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<h5>Originally published in <a href="https://www.assemblymag.com/articles/99940-subaru-saves-time-with-pdm-software" rel="noopener noreferrer" target="_blank">Assembly Magazine</a></h5>Software leverages AI to aggregate, analyze and extract design data to help engineers create better products.By <a href="https://www.assemblymag.com/authors/1846-john-sprovieri" rel="noopener noreferrer" target="_blank">John Sprovieri</a><img src="https://cdn.builder.io/api/v1/image/assets%2F209ee507cedf4c298e100edae4bba2df%2Fb199323da4544bdb97cb13d84f994b74" alt="Subaru vehicle on the assembly line beneath a Welcome to Subaru Assembly sign">Photo courtesy Subaru Corp.Subaru established a companywide team—the Cost Innovation Promotion Department—to address cost-related challenges related to manufacturing the next generation of vehicles.The automotive industry is experiencing a once-in-a-century transformation, driven by the convergence of four technological trends: connected vehicles, autonomous vehicles, shared vehicles and electric vehicles. This transformation demands not only product innovation, but a total revolution of manufacturing processes.To meet that challenge, <a href="https://www.assemblymag.com/articles/99578-final-subaru-legacy-rolls-off-indiana-assembly-line" rel="noopener noreferrer" target="_blank">Subaru Corp.</a> created a new management strategy, the “One Subaru” initiative. The strategy emphasizes a flexible and agile organizational culture, closely integrating manufacturing, development and the supply chain to enhance productivity.Within this context, <a href="https://www.assemblymag.com/articles/95505-subaru-to-expand-indiana-manufacturing-plant" rel="noopener noreferrer" target="_blank">Subaru</a> established the Cost Innovation Promotion Department to address cost-related challenges and formulate strategies across the organization. Subaru aims to be at the forefront of manufacturing innovation and value creation.For manufacturing, one significant goal is to halve the number of processes, components and steps involved in production, starting with the reduction of non-productive work. Subaru began with the process of turning <a href="https://www.assemblymag.com/articles/96217-cad-software-aids-assembly" rel="noopener noreferrer" target="_blank">CAD drawings</a> and design specifications into production parts, whether they were to be made in-house or by a supplier.Subaru’s existing process required specific information, such as part numbers or design notification numbers, to search for drawings. This often necessitated inquiries to the design department, with responses taking up to one or two weeks. Even within the design department, finding drawings was challenging for those working in different areas or with less experience.Subaru sought ways to leverage its accumulated drawing assets to reduce non-productive tasks. The company identified CADDi Drawer, a cloud-based manufacturing data platform from CADDI Co. Ltd., as a potential solution.“I have about 20 years of experience in design,” says Kei Matsumura, an engineer with Subaru’s Cost Innovation Promotion Department. “In my design work, searching for drawings took up a significant amount of time. I always felt that if I had more time, I could engage in work that added more value.”When Matsumura learned about CADDi, it resonated with him, as he knew that it could reduce the tedious searching and unlock valuable additional time to do meaningful work.<img src="https://cdn.builder.io/api/v1/image/assets%2F209ee507cedf4c298e100edae4bba2df%2F463be91914954efc85a4a59a793742f7" alt="Subaru assembly worker fitting a component to a vehicle door frame">CADDi software uses AI to parse design drawings, documents and supply chain data. Photo courtesy Subaru Corp.<h3>A Better Way</h3>CADDi software leverages <a href="https://www.assemblymag.com/media/podcasts/6446-assembly-audible/play/339-how-artificial-intelligence-is-revolutionizing-manufacturing" rel="noopener noreferrer" target="_blank">AI</a> to aggregate, analyze and extract everything needed from design drawings and data to produce better products. Manufacturers upload their technical drawings and documents into CADDi—even hand-drawn ones. The software then parses those drawings, documents and supply chain data with AI technology. It extracts important information and structures that data into a data lake that can be referenced, imported or exported.Part drawings serve as the thumbnail through which engineers access data. There’s no need to click into file folders to find information. Engineers can use key words, similarity, or image search to instantly find the drawings and documents they’re looking for.Engineers can find similar drawings, identify differences between drawings, compare suppliers for a specific part, and annotate drawings and documents. CADDi links documents to drawings based on the drawing number, including quality inspection reports, meeting minutes, design change notices, and corrective action reports.Once engineers find the parts they are looking for, they can download every piece of associated data as a CSV file for analysis. They can also create up to 20 custom tables using any data from their spreadsheets, including manufacturing, pricing quotes, sales, process and purchase data.<img src="https://cdn.builder.io/api/v1/image/assets%2F209ee507cedf4c298e100edae4bba2df%2Fedd286e40ef44fbdbff7c6c9882e1907" alt="Workers installing parts on the underside of a vehicle on the Subaru assembly line">Using CADDi software, engineers can analyze similar designs with different costs to understand where the cost differences come from. Photo courtesy Subaru Corp.Engineers can even visualize parts in 3D within the software and review measurements without switching back to engineering tools.CADDi software has applicability throughout a manufacturing enterprise. Sales teams enjoy faster and more accurate estimates by referencing linked machining information. Procurement specialists can uncover hidden cost reduction opportunities by searching for patterns in order records. Engineering reduces design hours and prevents duplicates by making past designs easy to find.Following the introduction of CADDi, Subaru succeeded in reducing the time spent on drawing searches by several hundred hours per month. As use of CADDi expands across departments, these time savings are expected to multiply.“Many data management solutions focus on merely accumulating information, but CADDi allows us to analyze and utilize the data within the same system,” says Masateru Ido, an engineer from the Cost Innovation Promotion Department.<img src="https://cdn.builder.io/api/v1/image/assets%2F209ee507cedf4c298e100edae4bba2df%2Ff54d9a95d43246b8a480f34abf1edfaf" alt="Subaru workers assembling a vehicle chassis module on the production line">With CADDi, sales teams enjoy faster and more accurate estimates by referencing linked machining information. Photo courtesy Subaru Corp.Finding cost reduction opportunities requires quick and consistent access to data. Let’s say, for example, that there are two similar designs with different costs, and engineers want to understand where the cost differences come from. Before CADDi, Ito would have to request this sort of information from the design team, often waiting over a week for a response. With CADDi, he could immediately find the information he needed himself.The introduction of CADDi has also contributed to talent development. Previously, new employees had to be guided to specific drawing numbers to search for the right documents. Now, they can search for drawings by product name or material using keywords, making it easier to find the information they need without involving senior employees and taking them away from valuable tasks.“Before, if you didn’t know the drawing number, you couldn’t search for a drawing. Even if you wanted to inquire, you’d first need to figure out who to ask,” Matsumura recalls. “Now, even without the drawing number, you can search by part name. For example, typing ‘bumper’ will immediately bring up the relevant drawing, making information much more accessible.“The amount of information that can be referenced for decision-making has increased dramatically since CADDi Drawer was introduced. Moreover, the cycle of researching and obtaining information by oneself enhances learning, and those using CADDi Drawer are undoubtedly becoming more skilled.“The new value creation, evolution in creativity, and the impact on human resource development are immeasurable. Moving forward, I hope CADDi Drawer will further energize communication, serving as a starting point for projects from planning through after-sales, involving the entire supply chain. Our goal is to create an environment where everyone uses it.”<img src="https://cdn.builder.io/api/v1/image/assets%2F209ee507cedf4c298e100edae4bba2df%2F0910745d33a14384bc8dfea3bcf54833" alt="Subaru worker installing a component on a vehicle body on the assembly line">With CADDi, procurement specialists can uncover hidden cost reduction opportunities by searching for patterns in order records. Photo courtesy Subaru Corp.The Cost Innovation Promotion Department is now spreading the word about CADDi across the rest of Subaru. As a result, the number of proactive users across departments is steadily increasing.“When we talk to users, they tell us they can’t imagine working without CADDi anymore,” says Yuji Otani, an engineer with the Cost Innovation Promotion Department.Subaru aims to standardize CADDi Drawer across the company. Management envisions a future where CADDi Drawer is the first tool employees turn to, not only in design and manufacturing departments, but also in subsidiaries, overseas affiliates and suppliers.For more information on design management software, click <a href="https://caddi.com/en-us/" rel="noopener noreferrer" target="_blank">caddi.com</a>.

