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Fractory boosts manufacturing efficiency through an automated outsourcing platform

Production complexity, market fragmentation and diversity. These are some of the main reasons why outsourcing metal fabrication to external manufacturers is still a manual process and the slowest to change in the industry. Until now.

Fractory – one of the Estonian startups that participated in the pitching event Unicorn59 – is here to change the game, automating metal fabrication outsourcing. The services offered on their cloud-based platform include high-quality laser cutting and metal folding. Fractory’s manufacturing experience cuts across industries – from construction and robotics to forestry and agriculture – and their network of trusted partners is growing together with the startup.

Here, the company’s CEO Martin Vares outlines the problems their platform solves alongside their achievements thus far.

Unique challenges in the metal fabrication industry

Outsourcing in metal fabrication is crucial. As the fabrication process is complex and involves significant investments in equipment, materials, and workforce, it is less feasible to rely on in-house production and more profitable to leverage external expertise.

“But the market is fragmented, with many relatively small providers,” Vares explains. “Their machinery is diverse and the production itself is very nuanced. When a company starts their outsourcing to external manufacturers, the machine they need is surely available somewhere on the market. Nonetheless, it is difficult to evaluate which company has the right machine and where it is located,” he continues.

This means that companies send out multiple inquiries to external manufacturers, wait for replies and compare the results before making the final decision. On the other side, manufacturers spend resources on accepting the order, ensuring they have all the necessary blueprints as well as putting it into production and organising the shipping.

According to Vares, with the right technological solution, all the manual work involved can be eliminated.

Fractory’s achievements thus far

By now, Fractory has already managed to significantly automate the long outsourcing process, cutting down the resources typically spent on managing the admin. “For 30% of orders, our system is fully automated. So, the client can receive a quote and forward their request in a few minutes, without our team having to intervene,” Vares highlights.

“The manufacturer accepts the order, and the relevant information is automatically forwarded to their accounting and production units. They complete the production, come back and press a button, which generates the shipping label and requests transportation,” he continues. In short, for 30% of their orders, Fractory has managed to cut a 2-3h process down to 10-15 minutes.

Fractory prioritises finding the most optimal machinery to match the specific needs of the client. This allows the startup to achieve the necessary balance of value for all stakeholders involved:

+ Clients bear lower costs than finding the manufacturer on their own;
+ Machine idle times are reduced for manufacturers, and they are paid fairly because they have the right machine to meet the needs of the client;
+ Fractory has the necessary profit margin to keep the system running and in continuous development.

Reaching this profitable balance is one of the startup’s latest milestones. While it took them 3 years to reach it, Vares notes that this value is now visibly growing at a steady pace. “This is the key to our offering, which we keep refining, and which will ensure the long-term success of the whole system,” he underlines.

Fundraising for expansion

Currently, Fractory serves 400-500 clients, with about 600-700 orders every month. Their growth rate is over 10% a month and 230% year-over-year. They have an office in Estonia and the UK, with a focus on mainly targeting clients in the latter as well as Nordic countries. Soon, Fractory plans to open on the US market, where they already have a small but growing client base.

At the time of writing, the startup is about to close on their latest fundraising round. The aim of the round is to reach three new markets – North America, France, and Italy – as well as increase the automation level from 30% to 50-60% and introduce 2-3 new production processes. This expansion also entails actively growing their team in Estonia and other locations. With Fractory’s ambitious plans and the results achieved thus far, it is safe to advise watching this space, as there is definitely more to come.

If you are interested in investing in Fractory or some other Estonian startup, feel free to contact us via e-Consulting in order to schedule an appointment with one of our investment advisors, happy to help you on your journey to start building your unicorn in Estonia.

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