The impact COVID-19 has levied on the global supply chain is well documented, but one of the less-documented areas is quality control processes.
Travel restrictions and cost controls put in place during the height of the pandemic resulted in fewer e-commerce and consumer goods brands conducting quality control inspections are foreign manufacturers.
Founded in 2021, Factored Quality is looking to connect these businesses with quality control inspectors in foreign nations to help them gain better insight and control over the manufacture of their products.
On Tuesday, the company announced a $5.6 million seed round of funding led by Amity Ventures with participation from Dynamo Ventures, BAM Ventures, Red Antler, Very Great, and angels such as the founders and executives at project44, Anvyl, Shipbob, Evisort, Carta, Yelp, Scout RFP, Magic Spoon and Soft Services.
“The last two years have caused massive shifts in the supply chain world. Geopolitical tensions, trade wars and logistics constraints have forced modern brands to take a decentralized and lean infrastructural approach to manufacturing,” said Prince Ghosh, co-founder and CEO of Factored Quality. “In the same way that modern brands invested in using freight forwarders like Flexport to manage shipping and logistics operations, and then used 3PLs to manage warehousing operations, we’re building Factored Quality to help those brands scale their quality and manufacturing operations with ease.”
Ghosh, Justin Seidenfeld, Lucas Lappe, Yas Vishnu and Lucas Fridman founded the company. Ghosh and Fridman previously founded Workbench Technologies, a supply chain management software company for the e-commerce industry. The pair met Seidenfeld when they went through Y Combinator. Seidenfeld is CEO of Doris Dev, a full-suite product development agency.
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The need to ramp up quality control has accelerated during the pandemic. According to the National Association of Manufacturers, counterfeit products cost U.S. manufactures $131 billion in 2019, and that didn’t take into account e-commerce and consumer brands that buy finished products from overseas.
The National Retail Federation said retail goods counterfeits cause reputational harm to brands.
“Brand reputation becomes an immediate casualty when consumers unknowingly spend their hard-earned dollars on goods sold at bricks-and-mortar retail stores or on online third-party marketplaces only to later discover that these goods are shoddy or inferior counterfeits,” NRF said in comments filed with the Commerce Department in 2019 in response to a U.S. House bill on counterfeits. “The harm caused by one marketplace inadvertently carrying counterfeit or pirated goods … is difficult to contain.”
One way to combat this is for brands to gain better insight into the manufacturing of their goods. Factored Quality said it connects brands to third-party inspectors in any geographic region in the world. The brands simply choose what goods they want inspected, at which factories, and the date and specs they wish to see. Factored Quality contracts with an inspector and provides the brand with video and photos of the entire process along with a final report that includes “easy-to-understand results.”
The platform allows the brand and inspector to post reviews and ratings of each other.
“We’re excited to partner with Prince and his team because they are simply focused on helping brands deliver great products while Factored takes on the ‘unsexy’ stuff behind the scenes. This team has the right founder market fit to deliver,” said Patrick Yang, general partner at Amity Ventures. “Having invested in other companies like Carta, Snyk and Talkdesk for the same reasons, we’re confident that Factored Quality is well positioned to blossom into one of the next big platforms powering brand builders everywhere.”
Factored Quality said it provides a technology-based process to a service that is traditionally manual and typically requires phone or online meetings to discuss results. For smaller brands and those third-party merchants that want to sell on Amazon’s marketplace, this is a costly and time-consuming process.
Additionally, the supply chain disruption over the past two years has led some brands to adopt a decentralized manufacturing process, requiring inspections to take place in several countries.
Factored Quality works with consumer goods brands, primarily in the consumer electronics, durable goods (e.g., cellphone cases and luggage), footwear and apparel segments.