Subaru Saves Time With PDM Software

Total Cost of Ownership in Procurement

<a href="https://fortune.com/2025/03/27/japanese-ai-startup-caddi-venture-capital-funding-atomico-supply-chain-optimization/" rel="noopener noreferrer" target="_blank">Read the article in Fortune</a>CADDi, a Japanese startup that uses AI to help large global manufacturing companies optimize their supply chains, has raised $38 million in new funding from U.K.-based venture capital firm Atomico.The new funding values CADDi at $470 million, the company said. The investment round, which the company is classifying as a “Series C extension,” brings the total amount of venture funding CADDi has raised since its founding in 2017 to $202 million.CADDi had announced an $89 million Series C round in July 2023, with DCM Ventures, <a href="https://www.crunchbase.com/organization/globis-capital-partners" rel="noopener noreferrer" target="_blank">Globis Capital Partners</a>,<a href="https://www.crunchbase.com/organization/minerva-growth-partners" rel="noopener noreferrer" target="_blank"> Minerva Growth Partners</a>,<a href="https://www.crunchbase.com/organization/wil" rel="noopener noreferrer" target="_blank"> and WiL (World Innovation Lab)</a> all participating in the round.CADDI, which has headquarters in both Tokyo and Chicago, already has some U.S. customers and is planning to use the new funding to ramp up its U.S. expansion. The company also plans to double the number of software engineers it employs, from 150 to 300, Yushiro Kato, the ex-<a href="https://fortune.com/company/mckinsey/" rel="noopener noreferrer" target="_blank">McKinsey</a> consultant who is CADDi’s cofounder and CEO, said. The company currently employs 600 people in total.CADDi sells software that addresses a problem many large manufacturing companies have: They have too many similar parts being provided by too many different suppliers. CADDi ingests technical drawings of a part and then searches the company’s own data to find similar components—or, in some cases, identical parts—that are already in the company’s inventory or that it has bought previously. It also allows employees to search for parts using keywords that may be used in component descriptions.Manufacturers can use CADDi’s software to avoid component duplication, optimize supply chains for parts, such as fasteners, that may be common to many different products, and potentially reduce the number of suppliers they are using. That in turn can save costs by reducing the amount of time it takes to source a part and avoiding duplicative procurement processes and related paperwork. It also potentially lets the manufacturer get better prices on parts by purchasing higher volumes from a smaller number of suppliers.Kato told Fortune that the startup’s customers are primarily companies that make machinery for factories—for instance, food production machinery, packaging machinery, and semiconductor manufacturing machinery—and also automotive and auto parts companies.He said that one automotive parts customer reduced the number of different fastener SKUs it was using by 60% thanks to CADDi’s software.Automotive company <a href="https://fortune.com/company/subaru/" rel="noopener noreferrer" target="_blank">Subaru</a> said in a statement provided to Fortune that using CADDi’s software had saved it “hundreds of hours per month” in the time employees spend searching for technical drawings.DENSO, the Japanese auto parts company, has a partnership with CADDi and said in a statement that the company’s software allows younger, less experienced workers source components faster. Previously, procurement processes were dependent on the knowledge of veteran workers, many of whom are now approaching retirement age, DENSO said. It also said that it was working with CADDi to develop additional product features, such as the ability to search three-dimensional drawings, as well as two-dimensional engineering schematics.Kato declined to reveal the company’s current revenues or the total number of customers currently using the platform. But he said the company was targeting $1 billion in revenue from its software platform by 2030.When CADDi was first founded, it functioned as a kind of “<a href="https://fortune.com/company/amazon-com/" rel="noopener noreferrer" target="_blank">Amazon</a> marketplace for machinery components,” Kato said. Customers would send it technical drawings or engineering specs for parts that they needed, and CADDi would go out and source those parts for the customer, acting as a kind of parts broker. In order to do this efficiently though, the company wound up developing a lot of its own software, including AI models that can do searches based on technical drawings. Three years ago, Kato and his cofounder Aki Kobashi, who is CADDi’s chief technology officer, pivoted away from being a parts marketplace, instead selling the AI software it had developed as a cloud-based platform to manufacturing companies.Written by Jeremy Kahn

Exclusive: Japanese AI startup CADDi that helps manufacturers optimize supply chains gets $38 million in new funding

