CADDi is a global supply chain company with a goal to unleash the potential of manufacturing. Pulse 2.0 interviewed CADDi CEO and co-founder Yushiro Kato to learn more.
Formation Of CADDi
How did the idea for CADDi come together? Kato said:
“The idea for CADDi came about during my time at McKinsey, where I worked with numerous large manufacturing enterprises to help them reduce procurement costs. One persistent challenge was estimating the production costs of custom-made parts. Local machine shops vary greatly in their strengths, and prices fluctuate significantly. However, since all parts are custom-made, there was no standard formula for calculating costs, and it was unclear what each supplier’s strengths were.”
“This led to the idea of using technology to automatically analyze the cost of drawings at each supplier and to select the best supplier from our network, much like finding the ideal supplier for custom-made parts—an approach similar to Amazon’s for off-the-shelf products.”
Favorite Memory
What has been your favorite memory working for the company so far? Kato shared:
“One of my most cherished memories working with CADDi has been receiving feedback from our customers detailing the significant improvements they’ve seen in their businesses as a result of our partnership. There’s a profound sense of fulfillment that comes from knowing our efforts have made a real difference. This collective mindset of success, shared by every CADDi member, deeply resonates with me. Each customer’s progress is a testament to our work, and these moments of gratitude are not just heartwarming but also a powerful affirmation of the positive impact we’re striving to create.”
Core Products
What are the company’s core products and features? Kato explained:
“CADDi MANUFACTURING: Our business primarily deals with high-mix-low-volume and mid-volume production, where customers cannot get optimal pricing on their own due to volume constraints, but with our technology, we can aggregate these orders together (finding similar processes, materials, and delivery schedules) to our global manufacturing partners in Mexico, Japan, Vietnam, and Thailand that meet the highest quality standards to provide better, cheaper parts on time.”
“CADDi Manufacturing provides parts for these customers, yielding a 99.83% on-time delivery rate and a 99.96% non-defective rate (several standard deviations above average for lower-volume industries) while also reducing manufacturer’s procurement costs by nearly 20%.”
“CADDi DRAWER: Drawings are considered the most important asset of manufacturers as they hold details that impact quality, cost, and delivery (QCD), yet these are stored in decentralized systems, and often key insights are tied to human memory (which goes away with the high turnover in this industry), so these valuable data are not compounded. People normally keep their savings in assets that grow, but manufacturers have been unable to do that because of the way drawings are stored and accessed. Because of the difficulty of access, drawings are often recreated or just not found, which means keys to improving QCD (the KPI for manufacturing professionals) are never unlocked. So, instead of more drawings providing more improvement, it’s almost like the data is never saved, and people are forced to start from scratch every time.”
“CADDi Drawer provides access to all procurement data ever created in seconds, making drawing data usable across departments and saving a significant amount of time and costs while allowing manufacturers to improve QCD with more drawings created.”
Product Superiority
How is your product an improvement compared to current industry trends and alternatives? Kato replied:
“CADDi Drawer offers an unparalleled level of accuracy in similarity search within the market. Our cutting-edge algorithm leverages the rich metadata embedded in 2D drawings to transform them into intricate 3D-like representations. In stark contrast to other algorithms that merely superimpose drawings or compare exact shapes, our solution conducts a comprehensive analysis of every facet of the drawings to yield remarkably precise results. Think of it as having an engineering and procurement expert meticulously examine all drawings, but accomplishing in mere seconds what would typically take hours or even days.”
Differentiation From The Competition
What differentiates CADDi from its competition? Kato affirmed:
“CADDi sets itself apart from competitors like AutoDeskVault, Paperless Parts, Procurify, and Physna with its unique foundation in addressing the complexities of custom part manufacturing as a manufacturing-first tech-company rather than a tech-company that developed a solution for manufacturing. With a team of hundreds of experts servicing more than 600 global manufacturing sites, CADDi offers an unparalleled depth of industry knowledge. Unlike other solutions that target specific departments, CADDi focuses on integrating the entire manufacturing process, promoting company-wide efficiency and breaking down silos. This comprehensive approach ensures that CADDi doesn’t just solve isolated problems but enhances the overall productivity of the manufacturing operation, which is necessary for maximum cost reduction and value enhancement.”
