Judy Warner (00:01) Hi Matt, so good to have you again on the podcast. Thanks for joining us today. For those who may have missed some of our other podcasts, why you take a moment to introduce yourself and tell us a little bit about CoFactor. Matthew Haber (00:13) Thanks for having me, Judy. I am Matthew Haber. I'm the co-founder and CEO of CoFactor. CoFactor is a supply chain execution platform for critical manufacturing. specifically, we work a lot in electronics and with electronics manufacturers to help them automate and optimize how they procure and manage their electronics. Judy Warner (00:34) Well, sounds easy enough when you say it that way, but right now, as you know, the US shifting trade policies and tariffs that is getting not only us as people in industry, but global markets feeling insecure. thought this was an excellent time to have you on to dig into that a little bit deeper. So From your perspective and having the platform you do and having intelligent data to help people make these decisions, how do you address all the uncertainty that we're finding ourselves in in regards to tariffs right now? Matthew Haber (01:12) Yeah, I mean, you know, goes without saying that it has never been a kind of more volatile and uncertain time for manufacturers when it comes to global trade and tariffs. Obviously, there have been plenty of periods in history where there are more or fewer tariffs. But I think the rate at which the air environment is changing these days is pretty unique. And so it certainly demands kind of a different approach. to how manufacturers think about these issues, right? And I think the big one is anyone who tells you that they can solve these problems for you is lying, right? The reality is everything's changing really quickly. There's no magic bullet to how you solve all of that. But what you need to be able to do is rapidly respond to these changes so that you can... most effectively and efficiently manage them in the moment as they change. And so one of ways that co-factor helps is to provide manufacturers with tools that let them clearly understand what are the impacts going to be every time the sort of environment changes. So we have no control over the tariff environment. There's nothing we can do to change any of that. But when the countries that are subject to tariffs changes or the amounts and commodity classes to which those tariffs are applied changes. Manufacturers need to understand, you know, of the dozen, hundreds, thousands, tens of thousands, hundreds of thousands of unique items that, you know, are used across all of my products, where are they coming from? What are the country of origins of all these parts so that I can understand whether or not tariffs apply to them? What type of commodity are they? So I can also understand like the applicability of different tariffs to them and you know, which product do I use them in? How much do I pay for them? Like all the kind of that information. You need to be able to understand all that in one place. This doesn't involve a bunch of people running off and scrambling in spreadsheets because, by the time you finish your spreadsheet scramble, the situation probably has changed again and you're going to to go back and start all over. So think like that's really where we can come Judy Warner (03:29) So Matthew, I actually saw your team. was at IPC Apex in Anaheim yesterday and I saw your team. I saw Shane Whiteside, who is the CEO of Summit Interconnect Technologies and some other executives. And the conversations around tariffs were on everybody's lips, which is why I wanted to have you on. And as you said, tariffs aren't new, but the rate and the volatility is certainly a challenge and I'm sure it's a challenge for people in our audience. give us a sense. mean, obviously they're changing. It seems like day to day is maybe I'm over exaggerating. But I met with the executive director of PCBAA yesterday who's advocating on Capitol Hill for U.S. manufacturing. And what he said is he said the market doesn't like uncertainty. Washington DC doesn't like uncertainty. And if I dare speak for our audience, I don't think engineers and electronics companies like this kind of uncertainty. So how, how do we gain that agility right now? And I know, you know, you guys are kind of in the thick of it as really looking at this with a modern, using great data intelligence to give that, you know, near real time. Feedback. So what exactly does that mean and what does it look like? Matthew Haber (05:00) Yeah. So I think there's, there's really like a few key inputs you need to understand what are the tariff implications, right? mentioned them earlier, but it's like country of origin. So we call commodity class, which is like, you should call them HTS or an HTS US code. Um, and then, uh, price of the item and like how many of them you're importing and when, right? Like those are really the factors. Um, and so the starting point is if you're a manufacturer, you need to know those things, those pieces of information about every single item that goes into your product, not just your finished product, but the resistors, the chips, the nuts and bolts, every last little bit of it. Right. And you can't really do anything more sophisticated. until you have that kind of basic foundation figured out. what we see is that most manufacturers traditionally haven't really had to worry that much about that stuff. And so a lot of people just have really big gaps in their