The last few years have marked a turning point in manufacturing, as the industry has faced one challenge after another.The COVID-19 pandemic, supply chain disruptions, and economic fluctuations have reshaped global manufacturing—and though progress has been made, true stability has not yet been reached. Fortunately,&nbsp;these challenges also created opportunities for innovation, with a growing number of companies leaning on new technologies to chart a path through uncertainty. Among the top innovations is artificial intelligence (AI), which is unlocking untapped potential across manufacturing sectors.AI-driven solutions in additive manufacturing, robotics, and intelligent software bring a new age of agility, efficiency, and adaptability to an industry founded on constant innovation. These breakthroughs allow manufacturers to meet demand more effectively, mitigate supply chain hurdles, and future-proof their operations. Here’s how these cutting-edge technologies are setting the stage for a new era in manufacturing.<h4>1) Additive Manufacturing Powers Rapid Idea-to-Production Capabilities</h4>Additive manufacturing, including 3D printing, has brought unprecedented flexibility to production lines. AI is making the entire process even more efficient by automating complex design steps and creating a seamless path from idea to physical product. With AI, manufacturers can transform an image or concept directly into a 3D model without needing extensive manual input. This streamlined process allows for a wider variety of products and significantly shortens the timeline from design to market-ready goods.For instance, during COVID-19, when personal protective equipment (PPE) became scarce, several manufacturers pivoted to 3D printing to produce face shields and other essential supplies. AI-driven additive manufacturing allowed them to quickly iterate designs and scale up production without the traditional delays associated with retooling. The flexibility to make on-the-fly adjustments to product designs reduces production lead times and enables companies to offer a wider variety of customized products, tapping into market segments that demand tailored solutions.AI’s role in 3D printing also opens up the opportunity for more customized product offerings, allowing manufacturers to create small, unique production runs without costly retooling. This capability is especially valuable in industries where customers demand highly personalized products, where companies must pivot swiftly to maintain competitiveness.Even if additive manufacturing can’t produce a certain final product, it allows for rapid iteration in prototyping and experimentation. Rather than having to reprogram a sophisticated metalworking machine, things like size tolerances or assembling compatibility can be tested quickly by printing out parts. AI-enhanced additive manufacturing can expedite this process further by automatically iterating on design parameters.<img src="https://cdn.builder.io/o/assets%2F209ee507cedf4c298e100edae4bba2df%2Fcc35d72367074dc5b8406630fc7bc1e7?alt=media&amp;token=76cad71f-1dcc-41cc-99be-200fb765170d&amp;apiKey=209ee507cedf4c298e100edae4bba2df" alt="Worker in a factory holding a tablet that displays a glowing 3D model of a motor with technical overlays"><h4>2) Smarter, More Adapatable Robotics</h4>AI is also transforming robotics, enhancing their flexibility, accuracy, and capacity for autonomous decision-making. Traditionally, robots were designed for repetitive tasks, each programmed with specific parameters. Now, AI-powered robotics can “see” and interpret their surroundings through machine vision, allowing them to adapt to different scenarios on the factory floor. This contextual awareness means they can handle a broader range of tasks—making each robotic unit more valuable and adaptable.Consider a scenario on a high-volume production line where robots equipped with AI-driven vision systems can perform quality inspections. Instead of relying solely on humans to spot inconsistencies, these robots can detect subtle defects with high accuracy, enabling manufacturers to catch issues early and reduce waste. This technology also makes robots ideal for assembly tasks, where they can handle varying components without requiring reprogramming. For example, an AI-enabled robotic arm could assemble parts of different sizes and shapes, adjusting its grip and pressure based on real-time data from sensors.For manufacturers, this adaptability means less downtime, fewer changeovers, and the ability to increase production capacity when demand spikes. AI-enabled robots also make it possible to introduce more complex products into the lineup without requiring a complete reorganization of the production floor. As manufacturing continues to face labor shortages, these advanced robotics solutions are proving to be valuable, enabling manufacturers to maintain or even increase productivity as headcounts decrease.<img src="https://cdn.builder.io/o/assets%2F209ee507cedf4c298e100edae4bba2df%2F6584c399f5064e12a9d8f841e963c86e?alt=media&amp;token=e21404b5-5f69-4777-b0bb-857c44183881&amp;apiKey=209ee507cedf4c298e100edae4bba2df" alt="Yellow industrial robot arm working on an unpainted car body frame on an automotive assembly line"><h4>3) Insightful Software Turns Data into Actionable Intelligence</h4>Manufacturers are no strangers to data, but with today’s scale of operations, managing and interpreting data can become overwhelming. This is where AI-driven software comes in, acting like a virtual expert that helps uncover insights hidden within complex datasets. Rather than requiring a specialist to comb through spreadsheets manually, AI can analyze data and provide actionable insights that support faster decision-making.Instead of sifting through endless spreadsheets, manufacturers can now rely on software that understands what they’re looking for and delivers actionable intelligence. <a href="https://us.caddi.com/" rel="noopener noreferrer" target="_blank">CADDi Drawer</a> is designed to highlight operational insights, which is especially valuable for manufacturers dealing with multiple product lines or high-output facilities. This type of AI-powered software can answer nuanced questions about production efficiency, machine performance, or supply chain variables. Managers no longer have to spend hours finding answers; instead, they get instant, data-backed insights allowing them to adjust schedules, allocate resources, and identify potential issues before they escalate.In many cases, AI-driven insights have become essential for new employees, enabling them to contribute effectively without years of experience. This technology is especially useful in today’s environment, <a href="https://www.cloud-awards.com/mastering-shifting-technology-protect-future-of-american-manufacturing" rel="noopener noreferrer" target="_blank">where experienced staff may be harder to come by</a>, allowing companies to onboard new hires more efficiently.Moreover, AI in software can adapt to changing production demands, identifying patterns and suggesting adjustments that keep operations optimized. For instance, during supply chain shortages, AI can help find alternative materials or adjust production schedules to minimize impact on the end product. The speed and accuracy with which AI processes and applies this data helps manufacturers respond to disruptions faster, reducing the time and cost of manual adjustments.<img src="https://cdn.builder.io/o/assets%2F209ee507cedf4c298e100edae4bba2df%2Fa3d7054e28c04491947479d87148f6d4?alt=media&amp;token=2e4dbe33-99ca-499b-bacb-414f6320aea9&amp;apiKey=209ee507cedf4c298e100edae4bba2df" alt="Circuit boards moving along a conveyor in an automated factory with orange robotic arms and glowing digital data overlays superimposed on the scene"><h4>AI’s Role in Shaping the Future of Manufacturing</h4>AI isn’t just helping manufacturers get through disruptions; it’s positioning them to emerge stronger and more competitive. Additive manufacturing, advanced robotics, and AI-driven insights are all practical applications making a tangible difference on factory floors. By reducing lead times, enhancing flexibility, and giving businesses a clearer view of their operations, AI enables manufacturers to be proactive rather than reactive, putting them in control even in uncertain times.However, the true value of AI in manufacturing lies not just in automating processes or boosting productivity; it’s about creating a more responsive, resilient industry that can weather even the most turbulent of times. Additive manufacturing driven by AI shortens product development cycles and diversifies product offerings. Robotics enhanced by AI provides adaptable, context-aware systems that augment workforce capabilities. And AI-powered software provides actionable insights, helping manufacturers harness the full potential of their data.As manufacturers continue to navigate the post-pandemic landscape, AI offers the tools they need to stay ahead. The innovations reshaping manufacturing today are already proving that AI is not just a trend but a fundamental shift—one that will define the industry’s future for decades to come. For businesses ready to move beyond survival mode, AI is the gateway to a new era of opportunity and growth.<h2>About the Author: <a href="https://www.cloud-awards.com/author/the-caddi-team/" rel="noopener noreferrer" target="_blank">The CADDi Team</a></h2><img src="https://cdn.builder.io/o/assets%2F209ee507cedf4c298e100edae4bba2df%2Fd9eaaf0ae47343ccaaf3e4882693fa20?alt=media&amp;token=bec26711-84fb-4219-82ed-0ea743e94fd2&amp;apiKey=209ee507cedf4c298e100edae4bba2df" alt="CADDi logo">CADDi is a digital solutions provider for manufacturers on a mission to "unleash the potential of manufacturing." The company strives to transform the manufacturing industry through its primary offering "CADDi Drawer," an AI-driven data utilization system to assetize data and streamline processes through the patented similarity search function. CADDi also supports manufacturers through "CADDi Manufacturing," the procurement and manufacturing service that optimizes quality, cost, and delivery within supply chain infrastructure.‍

