Why Your Supply Chain Needs AI Now

The electronics supply chain has never been more volatile and the companies that ignore AI risk getting left behind entirely. In this episode of the Ctrl+Listen Podcast, host James sits down with Matthew Haber (CEO) and Phillip Gulley (CSO), co-founders of Cofactr, for a wide-ranging conversation on how AI is fundamentally reshaping hardware procurement, component sourcing, and supply chain management. From their unexpected origin story — building tours for Coachella acts and escape rooms for The Walking Dead — to solving year-long lead times for autonomous vehicle pioneer Zoox, Matt and Phil reveal how frustration with electronics supply chain chaos led them to build Cofactr from the ground up.

Cofactr is now transforming how hardware teams go from bill of materials to kitted components delivered on schedule with a free platform tier that removes friction for manufacturers of all sizes. Tune in to hear how AI handles everything from scrubbing supplier quotes to warehouse receiving verification, why 5 procurement professionals at Cofactr can do the work of 50, and why supply chain volatility isn't going away anytime soon. Whether you're a startup engineer or a Fortune 10 procurement manager, this episode is essential listening for anyone navigating today's unpredictable electronics market.

Resources from this episode:

• Connect with Matthew
• Connect with Phillip
• Learn more about Cofactr

Listen to the Episode

Watch the Episode

Key Takeaways

• AI is becoming unavoidable in hardware supply chains. AI now handles large portions of procurement, data extraction, and order tracking; tasks that previously required dozens of people. Companies that avoid AI‑driven tools risk falling behind teams that can operate faster and with far fewer resources.
• Supply‑chain volatility is here to stay. Instead of one big disruption every few years, the industry now faces constant, rotating shortages driven by geopolitics, tariffs, and semiconductor complexity. Stability isn't the norm anymore. Adaptability is.
• Big and small hardware companies share the same bottlenecks. Whether it's a five‑person startup or a global enterprise, engineering teams struggle with long lead times, sourcing parts, and managing thousands of components. Scale doesn’t protect companies from these issues.
• Fast iteration beats traditional manufacturing approaches. Relying solely on large contract manufacturers slows teams down during prototyping. Companies that iterate quickly—often using local or modular suppliers—reach market faster and respond better to change.
• Reshoring is accelerating but reveals new challenges. With growing pressure to manufacture domestically, companies are being pushed to rebuild local supplier networks. That shift requires better visibility, faster supplier discovery, and modern tooling to replace legacy processes.

Transcript

James Sweetlove: Hi everyone. Welcome to the "Ctrl+Listen Podcast" brought to you by Octopart. I'm your host James, and I'm here with our two guests today. They're returning to the show for the second time. We have CEO and co‑founder Matthew Haber and CSO and co‑founder Phillip Gulley, both from Cofactr. Thanks for coming back on the show. Great to have you again.

Matthew Haber: Thanks for having us.

Phillip Gulley: Great to be here, man.

James Sweetlove: Anytime. So let's do a quick refresh for anyone who missed the first time you were on the show. Can you tell us a little bit about your background, both personally and about Cofactr’s story?

Phillip Gulley: Yeah. So Matt and I have a technology and entertainment background—that’s actually how we started. We've been working together for about 10 years. We started as an engineering solutions company doing design and engineering work. This included all kinds of wild stuff—tours for bands going to Coachella, escape rooms, hardware for The Walking Dead, interactive window displays for Tiffany & Co.

Eventually, as we got deeper into the design and engineering space, we ended up working with companies like Zoox, helping them prototype and build out experience design for autonomous vehicles. That’s where we started to realize, hey, we should dive fully into hardware. One of the reasons Zoox engaged us was that they had a year‑long lead time to get proto boards to figure out the in‑car experience, which was wild. So we came in as a bespoke solutions team to help bridge them into the next stage of new product introduction.

Matthew Haber: By the end, we were pretty vertically integrated. We had in‑house machining, mold‑making, all sorts of stuff. One of the only things we didn’t bring in‑house was circuit‑board assembly and electronics fabrication. Because of that, we constantly got wrecked on lead times and supply‑chain disruptions. Our customers—large and small—were dealing with the same issues.

After we sold the engineering firm to private equity, we basically started a contract manufacturer for circuit boards out of frustration. We bought an SMT house and built on top of that. And we realized very quickly: the hard part isn’t building the boards. Contract manufacturers are great at that. The hard part is getting all the parts to show up at the line. Hundreds or thousands of parts every day. That led us to build software and infrastructure to solve that problem for ourselves, and ultimately that became Cofactr—for everyone.

James Sweetlove: Interesting. You guys have such an interesting journey. You’ve covered so much ground. I love to hear it.