information about those like really key pieces of information. And so there's like two kinds of ways you can get that, that CoFactor helps with. One of them is you can just go to someone who already has a database of a bunch of that information. And so like in CoFactor's case, we have country of origin data and HDS data on tens of millions of electronic components. And so if you put in a bomb for a lot of the parts, we're just going to know all that information right off the bat. You don't have to do any work to have that information. And there are other companies, you know, in the electronic component data space that have some of that data as well and can do something similar there. There's still going to be some gaps though. You know, parts that you get made custom, maybe your PCBAs, your bare boards, right? Things like that, that like, there's not going to be a data source out there that tells you what that information is because it's specific to you ultimately, right? Now, maybe you know the answers for some of that yourself. You know who you work with and where they make the stuff. But we find that often manufacturers, especially at a bigger scale, don't really have all that one spot. We have a of tools that lets you sort of go and find that information in materials you might already have. So for example, manufacturers often include that information on invoices, on packing slips, on other kinds of transaction commercial documents, as we call that. Judy Warner (06:42) Mm-hmm. Matthew Haber (07:08) And co-factor has a bunch of like AI products that can basically just like go look at a giant folder of documents, read all of them, pull all that kind of information off of them, and then kind of update your part library with that information for you. And so that can be a really powerful tool to essentially go in without too much labor, collect a lot of that information that manufacturers might already have hidden somewhere, but it's not sort of readily accessible and usable. So once you have all that information, that's when you can start to do stuff with it to understand, okay, you know, Judy Warner (07:14) Mm. Matthew Haber (07:38) the country of origin hasn't changed, the commodity code hasn't changed, but as of today, there's 25 % tariffs on this combination of commodity codes and country of origin. What does that do to my cost structure? And then you can start to play with it. So you can say like, well, what happens if I swap out some of those parts for different ones with different countries of origin? Is that worth it? Does it change my cost structure in a way that is sort of beneficial? So co-factor kind of is useful both to get that data to begin with. But then also we've this very sort of fast dynamic platform where you can load in a bunch of bomb data, either from spreadsheets or by integrating with products like Altium or various products like statistical management tools that engineers may already be using. So we could pull in all that engineering data and then we can make it very easy to kind of play with different scenarios and say, well, okay, what happens if I, you know, change how many of my bombs I'm making or add these alts that are from a different country or swap around these different, you know, components and what does that do to my cost? I can analyze that quickly. And also if I show up tomorrow and the tariff regime is different, I don't have to start from scratch. All I have to do is walk basically. And information is going to reflect tomorrow's reality when it's different from today. And so it also gives you a much quicker way to figure that out versus the kind of a traditional spreadsheet driven kind of tariff analysis that's going to take days, weeks, months, in some cases, as we've seen sometimes to try to figure that information out. Thank Judy Warner (09:07) So as far as your tool goes, I don't know honestly if I've ever seen sort of your dashboard or what it looks like. can you give us an idea? Well, I have two questions. So give us an idea of what it actually looks like if you're driving the tool and where somebody would find country of origin source inside of your tool that makes this accessible and helpful. Matthew Haber (09:34) Yeah, basically, anytime you look at a bomb, an individual part, or we call programs, which are essentially like work orders or builds or jobs, you kind of think of them different ways. But like, it's sort of the manufacturing intent around one or more bombs. There's just gonna be a column that you can turn on for country origin. And it's just gonna be like I said, it's kind of pre-filled magically for you, you don't really have to do any additional work. So it's just gonna be right there. And then you can start to filter and kind of slice and dice around that. And so I get a lot of ways, a lot of the views in co-factor look kind of like a sort of magical spreadsheet that fills itself in for you and has nicer color coding and also has some nice charts and graphs, right? So it's, it's a pretty familiar interface for folks. but with, you know, a lot more smarts. And when you want to understand, you know, why does it say that in that cell, for example, with a spreadsheet, you have to go try to figure out why it says that in the cell and co-factor, you can probably click and it'll Judy Warner (10:18) Okay. Matthew Haber (10:30) expand and give you more detailed information about the supply chain condition or things like that. Judy Warner (10:34) So how do