AI in Manufacturing turns today's challenges into tomorrow's opportunities

Building Resilient Supply Chains Through Technology-Driven ProcurementYushiro Kato, co-founder and CEO of <a href="https://us.caddi.com/" rel="noopener noreferrer" target="_blank">CADDi</a>&nbsp;As global economies experience ongoing shifts and uncertainties, U.S. manufacturers are facing a critical turning point. Tariffs, trade disruptions, and changing international relations have created a more volatile environment, making traditional supply chain models less reliable. In the past, procurement—sourcing materials and parts—could afford to be reactive, with teams able to quickly respond to issues like material shortages or price hikes.However, today’s challenges require a shift in approach. Manufacturers are realizing that reactive procurement is no longer effective in such an unpredictable world. To build resilience, they need to rethink how they source materials, manage suppliers, and ensure production continuity. Many are turning to a proactive, technology-driven approach to address unforeseen challenges effectively.This article explores how manufacturers are using technology to create resilient procurement systems that can withstand disruptions and drive long-term stability and growth in an unpredictable global landscape.A Proactive, Predictive Procurement ModelManufacturers can no longer wait for disruptions to happen before acting. Instead, they need to anticipate potential challenges and prepare for them. This shift involves using data-driven insights to predict and mitigate risks before they affect the supply chain, helping manufacturers maintain smooth operations and protect against issues like material shortages, price fluctuations, or supply chain bottlenecks.Predictive analytics play a key role in this shift. These tools help procurement teams analyze real-time data, identify patterns, and forecast potential disruptions. Rather than reacting to issues like material shortages, companies can take steps in advance to protect production timelines and costs. Predictive analytics help manufacturers answer questions like, “What alternative materials can we use if a supplier is delayed?” or “How will a surge in demand affect our lead times?” These insights allow manufacturers to stay ahead of potential issues.The challenge of predictive analytics is the large amount of historical data it requires. Many manufacturing shops are tracking procurement and supply chain data, but not always in a way conducive to analysis and comparison. Modernizing systems of generating and storing data beyond “good enough” should be thought of as an investment. If this data can make decisions more resilient and proactive, making it accessible will pay for itself. Modern data storage also empowers adoption of even more cutting edge analysis tools, such as AI assistants.How AI is Enhancing Procurement’s Role in ManufacturingArtificial intelligence (AI) extends the idea of agility and foresight in procurement. While AI can automate routine tasks, its real value lies in its ability to process large amounts of data and provide actionable insights that would have taken teams days or weeks to gather. By quickly analyzing data, AI-powered tools offer immediate insights into supplier performance, pricing changes, and lead-time adjustments, enabling manufacturers to act quickly in dynamic conditions.For instance, if tariffs raise the cost of a key material, traditional procurement processes might take days to adjust: tracking down backup suppliers, doing price and quality analysis, and reviewing product specifications with supplier capabilities. With AI, manufacturers can quickly evaluate alternative suppliers based on cost, quality, and logistics, enabling a faster response to disruptions. AI also enhances everyday procurement practices by continuously monitoring supplier performance and offering recommendations to improve efficiency. Humans naturally adjust their focus and prioritization when they arrive at a “good enough” solution, but AI can keep pushing for optimizations in parallel with human work.Digital Collaboration and the Creation of a Shared Platform for Proactive ProcurementWhile predictive analytics and AI are crucial for making procurement more agile, digital collaboration tools that connect manufacturers and suppliers bring everything together. These platforms serve as a central hub, enabling real-time communication between procurement teams and suppliers. Key data—like inventory levels, shipping schedules, and potential production bottlenecks—can be tracked and updated instantly.This connectivity is especially critical in high-stakes environments, where quick adjustments can impact profitability. For example, if a supplier signals a potential delay, the platform can immediately alert procurement teams, allowing them to address the issue or find alternative sources. This level of transparency and speed helps avoid costly downtime, especially as manufacturers face economic and geopolitical uncertainty.Collaboration is also crucial in the face of demand spikes or material shortages. Manufacturers using digital platforms can identify potential problems early and work with suppliers to resolve them. These platforms are not just tools—they lay the foundation for stronger, more effective partnerships that help navigate challenges.Adaptive Procurement and the Ability to Navigate Tariffs and Regulatory ChangesWith tariffs and regulatory changes appearing imminent after the 2024 election, manufacturers need procurement systems that can adapt quickly. Flexible, digital-first procurement systems give manufacturers a better ability to respond to these changes. A digital approach allows companies to assess the impact of tariffs and make adjustments to their sourcing and procurement strategies without delaying product launches.Rapidly adjusting sourcing or recalibrating pricing in response to tariffs helps reduce risk and also helps protect profitability. Manufacturers who respond quickly to new regulations—whether by finding new suppliers or adjusting pricing—can maintain consistency in delivery dates, pricing, and quality. Not only does this maintain the trust of the existing customer base, it can build a reputation of trustworthiness in turbulent times.How Technology-Driven Procurement Supports Middle-Class Manufacturing JobsTechnology-driven procurement does more than cut costs; it also helps support American manufacturing and its workforce. As tariffs and regulatory challenges force manufacturers to rethink their sourcing, technology provides an advantage that allows companies to keep production local and continue offering well-paying jobs.By using AI, predictive analytics, and digital collaboration, manufacturers can operate more efficiently and maintain high standards while reducing unnecessary costs. This technological edge helps offset the higher costs of domestic labor, making it possible for manufacturers to maintain and create middle-class jobs. This supports local economies and ensures the long-term viability of American manufacturing. It also offers the best protection against the impact of tariffs and supply chain disruption. Onshoring your supply chain and labor may become necessary to survive, but adopting it proactively gives you the best chance to thrive.The Shift Toward a Resilient, Tech-Forward Procurement SystemThe future of procurement requires more than quick fixes; it demands a shift to proactive, technology-driven systems. Manufacturers who invest in predictive analytics, AI, and digital collaboration are not just adapting to challenges—they are turning them into advantages.By embracing these technologies, manufacturers can better manage risks, reduce costs, and keep their supply chains running smoothly, even in the face of disruptions like tariffs. Technology-driven procurement is essential for manufacturers who want to create a resilient, sustainable supply chain that can navigate future challenges and contribute to long-term growth in the U.S. economy.To revitalize American manufacturing, technology must be used at every stage of production. By embracing digital tools, manufacturers can strengthen their supply chains and help sustain the American middle class. This approach is not just good for business—it’s an investment in the future of manufacturing and the communities it supports.‍About the AuthorYushiro Kato previously worked for McKinsey &amp; Company, where he co-led the procurement sector for the manufacturing industry. He supported large manufacturers in Chicago, Milwaukee, New Jersey, and more. In November 2017, he founded <a href="https://us.caddi.com/" rel="noopener noreferrer" target="_blank">CADDi</a> with the mission to “unleash the potential of manufacturing.” In 2023, Yushiro was selected as one of the top 10 entrepreneurs by Forbes.

