Last week, I had the chance to catch up with a friend and industry colleague, Mitch Free, founder and CEO of MFG.com. While we tried to avoid talking directly about work most of the time, I could not resist asking him if we could do a short blog interview about the future of sourcing, marketplaces and related topics. Mitch was more than happy to oblige. Somehow, the conversation even turned to Courtney Love and Manny Ramirez (don't ask me how). In any event, below you'll find the second part of my interview with Mitch.
Jason: In the current inflationary climate, what can small and mid-market manufacturers do to offset material costs?
Mitch: Developing sourcing options is one tactic -- different suppliers in different geographies might have access to different raw material pricing. Other options include leveraging the surplus and scrap markets, material substitution and listening to suppliers for suggestions on cost reduction ideas. Scrap programs are often good bets as anything that you or your suppliers can get for scrap material is found money.
Jason: MFG.com is a marketplace, not a software company. Still you use technology. What are the biggest lessons learned in developing it?
Mitch: First rule is that it always take longer and costs more than you anticipate it will. One of the strategies I favor is to develop small pieces of software and then put them out live and let the community help drive ongoing development. It's almost impossible to focus in advance and determine the needs of the community before they start using it. Let the users speak. Second rule -- which is connected to the first -- is that the web changes the game. With the web, you can push code hourly, daily, etc. This allows us to adapt to changing user requirements and demands quickly. We've learned that when we try to think through every user scenario, it takes a long time and then users don't use the features that we thought that they would. The better strategy is to meet basic requirements and observe what users are trying to do and develop it quickly on an iterative basis and develop exactly what the community wants. Avoid developing things that you think are cool. Let the community have a voice.
Jason: So what is up out with this Textile marketplace thing on MFG.com?
Mitch: We saw a big opportunity to take the MFG.com business model into the textile industry. Our gut was right. Only shortly after launching, we have tens of million dollars of volume almost every day on the site. We've got some cool stories, too. Even Courtney Love is using the service for some of her new fashion designs. But the bulk of the buy so far has been in uniforms with larger companies using the service. One organization spent $2 million on hospital scrubs. The truth is that the bulk of the buy is the non-sexy stuff (however much we like working with folks like Courtney Love). Small guys can play too, though. Manny Ramírez used our service to source t-shirts. "Let Manny be Manny." He brought them to Japan for spring training. 5,000 shirts!
Jason: Tell me more about this Open Source manufacturing model you're getting involved with.
Mitch: Right around the corner is a very interesting trend developing that we call Open Source hardware. It is particularly ripe for companies that have platform technology that don't make the money from the platform itself, but make it from consumables or add-ons consumed by the platform. These are companies that lose money or break even on producing the platform. But if they were to take the platform and Open Source it and let others improve it and combine it with other functional products, then they would get better mass distribution. And they could also get out of the business of low-margin or no margin platform development all the while achieving wider proliferation of a platform that would result in greater sales of the consumables. This concept is high on our priority list and we intend to take a lead on Open Source community development. We've been working on it for about a year. In the fall, we will be releasing some very interesting Open Source designs as well as a portal for the open source community. Here's a hint at what is to come.
Spend Matters would like to thank Mitch Free for sharing his thoughts on Spend Matters. To get more into the mind of Mitch, check out his site and blog: Free Thinking.
- Jason Busch