Challenges Faced
Have you faced any specific bottlenecks in expanding into the American market? Kato acknowledged:
“As the market leader in Japan, where we work with 70% of the top manufacturers, we can really lean into our brand awareness to be less overt in our messaging. In Japan, the corporate culture places a high value on humility and group harmony, which starkly contrasts with the more assertive and individualistic American business ethos. This cultural dissonance necessitates a strategic pivot in approach to resonate with the U.S. audience. Furthermore, the brand awareness that serves as a significant asset in Japan doesn’t automatically extend to the American market. Establishing a foothold in the U.S. thus requires a robust marketing strategy tailored to introduce and solidify our brand in the minds of American consumers, who may be unfamiliar with our legacy and success back in Japan.”
Evolution Of CADDi’s Technology
How has the company’s technology evolved since launching in 2017? Kato noted:
“We started from an automatic quotation platform based on 3D CAD data. However, we shifted our focus to 2D drawings since 99% of procurement people use 2D to procure parts.”
“We’ve delved deeper into holistic supply chain transformation: extracting data from 2D drawings, enabling automatic quotations from 2D, and developing an order platform for supply partners. We also offer tools for quality risk assessment, production monitoring, inventory, and logistics management.”
“We saw a significant need in 2D drawing analysis and created CADDi Drawer. It allows similarity searches across customers’ entire historical drawing library, image searches, and identifying differences between similar drawings. We keep adding features to meet our customers’ needs.”
Significant Milestones
What have been some of the company’s most significant milestones to date? Kato cited:
“In 2021, our commitment to excellence and innovation established us as the leading provider of custom-manufactured parts for Japanese industries. By 2023, this reputation for excellence helped us attract the largest investment round ever recorded for a startup in the manufacturing sphere.”
Customer Success Stories
After asking Kato about customer success stories, he highlighted:
“One particularly striking success story that stands out involves Mr. Takuya Kenmochi, who has dedicated 30 years to his company, witnessing its evolution from the introduction of CAD to managing an extensive archive of over 300,000 drawings. Facing the daunting challenges of an aging workforce, impending retirements, including his own, and no new hires, the company was at a crossroads, confronting the twilight of its core industry.”
“Despite this, Mr. Kenmochi held a resigned attitude that their situation was an unavoidable reality faced by many companies. However, this perspective began to shift with the introduction of CADDi’s services. As CADDi Drawer was implemented, even Mr. Kenmochi, who had been counting the days to retirement without much hope for change, found himself driving transformation within the company.”
“The generational gap that often hampers the adoption of new technologies like DX, IT, and AI seemed less daunting. DRAWER bridged the divide, providing seamless access to vital information across the company. Now, their 50 employees could retrieve and utilize data around the clock, from anywhere, ensuring that the company’s vast repository of knowledge would remain alive and accessible indefinitely.”
“This profound change eradicated the anxiety over business succession and the loss of expertise due to retirements. Thanks to our collaboration, Mr. Kenmochi and his company could not only secure their present but also reclaim the lost three decades, confidently stepping into a future they had once viewed with uncertainty. This turnaround, from resignation to revitalization, is a testament to the transformative power of our solutions, and it remains one of the most memorable validations of CADDi’s mission to empower businesses.”
Funding/Revenue
After asking KAto about funding and revenue information, he revealed:
“We have raised over $164 million thus far and have generated over $100 million since launching.”
Total Addressable Market
What total addressable market (TAM) size is the company pursuing? Kato assessed:
“$100 billion for the US+EU+JP market”
Future Goals
What are some of the company’s future goals? Kato concluded:
“Our goal is to generate $10 billion in revenue by 2023 with $1 billion coming from CADDi Drawer.”