A digital future: Building resilient supply chains through technology-driven procurement

The state of American manufacturing is in dire need of improvement. For decades, the U.S. economy has been transforming into a service-based model while the manufacturing power we associate with the American postwar capacity of the 1950s and ’60s has dispersed offshore.This slow degradation of U.S. manufacturing capacity is coupled with fears of a significant labor shortage. A recent study by <a href="https://tracking.us.nylas.com/l/09d00fe7ceb04d46b567892fa66848cf/1/4e0a076f534660bbc280b8139d78f0c316854fd151268705ee3161310bc11467?cache_buster=1731446900" rel="noopener noreferrer" target="_blank">Deloitte</a> found that by 2033, U.S. manufacturers will need about 3.8 million new workers, and half of those jobs might go unfilled. As an industry, we can’t remain on the same path and risk falling behind to an irreversible degree.A popular narrative right now is that automation and our advancements in machine learning will help mitigate the effects of this predicted labor shortage. However, with global competitors also making strides in these areas, the U.S. faces losing ground in the global landscape.It’s surprising that we didn’t hear much about any of that during the campaigns leading up to the 2024 elections last November.Discussing these trends and challenges with Quality Digest is Yushiro Kato, CEO and co-founder of <a href="https://us.caddi.com/" rel="noopener noreferrer" target="_blank">CADDi Inc.</a>, a globally operating Japanese company that provides a one-stop procurement solution for fabricated parts and components. Here’s what he had to say in a recent interview.Quality Digest: Please tell us a little more about yourself and your company.Yushiro Kato: At CADDi, we’re on a mission to revolutionize the manufacturing supply chain by harnessing the power of technology and data. Our platform connects manufacturers with suppliers in ways that eliminate inefficiencies, reduce costs, and unlock new opportunities. We believe manufacturing should be smarter, more transparent, and better connected—and we’re building the tools to make that happen.As someone who’s deeply immersed in the challenges facing global manufacturing, I see firsthand how these trends—offshoring, labor shortages, and global competition—are playing out. The manufacturing industry is at a crossroads, and our decisions will define its future.At CADDi, we’re not just responding to these challenges; we’re creating solutions that empower manufacturers to thrive in this new landscape. Whether it’s leveraging data to optimize procurement or using AI to bridge skill gaps, our focus is on enabling resilience and growth for manufacturers everywhere.The future of manufacturing isn’t about choosing between human talent and technology—it’s about making them work together seamlessly. And while these challenges are real, I’m optimistic. With the right mix of innovation, strategic thinking, and collaboration, we can build a stronger, more sustainable future for this industry. That’s what CADDi is here to do.QD: To what do you attribute a decline in U.S. manufacturing in the past few decades?YK: The idea that U.S. manufacturing is in a steep decline isn’t entirely accurate. Sure, industry revenue has dipped slightly—about 0.4% annually over the past five years—but that’s not the full story. Over the last two decades, manufacturing of durable goods has grown by 45.4%, while nondurable goods have seen a small decline. What’s happening isn’t a universal collapse but a shift that’s hitting some sectors harder than others. And these sector-specific trends have profound implications for jobs, global competition, and geopolitics.What’s happening isn’t a universal collapse but a shift that’s hitting some sectors harder than others.The disappearance of manufacturing jobs is undeniable, driven by automation, offshoring, and relentless cost pressures. But it’s not just the jobs we’ve lost—it’s the skilled workforce. As work moved overseas, many people left the industry entirely, creating a talent void. At the same time, global competitors—bolstered by decades of U.S. investment—are thriving. China’s middle class, for example, owes a lot to offshore American manufacturing. Now, those same factories compete with us, producing electric vehicles and other goods for global markets. Add geopolitical instability—wars in Europe and the Middle East, tensions with China—and manufacturers face a perfect storm of rising costs and uncertainty.Fixing this is no small task. Offshoring created structural dependencies on global supply chains that can’t just be unwound. Building domestic capacity takes time, political coordination, and significant capital. Even if companies reshore production, who’s going to run the machines? Addressing the skilled labor gap isn’t something we can solve overnight—it requires massive investment in training and rethinking how we position manufacturing as a career.But the clock is ticking. The longer we wait, the harder it will be to reverse these trends and secure the future of U.S. manufacturing.QD: How does America’s ability to fill open jobs compare to other countries?YK: America has at least one glaring advantage over most of the rest of the world when it comes to filling open jobs: our educational system. The U.S. education system is the envy of the world and represents an amazing delivery mechanism for the skills necessary to stimulate new growth in American manufacturing. However, that will take time.In the short term, we’re likely to see a stampede of OEMs rushing to a small number of viable fabricators to fill orders. Production is likely to be constrained by the labor shortage until fabricators can more fully automate their manufacturing processes.QD: What can the U.S. do to reverse these trends?YK: Reversing the trends hollowing out U.S. manufacturing requires a strategic, long-term commitment to rebuilding our economic and industrial base. The first step is realigning incentives. Tax policies must penalize offshoring while rewarding domestic investment in advanced manufacturing, automation, and clean energy infrastructure. Companies that benefit from access to the American market should be held accountable for reinvesting in the American economy. This isn’t about isolationism; it’s about ensuring a balanced, resilient economic framework that prioritizes national interests.Addressing the skilled labor crisis is equally critical. Decades of offshoring gutted the talent pipeline as workers left the sector for more stable opportunities. Restoring this pipeline will take years of investment in education, vocational training, and partnerships between industry and academia. A comprehensive approach—ranging from subsidized reskilling programs to a nationwide push to elevate the trades as respectable and well-paying careers—is essential. Without a robust, skilled workforce, efforts to rebuild manufacturing will stall before they even begin.Trade policies must also evolve. While free trade has its benefits, the U.S. can’t afford to outsource critical industries like semiconductors, green energy, and defense. Strategic protectionism, aligned with national priorities, is necessary to safeguard these sectors. Trade agreements should prioritize partnerships with nations that uphold similar labor and environmental standards, ensuring competition doesn’t come at the cost of American jobs or values.Finally, a significant reinvestment in infrastructure and manufacturing capacity is required. Federal initiatives, akin to Roosevelt’s New Deal or Eisenhower’s Interstate Highway System, should fund the development of modern factories, resilient