users know that that, like where are you pulling, you talked about pulling data from files and things like that, but how can users of your platform actually rely and are feel very comfortable that whatever that tariff is today is updated and it's good and they could rely upon it? Matthew Haber (10:59) I get data from other spots and we have a whole data engineering and data quality team at CoFactor that works on that exact problem. So when we look at country boards data from electronic component manufacturers, for example, generally coming from the electronic component manufacturer. So we're not just like guessing, we think this chip is made in Taiwan. We're pulling that off of materials, things like product change notifications, data sheets, compliance documents. Judy Warner (11:09) see. Matthew Haber (11:27) that are made available by the component manufacturers themselves. And so those tend to be a pretty reliable source of information. There's a lot of supply chain volatility right now. Folks sometimes are moving factories. Many manufacturers do a good job about publishing product change notifications that we can then use to make sure that's updated. Some don't, some try to actually obscure that. So it's an imperfect situation, but it's gonna be vastly better than trying to do it by hand. And that's also where the commercial document side of it is really valuable. Distributor websites that list country of origin aren't always right. They're operating off of sometimes old data. They're pretty good, but it's like not perfect. But the packing slip that comes for a specific piece of materials and list country of origin, that's going to be correct. That's like essentially a legal document and you really can't lie to customs about what country of origin is. And so like those tend to be correct. so Judy Warner (12:08) Okay. Matthew Haber (12:21) One of the benefits of our approach, where we also kind of pull this invoice data, this packing slip data, these other kind of transaction data sources, is those tend to be extremely accurate for the parts that manufacturer is actually using. And so that's really valuable as a data source to ensure a high degree of accuracy across that kind of information set. Judy Warner (12:43) Okay. So what I hear you saying is one, you're pulling it from actual documentations of your customers, as well as component manufacturers, not distributors, and you have data analysts inside making sure. So you've got several checks and balances in place. This is going to help them. Now, since I was meeting with Jero Cross and who is part of a brokerage in Matthew Haber (12:55) That's right. Judy Warner (13:14) Norway, that's called Confidy. And I was telling her a little bit about it, about co-factor. And she was like, thinking like a board person. She's like, I get it on components, but like you said, from a broker, she goes, this is a big part of our thing that we have to track all the time is the country of origin. Cause you may be buying it from a distributor in Germany, but it's made in China. And so she was asking about that. So when you talk about the PCB or the PCBA, can the customer add that in to their data? And then they kind of own the reliability of that line item or whatever inside, like how does that get stitched together? Matthew Haber (13:51) Yes. Yeah, that's right. So co-factor is a, what we call like a spot-channel execution platform, right? So we're not just like a data provider where you go and look at the data we have. We're a tool that people use to manage these workflows internally. And so that's right. They're going to have a whole bunch of parts of co-factor that might be PCBA, might be PCAs, might be enclosures, might be hardware, might be anything that can go into their finished assembly. And Judy Warner (14:19) Mm-hmm. Okay. Matthew Haber (14:22) that data they can put in manually or can come from other engineering tools, practical management software, their ERP, et cetera. So yeah, that's all gonna be in co-factor. And when it comes to country of origin data, proactively, we won't know, right? They can enter that themselves. But again, if they purchased it in the past from a supplier and they have documentation from that supplier in a big folder somewhere essentially, and that can be a physical folder or a virtual folder. Judy Warner (14:39) Right. Right. Matthew Haber (14:52) the system can use that document AI processing to pull that information off of the document. So they might not have to go in and manually type in, I get my PCB is made in China. We can look and see like, well, we see that there's a document with this part number and the country of origin is China, and that's clearly where you're getting it. So we can set that for you and based on your own information that might not be conveniently accessible to you. And that's again, really valuable because often, especially at kind of medium to large companies, Judy Warner (15:00) Okay. Right. Matthew Haber (15:20) the people have accessed all of that traditional compliance and transaction information might not be the same people are trying to figure out what tariff implications are. And so it can be really useful as a way to kind of like hoover up all that finance data, but actually use it to unlock a bunch of really powerful like, you know, tariff modeling capabilities. Judy Warner (15:25) Right. Very interesting. I like that you can provide some heft and insight if you have access, you know, through your tool