If they’re a more traditional buyer and they deal with RFQs, a lot of OEMs select their factories based on RFQ selection criteria. They send an RFQ to us, and we upload the RFQ to our platform; ultimately, what they get is a price quote, and then we execute that price quote. We have created a digital record of their transaction. Whatever they’re building isn’t tribal knowledge that gets inserted into the factory floor, where there is a production manager and a line that knows how to produce your product; instead, it gets digitized. We establish a digital thread that goes from the point of order to the production line and all the way to delivery.
By digitizing that, we take a lot of variability out of the equation. Most of what happens in manufacturing is people give each other small cues for, “I know you ran into a problem. Here’s how you fix it.” That becomes a little bit of information that only the production line realizes exists, and that’s not a repeatable or scalable way to manufacture anything. We digitize all of it.
Matties: There’s a lot of communication.
Govshteyn: That’s right. The difference is when you interact with MacroFab, we make sure there are a number of factories that can build your product. One hard rule with us is that we never take on a job if there’s only one factory that can produce that order. In fact, I want them to authorize as many factories as possible. We have about 40 factories that are at our disposal right now. The ideal scenario, and what I always advise our customers to do, is to authorize us to use as many of those as possible. We give them a list of factories that we think are going to be a good fit, and if they need to visit them because that’s part of their process, that’s fine. We aim to authorize at least three of them, so we can reroute their capacity when needed.
Matties: If they have to authorize a factory, why not just deal with the factory directly?
Govshteyn: What people are responding to is every time they work with a factory, it works for a while, and then it breaks down. When somebody on a production line quits, the tribal knowledge breaks down. Sometimes, the design changes, and all of a sudden, the factory that was good for you before is no longer good for you going forward. This happens quite often. For that reason, our matching engine figures out, not on a per-customer basis, but on a per order basis, “Here’s the design that we took from you. You need 10,000 units of this. There are 25 factories that are a perfect fit for producing these, and we’re going to choose the right factory on your behalf.” That’s a level of granularity that most people don’t have.
Matties: To play the counterpoint, you’re saying they want three sources, so they go authorize three factories. If they have a problem and they’re doing this on their own, they would already have a factory to go to.
Govshteyn: Correct. Usually, that’s where things break down in a traditional world. There’s only so much you can do if your factory gets busy with another customer. When I ask, “Are you happy with how you’re producing right now?” chances are, more often than not, they respond, “I’m reasonably happy, but I could be happier.” We had a factory last quarter that got hit by a lightning strike; it happens. Stuff happens on a production line, and you need that level of fault tolerance that just isn’t there today.
Matties: If they’ve authorized three factories, and one is a problem for whatever reason, you go to factory number two. They could just as easily go to factory number two without you, but what’s the added value? Do you have priority placement in these factories?
Govshteyn: We have very good relationships with these factories. MacroFab is a pretty big customer for all of these factories, but that’s not where the biggest benefit comes from. The repeatability of that job happens because it’s software-driven. We capture a digital representation of what that job looks like. We take a lot of the human variability out of the equation. Everybody knows that when you switch factories, you have to go re-train your line all over again to make sure that it works properly. Because we capture all of it digitally, it’s much easier for us to move a workload from one factory to another, if that needs to happen.
Matties: How long have you been in business?
Govshteyn: Five years. We’re a venture-backed company, so our objective is to build this all at a large scale.
Matties: Is this your concept?
Govshteyn: It’s not. I’m one of the earliest investors in the business, but Chris Church started it. He and I started a prior business together. We were in the cybersecurity world. We had a front-row seat into how the IT industry got disrupted by Amazon. Amazon came in with Amazon Web Services and applied cloud concepts to a lot of the way that IT worked. Everything we’re talking about now is a cloud concept that didn’t exist 10 years ago in the IT world, and it doesn’t exist today in the manufacturing world either, but it will about five years from now.
Matties: What about supply chain management?
Govshteyn: That’s our job, which is software-driven as well. The way the model works is MacroFab is your supply chain provider. We capture your BOM, and we control that sourcing process all the way through. One of the pieces that we do for our factories is we say, “We’re going to put a job on your factory floor. We’re going to give you a lot of certainty, and you’re going to know exactly how to build it. We’re going to give you great assembly instructions, and there aren’t going to be any surprises. We’re not going to be like a typical customer. It’s not going to be a bumpy road; you’re going to know exactly what you’re going to get out of us.”