supply chains, and energy independence. This will not only drive job creation but also reestablish the U.S. as a leader in the global economy. Rebuilding U.S. manufacturing is a complex, multidecade challenge, but with coordinated action and strategic focus it is achievable, and it’s critical to the nation’s long-term prosperity.Federal initiatives, akin to Roosevelt’s New Deal or Eisenhower’s Interstate Highway System, should fund the development of modern factories, resilient supply chains, and energy independence.QD: What effects do you think AI will have in filling the labor gap?YK: AI is going to be a game-changer in U.S. manufacturing, but not in the way people usually think. It’s not about replacing humans with robots; that’s science fiction. The real power of AI right now is as a partner to human workers. It fills the gaps where there aren’t enough skilled people or where workers are stretched too thin. Think about it: AI can analyze production data faster than any human, flag potential problems before they happen, or even guide someone step-by-step through complex tasks. It’s like giving every worker a super-intelligent assistant that makes them better at their job.In the long run, AI could transform the entire workforce. But it’s not going to happen overnight. The key is creating hybrid roles where humans and AI work together—people handle judgment calls and creativity, while AI crunches the numbers and optimizes processes. But here’s the catch: Companies need to invest in training people for these roles. AI isn’t going to magically create a skilled workforce. If manufacturers don’t step up to reskill and upskill their teams, they’re just going to dig themselves deeper into the labor gap.And here’s the controversial bit: I think AI can actually save smaller manufacturers that are struggling to compete with big guys offshoring their operations. AI makes it possible to do more with fewer people and less money. It democratizes high-tech efficiency. If smaller companies adopt AI the right way, they can stay competitive without moving jobs overseas. But we have to remember that AI isn’t a silver bullet—it’s a tool. The companies that win will be the ones that figure out how to make humans and AI work together, not replace one with the other.QD: Does the U.S. trail other countries in this regard?YK: There isn’t a simple answer to that. The U.S. may trail some other countries in very specific respects. For instance, countries like Germany and Japan have built highly advanced, integrated manufacturing ecosystems. The sheer scale of China’s manufacturing is unprecedented, thanks to years of foreign direct investment and relentless focus on cost efficiency. In comparison, the U.S. has allowed areas of its manufacturing sector to be hollowed out through decades of offshoring and underinvestment in workforce development.One major difference is the way these countries have embraced long-term strategies to address challenges. Germany has invested heavily in vocational training and apprenticeships, ensuring a steady pipeline of skilled labor. Japan has excelled in lean manufacturing and integrating technology into production processes.The U.S., by contrast, has seen a decline in its manufacturing workforce and expertise as workers shifted to other industries, and it’s paying the price now in the form of a massive skilled labor shortage. But the U.S. still has unique strengths. Its innovation ecosystem is unmatched, with cutting-edge research and development in automation, AI, and advanced manufacturing technologies. If these tools are harnessed strategically, they can help close the gap, especially in areas where labor shortages are most acute. We’ve barely scratched the surface of AI’s ability to act as a force multiplier, helping smaller manufacturers optimize their operations and supplement human labor in critical ways.The U.S. still has unique strengths.The bottom line is the U.S. has fallen behind in certain aspects of manufacturing. But we can close the gap. With smart investments in technology, a recommitment to workforce development, and a willingness to rethink its reliance on global supply chains, the U.S. can reclaim leadership in this space. The key is treating this as a national priority—not just for economic competitiveness, but for long-term resilience and security.QD: How do you think the recent election will affect the labor market?YK: The idea that the election will drastically change the labor market is probably overstated. While elections can set the tone for policy and priorities, labor market conditions are shaped far more by macroeconomic forces and geopolitics than by who’s in office. Factors like inflation, interest rates, global supply chain disruptions, and energy markets will probably play a much larger role in determining job growth, wages, and overall labor demand.Of course, if you anticipate the new president having strong influence over the Federal Reserve’s interest rate policy, then the election will absolutely have an impact on the labor market.It’s worth also mentioning how ongoing conflicts in Europe and the Middle East, as well as U.S.-China tensions, have already reshaped global supply chains and driven up costs for manufacturers. These pressures have as much influence on trends like reshoring and automation as U.S. trade policy or the specter of tariffs.The other thing worth acknowledging is how conditions aren’t likely to sustainably improve for labor in the absence of strong unions. Without stronger unions, workers are going to struggle to secure higher wages, better benefits, and improved working conditions, regardless of the demand created by a push for onshoring work.It’s easier said than done. Without broader structural changes, such as better support for workforce development and training, even the most well-organized labor movements will struggle to counterbalance the larger economic forces at play. Improving labor market conditions will take more than an election cycle—it will require sustained effort to address systemic issues and adapt to global realities.QD: How do you think American companies will react to or benefit from a change in the political climate?YK: American companies are likely anticipating a reduction in corporate taxes from the incoming administration. Historically, companies have taken advantage of these moments to repatriate cash from overseas. We’re likely to see managers fall into one of two camps: 1) those who take the opportunity to return capital to investors or shareholders, or 2) those who choose to make longer-term capital investments to fuel long-term growth.Either way, this is likely to be a period of exuberance for companies that have been languishing under the interest rate regime of the prior administration. Of course, if inflation returns, or if global supply chains are further disrupted, that exuberance will turn to anguish pretty fast.QD: What do you think the future holds for American manufacturing?YK: America’s manufacturing sector is at a complicated crossroads. What sectors should live on shore? What does the future of our labor force look like? How should profits be divided between labor and management? None of these questions have simple answers. How we decide to answer them will have profound consequences for the manufacturing sector and for the daily lives of average Americans.Whatever we decide, these things are unavoidable: AI is here, and its impact is increasing exponentially. The global order is shifting under our feet, and America’s role in that order may evolve significantly over the next 50 years. We are facing an intense period of rapid transformation that we all need to embrace.Buckle up.