Phillip Gulley: Oh yeah. We have plenty of conversations at a bar a couple beers in that get a lot weirder. It'd be a world of entertainment.

James Sweetlove: For sure. So just to refresh people's memory, can you tell us about your product offering—the value pitch you have?

Matthew Haber: Ultimately, Cofactr gives hardware teams the fastest, most cost‑effective way to go from a bill of materials, coming from something like Altium, to kits of components delivered to their dock or to their contract manufacturer on schedule, with full traceability and compliance. That way hardware teams can focus on building and designing products instead of procuring and kitting the parts. We work with companies ranging from startups to large Fortune 10 manufacturers—especially in aerospace, defense, robotics, and other critical industries.

James Sweetlove: Interesting. And I know you’ve undergone some major changes in the past 12 months. Can you explain what's shifted and how the company is evolving?

Phillip Gulley: Oh my God, yeah. The world is different. We’ve got tariffs, geopolitical shifts—huge disruptions in how tiered supply chains operate. Domestic manufacturing is facing new challenges, and organizations are incentivized to bring manufacturing back to the U.S.

A year ago, we were focused on generalized procurement and were a SaaS model. We've realized it's almost a moral imperative to make what we do easier to get onboarded with and faster to deliver results, because it’s a crucial moment for manufacturing.

Now the platform structure is free to get on. We expanded our footprint—we had a warehouse in New York, now we have one in Long Beach, because we work with many companies in Seattle and Los Angeles. We also acquired Cogbase, which brought a domestic supplier base that’s searchable. So now if you need board fab, PCBA, new suppliers, quotes—it's all there. We're trying to make everything as accessible as possible and have the infrastructure to support growth.

James Sweetlove: Fantastic. How has that change affected your day‑to‑day?

Matthew Haber: The company is a lot bigger. A year ago we were around 15 people; now we're around 50. Our customer base has grown substantially—both in number and scale. In the past two weeks alone, we had over 50% customer growth. That changes how we work. It’s exciting, and we thrive in interesting environments.

The geopolitical and economic changes have made for very intellectually interesting work in supply chains. We’re now in rooms we wouldn't have been in before, both in industry and government, and the reception has been gratifying.

Phillip Gulley: Everything feels a lot more real. Members of our team have spent more time in D.C. than we expected, having conversations about critical manufacturing. Supplier discovery has shifted from “it would be nice to find someone else” to “I’m being told to reshore as completely as possible.” That’s a massive challenge.

Matthew Haber: And scaling is unusual. Some of our customers were making a handful of drones a year, and now they're ramping to hundreds of thousands. Everything breaks at each increment of scale. It’s a whole new wave of hardware companies, heavily funded, scaling fast, and adopting modern tools. Even legacy companies are now saying, “We can move faster.” It's exciting.

James Sweetlove: Interesting. So let's shift into talking about how you stand out. What do you offer the EE market that others don’t?

Phillip Gulley: We’re admittedly a confusing business model. People hear “data BOM upload,” “sourcing,” “procurement” and get that. Then we say, “We have warehouses,” and that always surprises people. We’re actually receiving material, transforming it, kitting it, storing it, and ensuring customers have critical parts ready for manufacturing.

We combine great data, AI tooling, physical warehousing, and people into an end‑to‑end solution that goes from BOM to assembled product. It’s unique.

Matthew Haber: Think of it as an infinitely scalable army of top‑tier electronic commodity managers and procurement experts—powered by AI. Plus unlimited scalable 3PL that’s electronics‑ready—ESD safe, climate‑controlled, secure, ITAR‑registered. All wrapped in modern software. And it scales with you. You don’t need to build the infrastructure or hire the headcount.

We’re software, people, and warehouses—all tightly integrated. It's incredibly hard to do all three well. That’s why no one else does it.

Phillip Gulley: We were talking to a customer yesterday who said hiring supply‑chain leadership is nearly impossible right now. Especially for electronics. There’s just not enough people, and demand is huge.

James Sweetlove: Yeah, that makes sense.

Matthew Haber: And memories are short. Everyone panicked during Covid—then a year later acted like everything was fine. Now sanctions hit, another panic. Every few years it’s “the worst disruption ever,” and then people forget. We're just here steadily dealing with every part of the cycle.

James Sweetlove: So last time we spoke, you mentioned creating a free tier based on customer feedback. What inspired it?

Phillip Gulley: Supply chain feels transactional. People think, “I want to buy things; the things should show up.” Paying ongoing software fees feels odd to them. If our mission is to make solving this problem easier for domestic manufacturing, then the platform should be free to adopt.

Matthew Haber: It also aligns incentives. If we make people pay upfront, they have to trust us before they see results. With the free tier, we’re saying: we’re so confident the product will save you money and time that you’ll end up paying us anyway through usage—fees on purchasing and warehousing. But the software itself is free because we want you to see the value immediately.