to, like you said, suck up that information and pull it in. they could also look at it for those commercial off the shelves or those custom things that that co-factor is not going to pull in. So how is this? I'll need you to educate both me and our listeners. Who is typically responsible, say, a, your customers are mostly like mid-tier electronics manufacturers, let's say, generally. And who would be normally own the responsibility for finding the country of origin? Is it the engineers that are, is it our audience? Is it a buyer? Is it a global procurement or compliance person? Like who owns that? Matthew Haber (16:36) Yeah, I mean, I think like there's a lot of the challenge industry right now, is that like traditionally no one owned it. Like it was basically, you know, unless you're like a global trade department, which like really owned it, like, but that was, that's very unusual. Judy Warner (16:42) Ha Matthew Haber (16:49) other than at kind of much larger companies. What we see is like a lot of folks have been very responsive or reactive about this versus kind of proactive, where no one was identifying that proactively. When you go to import something, the shipper was just putting the information that needs to be put on the shipping documents. And then you get a bill from your customs broker for some amount that you may or may not have expected when those materials come through customs. All of a people are realizing about that's not Judy Warner (16:51) Mm-hmm. Matthew Haber (17:18) going to work. Right. And so I think like, generally we see supply chain folks having to take this on. We see material managers or like, you know, material people on the sort of inventory side, in some cases, I'm taking this on. Sometimes component engineering is starting to take this on because they're kind of responsible for like library data management. And this is just like another data point that all of a sudden they care about. Again, some companies do have like kind of dedicated compliance or global trade folks or teams like that might fall to them, but Judy Warner (17:36) Right. Right. Matthew Haber (17:47) Even when it does, say generally global trade teams or compliance teams don't actually know how to figure out the country of origin for a bunch of electronic components. They tend to be better at doing things like classification and those sorts of issues. But data research isn't necessarily within their skill set when you look at these kinds of materials that there's a very high number of bottom lines electronics. That's the challenge is you're trying to figure this out, not for a few important commodities, which is often what a global trade team is good at. You're trying to figure it out for like a ton of commodities, like a million lines across all your bombs. That's just a really, really hard for humans to keep up with. Judy Warner (18:25) Right. I mean, because of my limited exposure, my thought is, well, either the person that designs a circuit at a schematic level or maybe the design engineer is touching the components, but that's not the whole system. Right. And so I can see how maybe multiple people are touching this critical point. Are you seeing now with these tears that this has become more of a hot button because it seems like it would have major cost implications that might throw people into some panic right now. Matthew Haber (19:05) Yeah, I mean, I think like you think back like a year or two, and unless you were in like a really regulated industry where you had like very specific rules about what countries you could buy parts from, mostly people just didn't really care that much about it. I mean, even with the kind of last round of tariffs on imports from China, people kind of acclimated to those pretty quickly and then kind of went back to not caring anymore. It was sort of my experience of it. And I think now because of how quickly it's changing and also because of the impact of not having the free trade between Canada and the US, Mexico, sort of, sometimes we have that, sometimes we don't these days, but like, know, deep uncertainty about whether or not we're going to continue to have North American free trade, that is, I think is prompt today, like, renewed and significantly increased sense of awareness, urgency and awareness that like, you really have to actually pay attention to this stuff and get ahead of it. Judy Warner (19:37) Yeah. Matthew Haber (20:02) not just like hope it doesn't bite you later. Judy Warner (20:06) Right. And it's changing so fast. So I think what's intriguing about your tool is being able to have multi-point of reliable data that can say, yeah, no, this is the country of origin and get that updated, you know, regularly and have access to that data. I think it's so fascinating how much good data intelligence is becoming critical. on many fronts right now. It always has been, but like you said, it seems somewhat forgettable. Matthew Haber (20:40) Yeah, I mean, I think, look, the faster the world moves, the more impossible it is to rely on manual processes. It's just like the rally on it, right? Like if these legal regimes change every couple of years or every several years, maybe a manual process is going to cut it. Like maybe that's okay. And you can live in spreadsheets because you have some time to kind of be responsive to things. When things are changing every day, every week, every month, a manual process is going to be wrong by the time it's done. Judy Warner (20:59) Right. Matthew Haber (21:10) And so you just can't do it. Like if that's not a functional way to run a manufacturing business, you have to have a lot more automation and a lot more data intelligence around this stuff to have any shot at keeping up. There's nothing to do with kind of skill or aptitude or attitude. It just has to do with the reality of like, I know more about this stuff than most people and I couldn't do it manually. No one else is going to be able to either. Judy Warner (21:11) Right. Right. And, and I think it's not just the speed, which is the speed at which the landscape is changing, but also the complexity of electronics because of AI and data centers is like off the chain. Everybody's telling me, kind of across the industry, you know, people who I know that are operating at the highest levels are like, we've never, you know, people my age are saying we've never seen it move this fast. It's like 4X. what it normally has been because of the onslaught of AI data centers. And then on top of all the tariffs, then there's this push towards reshoring or people investing billions in the States. And yeah, it, what a mess and how great like to be sitting where you're sitting and sort of be in this place and to help companies sort of give them this insight so they can make these quick decisions. And I imagine that there's opportunities because we do operate in a global supply chain today and it's changing all the time that you may be hit by multiple tariffs, right? On several fronts and is that I... Matthew Haber (22:51) Yeah, that's right. mean, think like the thing about tariffs is they usually come in at least pairs, right? Which is like, if a country levies tariffs against another country, typically the country against which the tariff was levied is going to come out with retaliatory tariffs. Those might not apply to all the same commodity class, right? Like there's a bunch of variety there, but you end up often with kind of like what we call a tariff stack up. meaning like as the item moves from country to country, it accrues additional tariffs that can end up adding up to quite a lot, right? And I think that's where, for example, tariffs between the US, Canada, and Mexico are quite different in their impact than tariffs between China and the US. Because think traditionally, when we look at the sort of East Asia US supply chains, they tend to be like fairly one directional for electronics, which is they like mostly some amount of electronic assembly happens in China. And then the parts, the finished parts, at some stage the parts come to the US, they don't go back to China after that, right? Like they're mostly coming here, whatever the tariffs are, you let's say it's 25%, you pay the 25 % tariffs when they come to the US. And so your hair burden is 25 % on those, on those materials, right? Judy Warner (24:02) Right. Matthew Haber (24:14) Because there has been such a long period of free trade between the North American countries, a lot of supply chains have built up that treat those borders as fairly sort of inconsequential. And so you have supply chains that sort of like hop between the US, Canada, US, Mexico, Canada, Mexico, US, whatever, back and forth a whole bunch of times. You see this a lot in automotive. You see this a lot in aerospace. Some during medical devices where Judy Warner (24:30) Hmm. huh. Matthew Haber (24:45) a given product cross back and forth a lot of times. And that's like uniquely challenging because they get hit with tariffs when they go into Mexico, they hit with tariffs when they come back, and then get tariffs when they go into Canada, they get tariffs when come back, right? And so potentially you end up with a tariff stack up where it's not just you're paying 25 % tariffs on this item, you're paying like hundreds of percents of tariffs on this item because of the sort of like compounding effect of all of those tariffs. And so that's just like a new situation. We have not seen that. you know, in decades, essentially. And we haven't really seen that since these kinds of supply chains got developed. Because you would never develop these supply chains the way they've been built if you thought you were going to have terrorists in each of these countries, right? And so it's only because these supply chains have sort of been built under one kind of geopolitical model. And they're sort of uniquely ill-suited to the current geopolitical climate. And so there's like a lot of trying to figure out what the heck is going on that has to happen. Judy Warner (25:33) Right. Matthew Haber (25:44) around these issues. Judy Warner (25:45) Well, to cheer everybody up after that description, that picture we've painted, do you have a say, optimistic use case or a customer co-factors worked with that maybe was able to access this data in a way that made a difference for them so we can kind of see what that would look like in real life? Matthew Haber (26:10) Yeah, we have a customer we just helped out recently, kind of around this issue. they were manufacturing primarily in China, a fairly large manufacturer of industrial equipment, essentially. And they had a fairly China and some degree Mexico based manufacturing process, specifically for PCBA. And so over the years, they'd accumulated a lot of inventory, like millions, millions, millions of dollars of inventory at their EMS. manufacturing sites in China, Mexico. As the sort of nature of the work they were doing, their nature, their product