Cloud-Based Contract Manufacturing Gets New Money

Cloud-based contract manufacturing just got a boost. Fictiv, a savvy California startup looking to transform hardware manufacturing, closed a US$33 million Series C funding round—more than double its previous bench—for a total investment of US$58 million to date. The latest round will be used to accelerate the company’s effort to digitalize and automate the manufacturing workflow.

Every company wants to bring products to market faster, but not every company has the bandwidth and resources to pull it off. Some struggle with output quantity; others struggle to hit quality benchmarks. This is where contract manufacturing comes in.

Contract manufacturing reduces the resources required for supply chain management, lowers barriers to entry, and speeds time to market. The challenge with traditional contract manufacturing is the functional silos required to actually make a product: a company might work with Autodesk for design, Jabil for development and early production, and Foxconn for scale (this is super common).

Porting contract manufacturing to the cloud unifies these functional areas in a way that allows a company like Fictiv to come in and develop tools that bring these silos together on a common platform. This is a paradigm shift that provides not only content and accessibility, but also the availability and scale that makes a marketplace--in this case, for drop shipping digital files on demand and getting first-time right results (production) in return.

Fictiv is pretty much everything that a company like Protolabs is not. Protolabs buys and owns equipment; Fictiv owns IP and relationships. Protolabs deals primarily in low volume, short-run production; Fictiv deals with first through third generation product delivery. Protolabs is public; Fictiv is private. The list goes on, and there are plenty of others that fit a similar build, like 3D Hubs, 3D Systems, Materialise, Sciaky, Stratasys, Xometry, etc.

The problem for Fictiv and companies like it is that they are a delivery service, not a restaurant. Think of UberEats, Grubhub, and Postmates; all of these companies offer as many restaurants as possible so they can compete on other things like price, technology, and user experience. Fictiv needs to do the same, and it isn’t offering a full menu of restaurants, let alone meal options.

Fictiv’s biggest gap is a credible metal additive offering, Stratasys’ biggest gap is a digital platform, 3D Systems’ is a combination of software, technology and execution, Carbon’s is implementation and lead time for the L1 platform, and HP’s is getting to market (all of this is detailed in ABI Research’s Additive Manufacturing Platforms Competitive Assessment). But with the right tools and execution, several things change:

• Quality Assurance (QA): This is a preventative activity that primarily deals with hard goods. Add a software bent, and QA can be a target for predictive analytics, especially when it comes to precertification and standards adherence (customary in certain AM end markets, such as aerospace & defense). The same data infrastructure can be used for simulation and virtual commissioning, which shortens the lead times and bottlenecks associated with process changeover.
• Quality Control (QC): This is a corrective activity--i.e., one that occurs after an issue. QC is typically performed at each stage or point of process change. Integrate this process with production planning and it can be in situ (at the place and time work is performed), therefore stopping subsequent error. The fact that AM operations typically have fewer steps or process changes in short- and medium-run production compared to CNC machining means additional savings due to fewer QC checkpoints.
• Economics: The same way that e-commerce shook brick and mortar retail and digitalizing delivery changed the nature of fulfillment, additive and hybrid manufacturing processes are changing the way parts are produced. More is virtual, less is wasted, and for the first time in a long time, hardware innovation is driving the need for software innovation. This is the reason firms like Fictiv are popping up, why a company like Siemens employs more than 200 AM platforms as part of its Distributed Manufacturing Network, and why generative design is now part of the CAD conversation.

This makes alignment one of the single biggest challenges facing service bureaus, customers, and suppliers, and it has to do with the pace of manufacturing technology innovation. Companies like Fictiv and even Stratasys, 3D Systems, and Protolabs get most of the way there, but the reality is that it isn’t good enough. None of these companies employ scalable metal additive technologies (e.g., binder jetting)—and some of them need to—regardless of whether they are connecting or building an ecosystem. Most currently focus on short run production tools and infrastructure, leaving the larger market for true production systems underserved. Technology suppliers must help these firms fill the menu.