The Present State of American Manufacturing

American manufacturers aren't seeing the future through rose-tinted glasses.About 49% of U.S. manufacturers expect a recession to hit in 2025, with 84% predicting it will happen within the next two years, according to new research conducted and released today by software development company <a href="https://us.caddi.com/" rel="noopener noreferrer" target="_blank">CADDi</a>.However, the proprietary research, which is based on a survey of more than 330 U.S. manufacturing professionals, suggests that manufacturers are making financial decisions based off incomplete information.The research said 60% of procurement professionals have sourced a part at a higher cost than what they knew was possible because they didn't have access to sufficient supplier data to negotiate effectively. The same percentage of respondents said they've missed an opportunity to consolidate suppliers and/or negotiate a volume discount because they didn't have access to historical cost data associated with similar parts.Additionally, 71% of sales professionals have quoted or sold an unprofitable deal for their company because they didn't have access to the historical engineering and procurement data they needed."American manufacturers are feeling pressure from every angle – the economy, talent shortage, rising competition from China and Mexico and more," CADDi CEO Yushiro Kato said. "Our research indicates that data and collaboration issues are exacerbating the pressure. Internal teams can't access the information they need to do their jobs and make smart and profitable decisions fast enough, which increases the stakes for manufacturers that don't take steps to address the inefficiencies."Key findings from CADDi's research, <a href="https://us.caddi.com/resources/whitepaper/the-american-manufacturing-pressure-and-productivity-index?utm_source=Website-Referral&amp;utm_medium=PR&amp;utm_content=White-Paper&amp;utm_campaign=Market-Research-Report&amp;utm_term=Bear" rel="noopener noreferrer" target="_blank">The American Manufacturing Pressure and Productivity Index</a>, includes:<ul><li>Talent challenges remain top pressure drivers, including a lack of access to skilled labor (56%) and equipping current employees to step into strategic roles (50%).</li><li>Speed to market, which 23% of manufacturers say is a 2025 priority, is at risk.</li><li>77% of procurement professionals say that every few projects they need to find a new part, product or supplier because the one they found didn't meet engineering's specifications.</li><li>68% believe at least half of their institutional knowledge will be lost forever in the next decade when senior executives retire.</li><li>27% of manufacturers fear they aren't transforming fast enough to survive (27%).</li><li>45% of senior management leaders cite digitally transforming their operations as a top business pressure.</li><li>51% said navigating political demands to bring more production onshore is a top three pressure point.</li></ul><h3>Pervasive Data Issues Undermine Productivity and Competitiveness</h3>Sales, procurement and engineering teams generally spend at least 25% to 50% of their workdays tracking down critical information to do their jobs and ensuring the accuracy of this information.When asked about their biggest frustrations, inadequate documentation (73%) – missing part numbers, dimensions and material properties – topped the list for procurement. Sales professionals cited long quotation processes due to needing to track down relevant information (67%) and poor collaboration and communication with procurement and engineering that leads to delays and misunderstandings (33%).

84% of U.S. Manufacturers Anticipate a Recession in Next Two Years

These days, incessant pings and buzzes from your workspace’s preferred team management software may seem like a fact of life. But not too long ago, the idea of having software beyond emailing to manage teams was beyond imagination. Then one of the market’s leaders stumbled into creating the perfect product.Many people think that entrepreneurship is about building a new product. Although this can be the case, the most transformative businesses start by creating an entirely new market.Undoubtedly, that is a lofty proposition. How can you think about a market that doesn’t even exist? The secret is finding a problem that isn’t seen as one, an inconvenience that is seen as being “just the way things are.” Slack’s development serves as a perfect case study for finding these problems.<h3>Solving user problems and building better communication</h3>When Stewart Butterfield founded his first company, team management was merely a means to an end. The end in question? Making a video game called Glitch. When Glitch failed to capture a large enough user base, Butterfield had to shut the game down. However, he didn’t close the company. Instead, he renamed the company Slack and made a new solution-oriented software its product.As his team was developing Glitch, they encountered inefficiencies in their internal communication that led them to create a more streamlined system for their use. They developed a communication tool that allowed for better, more efficient, and easily searchable conversations compared to email. The software that would eventually become Slack began life as a means to this end. Seeing how well the system worked internally and noticing the vacuum in the market, Butterfield rebuilt his entire company around the product.The core takeaway from the Glitch-to-Slack story is the importance of following your end user’s pain points and being flexible about what your product provides. Slack stumbled into discovering a new market because its employees were its customers. Without knowing it, they were designing a system that appealed perfectly to professionals working as a team to create a product.As Slack cemented itself as a market leader in the space, it has continued to be curious about finding ways it can address users’ pain points. For instance, by adding features like Slack Atlas, an employee directory system, Slack demonstrated its continuous willingness to enhance its functionality and cater to the evolving needs of its users. This focus on continuous improvement and user-centric design has been key to its success.<h3>Applying Slack’s strategies to manufacturing procurement</h3>To get a deeper understanding of how Slack’s methodology can be used to identify new markets, let’s look at a totally different example: procurement systems in the manufacturing industry.Factories need to order many parts to produce whatever product they are making. A procurement department’s job is to order the right parts at the right price. That may seem straightforward on paper. In reality, today’s procurement departments are plagued with countless problems.Procurement departments often have databases where they store documents with parts drawings and prices. However, these databases are frequently outdated, poorly organized, or incompatible with other systems, making it difficult to retrieve accurate and timely information. As a result, obtaining new parts can still become a matter of guesswork, with orders sometimes being made based on scant descriptions over the phone. Furthermore, when employees leave their companies, critical knowledge is often lost, leading to inefficiencies and errors.Critical knowledge in procurement includes detailed information about suppliers, pricing histories, negotiation tactics, and specific technical requirements for parts. For instance, experienced employees often have personal relationships with suppliers and a deep understanding of which vendors provide the best quality or most reliable delivery times. They also know the nuances of past orders, such as which parts required special handling or which suppliers were more flexible on pricing.When these employees leave, much of this invaluable information goes with them if it hasn’t been properly documented and stored. This loss can cause several issues.• Delays in procurement: New or remaining employees might not know which suppliers to contact or what specific details to ask for, leading to delays in obtaining necessary parts.• Inaccurate orders: Without detailed descriptions and historical knowledge, there is a higher risk of ordering the wrong parts, which can lead to production delays and increased costs.• Repetitive mistakes: Knowledge about previous issues with certain suppliers or parts might be lost, causing the same mistakes to be repeated.• Increased costs: Lack of historical pricing information can lead to paying higher prices for parts, because new employees might not be aware of previous negotiations or discounts.An experienced procurement officer might know that a particular component needs to be sourced from a specific supplier due to unique material requirements that aren’t documented in the database. If this knowledge isn’t transferred, a new procurement officer might choose a different supplier based on price alone, resulting in receiving a part that doesn’t meet the necessary specifications. This not only wastes time but also incurs additional costs as the correct part must be reordered, and production timelines are disrupted.These problems only scratch the surface of procurement’s inefficiencies. Yet, until recently, no one in the industry was solving these problems. The reason why? No one knew they were problems in the first place.Autodesk, renowned for developing AutoCAD, a staple in engineering design, attempted to extend its success into procurement solutions for manufacturers. However, its offering failed to gain broad adoption. The challenge was in the misalignment with procurement professionals’ specific needs, such as centralized supplier management and detailed cost analysis. Engineering software like AutoCAD, while excellent for design, often lacks seamless integration with procurement workflows. This disconnect, coupled with market perception issues, hindered Autodesk’s penetration into the procurement sector.<h3>Prioritizing widespread adoption and problem-solving</h3>Perhaps it’s not surprising that another company is now trying to solve these problems. CADDi is addressing fundamental challenges faced by procurement departments through its innovative software solution, CADDi Drawer. Central to its approach is a centralized digital database that houses all procurement-related documents, including parts drawings and pricing information. This searchable database is meticulously designed for easy integration with existing systems, ensuring real-time updates and comprehensive accessibility.Using advanced AI algorithms, CADDi enables procurement professionals to swiftly locate specific parts with precision. This capability is crucial because it replaces traditional manual searches, which are often time-consuming and prone to errors. With AI, users can input search criteria like part numbers, specifications, or descriptions, and CADDi’s algorithms can quickly retrieve the exact documents needed. This not only streamlines the procurement workflow but also ensures that suppliers receive accurate information promptly, leading to improved communication and faster decision-making in sourcing and purchasing processes.CADDi plays a pivotal role in mitigating knowledge drain within organizations. By digitizing and centralizing critical documents, including historical drawings and procurement records, CADDi ensures that valuable institutional knowledge remains accessible over time. This proactive approach is particularly crucial as experienced employees retire or move on from the company. Instead of losing critical information that resides only in the minds of departing employees, CADDi stores it in a structured digital format that can be accessed and used by current and future team members. This preservation of institutional knowledge not only reduces the risks associated with personnel changes but also facilitates continuity in operations and decision-making. It empowers organizations to retain and leverage years of accumulated expertise, thereby maintaining productivity and efficiency across different departments.Another significant feature of CADDi is its ability to foster collaboration between engineering and procurement teams. The platform allows engineering teams to annotate drawings with specific requirements or modifications directly within the system. These annotations can include details such as material specifications, dimensional adjustments, or quality standards that are crucial for procurement professionals when sourcing parts or materials. By integrating these annotated drawings into the procurement process, CADDi enables seamless communication and alignment between departments. Procurement teams can easily interpret engineering requirements and translate them into actionable sourcing decisions, ensuring that purchased parts meet exact specifications and quality standards.While the markets of Slack and CADDi may initially seem distant from your industry, they exemplify a fundamental principle: Challenging assumptions about user pain points can lead to groundbreaking market creation. By identifying and addressing these pain points effectively, both companies have redefined industry standards and demonstrated the transformative power of innovation rooted in genuine user needs.By digitizing and centralizing critical documents, including historical drawings and procurement records, CADDi ensures that valuable institutional knowledge remains accessible over time.