mix, their kind of risk tolerance evolved. So, kind of like two years ago, they decided they wanted to move towards on-shoring that PCBA back to the US. So, reshoring it back to the US. It's not really back to the US. They probably never had it the US to begin with. But they wanted to look at bringing it into the US. But the challenge they had was that they had all of this material in China and they owned it in Mexico and they had to bring it into the US to transfer it to a new facility essentially, right? And they didn't know what that was gonna cost. So when they were doing all of this kind of like modeling, they can look and say like, well, a C-frame container or a bunch of airframe pallets or whatever for the materials, like we know what the shipping is gonna cost, but we don't know what the bill we're gonna get when it comes to customs is. And as we think about the kind of financial modeling of this really big consequential supply chain decision we have to make, there's this huge unanswered question about what's it actually gonna cost? What is the bill we're gonna get when these materials cross the border, right? And so, it's something they've been struggling with for a year and a half when they started working with CoFactor, and pretty much immediately we were able to take some inventory information about what they had at these facilities. Judy Warner (27:37) Mmm. Matthew Haber (28:05) enrich it with country of origin data, with HDS data, and just tell them, like, hey, here's what the bill is going to be. They were able to have certainty and concreteness around that number, do their business decisions around it, decide that makes sense, pull those materials through. Those are now in the US in one of the cofactors warehouses. that whole process was able to be done in a matter of weeks. Actually, the cofactor part was able to be done in about a day. And then the rest of it was a matter of weeks. And so we were able take what was sort of like a slowly progressing, really painful, like year plus long process and just turn it into like kind of immediate answers that they could then make the right business decision, move forward, get their manufacturing lines restarted in the US and have a lot of like kind of certainty about what was gonna happen because they just had the right information to operate off of. Judy Warner (28:35) Wow. Right. I think a lot of companies, mean, between post COVID and supply chain insecurity, and now with this tariffs going in, I'm positive. Well, I could hear it yesterday on the floor of IPC Apex. It's like, it's on everybody's lips right now. So I know for a fact, and not only here, but in Europe, when I had dinner with my friend, Jero from Confidy, like it's on everybody's mind. So it's really... Amazing to learn about that you have that ability in your tool and what a great value add I know that you're going to be doing I saw your team at apex yesterday and They were telling me that you guys are getting ready to do a webinar With a partner. Can you tell us a little bit about that? And then I'll share that so if our listeners want to go learn more they can go join your webinar and learn more Matthew Haber (29:58) Yeah. Yeah. Let me say about this webinar to attend. I'm not the one hosting it. we talked a bunch today about kind of co-factors, data, and sort of process management capabilities. But we're definitely not like a global trade management platform where we don't deal with customs paperwork and filing and those kinds of things. We're sort of more of a procurement and kind of engineering data management platform. And so this company that we are hosting this webinar with is more on that kind of like global trade shipping management, customs management, automation side of the software stack, which I think is a really cool compliment and like exciting compliment to the co-factor platform. And so I think we're gonna be talking kind of a lot during the webinar about a lot of the tactical process automation stuff Judy Warner (30:26) Mm-hmm. Hmm. Yeah. Matthew Haber (30:49) manufacturers could do to just solve these problems, know, with co-factor kind of bringing a lot of that kind of upstream perspective to it. And then our partner focusing on just sort of the like, customs execution and shipping execution side of the, the, the problem space. Judy Warner (30:56) All right. This is great. It's great information. And I love that you have this upstream partner that's going to bring that kind of visibility. well, Matthew, know you're growing, Co-Factors growing like crazy and you're very busy, but I really appreciate this meaningful conversation. And I'll be sure to get with your team, Libby, Phillip, and get that link. So if listeners here want to learn more about it, they can certainly. Dig in deeper instead of just hearing the highlights here on a podcast. But thank you again for being generous with your time and your knowledge. I really appreciate it. Matthew Haber (31:43) Thank you for having me. My pleasure as always. Judy Warner (31:46) To our listeners, please go check out the show notes. By the time we get this live, I'll have those links for you below. I hope this has been helpful and insightful for you to think about risks to your supply chain and ways that you can stay on top of this crazy geopolitical sort of storm we're in while we're trying to figure out what we're doing around here! We will see you next week. Until then, remember to always stay connected to the eecosystem.