James Sweetlove: So what's the difference between the free tier and paid tiers?

Matthew Haber: Mainly integrations and enterprise features. Some integrations are available on the free tier. More complex integrations—SAP, Oracle—require customization and support, so they're paid. There are also more advanced reporting tools at the enterprise level. But many large customers use the free tier, which is great.

James Sweetlove: You mentioned AI earlier. How crucial is AI to the processes that make all this work?

Matthew Haber: A lot. An ever‑growing amount. Customers see it in features like reading supplier quotes or data extraction. But behind the scenes, we use AI for technical data extraction, supplier communications, tracking tens of thousands of parts, and managing orders. We do with a handful of people what would normally take 100. Even in the warehouse, AI handles receiving, photographing, reading labels, matching packing slips. Humans fill in edge cases; AI handles the rest.

Phillip Gulley: And the magic is that customers barely see any of it. The number of issues resolved before a customer even hears about them is huge. We know every part’s status, every quantity, every shipment. Zero lost parts. AI makes that possible.

Matthew Haber: Of our 50 people, fewer than five are procurement staff supporting what normally takes 50–100 people. That’s AI delivering real‑world results.

James Sweetlove: Fantastic. I love seeing AI used this way.

Matthew Haber: Absolutely.

Phillip Gulley: Humans shouldn’t be doing grunt work. They should be doing the strategic work—the art.

James Sweetlove: So here's a company‑focused question before we get into industry trends. What differences do you see between small and large companies’ supply‑chain needs?

Matthew Haber: Surprisingly few. We work with five‑person startups and huge global companies, and the day‑to‑day pain points are incredibly similar. Big companies have more leverage, but inside those companies are hundreds of small 20‑ or 30‑person teams managing procurement on credit cards—not much different from a startup. We support both ends.

Phillip Gulley: I’ll add a contrarian view: massive commercial hardware companies have great supply‑chain service from manufacturing partners because they make millions of units. That doesn’t work for rapid iteration. Using your scaled manufacturer for prototyping slows you down. The PlayStation versus Xbox example is perfect—PlayStation iterated faster using local partners and beat Xbox to market.

Agility wins. We're seeing that across the industry.

Matthew Haber: And outside consumer electronics, huge companies often have low volumes per SKU. A big chip maker might make millions of chips, but they also manage 20,000 PCBAs in small quantities. Their pain points look like startup pain points—just multiplied.

James Sweetlove: I love that explanation. So let’s talk big picture. What role do you see AI playing in the future of supply chain? Is there any path forward without it?

Matthew Haber: Yes, AI is essential. AI won’t eliminate supply chain—it won’t replace human relationships or strategic negotiation—but it will replace huge amounts of grunt work. Companies that avoid AI won’t keep up. Not tomorrow, but soon. The pace is too fast.

But most companies won’t implement their own AI. They’ll use tools—Altium, ERPs, Cofactr—where AI is built in by experts. That’s the future.

Phillip Gulley: Exactly. Think about legal redlining. AI gets you 99% of the way there. Lawyers shouldn’t do grunt work—they should do high‑level reasoning. Same thing for supply chain.

James Sweetlove: Do you see constant disruption as the new normal?

Phillip Gulley: Yes. There is no normal. Stability requires controlling every element of a global supply chain, which is impossible.

Matthew Haber: Chips are the most complex products humans make, with the most complex supply chains. Combine that with geopolitical instability, and yes—disruption is constant. Not everything at once like COVID, but rotating pockets of chaos. One quarter it's Nexperia; next quarter it’s someone else. You can't predict it. You can only build resiliency.

Phillip Gulley: To put it simply: I don’t know if there's ever been a moment in my life when I could say with confidence, “In 90 days, I can make you guacamole.” If that’s true of avocados, it’s definitely true of complex hardware.

James Sweetlove: Fantastic analogy. I think people are more aware than ever of how fragile supply chains are. Companies like yours are going to be crucial. Thank you.

Matthew Haber: Likewise.

Phillip Gulley: We love you too, James. (laughs)

James Sweetlove: One last question. If people want to follow what you're doing or try the free tier, where should they go?

Matthew Haber: Cofactr.com — C‑O‑F‑A‑C‑T‑R.com. We're also on LinkedIn. You can find the company or find Phil and me directly. We're not hard to reach, and we'd love to help anyone get access to the free tier.

James Sweetlove: Fantastic. Thank you. We’ll have to bring you back in another 12 months—I’m sure the world will be unrecognizable again.

Matthew Haber: I'm sure it will.

Phillip Gulley: Thanks, James.

James Sweetlove: Anytime. And thanks to everyone listening. Come back next time, we’ll have another guest for you.