How Slack Created a New Product Category, and how you can too

Yushiro Kato — the 32-year-old co-founder and CEO of manufacturing platform CADDi — offers his most valuable leadership learnings.Key Takeaways:<ul><li>It’s critical to identify and solve pain points to move forward in an industry and provide real value to those within it.</li><li>Saying yes to opportunities that others might decline is key to making an impact, even if it isn’t the easiest path to take.</li><li>Embrace basic principles, seek truths in history, and return to core values.</li></ul>From the early days of my career, I’ve been driven by a passion for innovation and a desire to make a meaningful impact. My journey began with a deep dive into the world of entrepreneurship during university, where I honed my skills and cultivated a mindset geared towards problem-solving — isolating big-picture issues that hamstring entire industries.After college I joined global management consultancy McKinsey, where I explored major pain points in traditional industries. On a personal level, I wanted to take on challenging work that would help me uncover a new creative business idea. I’m an entrepreneur at heart. However, transitioning from university to the fast-paced environment of consulting presented its own set of hurdles: For example, the demands of client expectations and the need to deliver tangible results.I embraced opportunities to lead and drive change, even when it meant stepping out of my comfort zone, and became the youngest McKinsey manager at the age of 25. In fact, I think it is only when you truly stretch yourself that you learn the life and professional lessons you need to really succeed.Now, as the CEO of CADDi, a SaaS manufacturing company I co-founded in 2017 with more than 600 employees worldwide, I’m mentoring others looking to lead and grow. Here are the top lessons I’ve learned along the way:<h2># 1. Hone in on the pain points</h2>Choosing to become a McKinsey consultant was a strategic decision to prepare myself for future entrepreneurial endeavors. I was upfront with my mentor at McKinsey and shared my goal of starting my own business after working at the firm for a few years. He supported my choice (it’s not often you get to tell your boss you’re planning on starting a business in a few years and have them accept that!).At McKinsey, I quickly realized that making the most of my experience meant tackling meaningful challenges, not just repeatable tasks. McKinsey is often jokingly referred to as an “exercise” or “physical workout” in the industry because of its demanding nature. Despite the long hours, I had the chance to truly connect with my work and the industry I focused on. Working closely with manufacturers, I learned some of the struggles they deal with, particularly the technical limitations within procurement. These findings were the impetus for CADDi Drawer, our flagship software.On a broader level, I learned that it’s critical to identify pain points in traditional industries. Identifying those — and then solving those pain points — is how to move forward in an industry and provide real value to those within it. By selecting problems that matter and focusing on the most impactful issues, I gained valuable insights and skills. Balancing short-term demands with long-term goals, especially in startups where revenue is crucial, required strategic prioritization. I learned to put all my attention into the #1 pain point that would make a significant impact, a lesson that has been instrumental in my career and one I would encourage anyone at any level in their career to focus on.<h2>#2. Drive your own projects</h2>From my early days at McKinsey, I quickly learned the importance of driving my own projects. When I was put on my first big project as a business analyst for a large manufacturing company in Milwaukee, Wisconsin, I took on a leadership role that other managers declined. This was because the two partners on the project — one a former U.S. Navy SEAL officer and the other, a Stanford graduate who supported former President Barack Obama with his presidential speeches as a university student — had very strict managerial styles. Several managers even left the project mid-way because they were too demanding. However, I stepped up, embracing the opportunity despite the uncertainty of how it would turn out, and I gained a lot of value from the experience.It’s crucial to “manage up” when you’re starting out in your career. This guidance shaped my leadership style and instilled in me the confidence to be the driving force behind projects.The partners emphasized to me how crucial it is to think of myself as two levels higher than my current role and encouraged me to raise the bar. Even in rooms filled with intimidating individuals who had years more experience than me, I needed to handle all questions and delegate tasks effectively to my supervisors — in short, it’s crucial to “manage up” when you’re starting out in your career. This guidance shaped my leadership style and instilled in me the confidence to be the driving force behind projects, regardless of my position. I could truly “own” the projects because I was the one driving them.Additionally, saying yes to opportunities that others might decline became a principle I continue to live by. I learned that being proactive and identifying problems that matter was key to making an impact, even if it wasn’t the easiest path to take.<h2>#3. Follow industry trends but also differentiate</h2>Focusing on a major pain point helps to sharpen your vision when differentiating the marketplace. In the fast-paced world of manufacturing, staying ahead of the curve is crucial. Our team at CADDi has always believed in the importance of understanding industry trends, but we also know that simply following the crowd isn’t enough. When the industry started shifting from 2D CAD analysis to 3D CAD, we didn’t just jump on the bandwagon. Instead, we took the time to understand the underlying pain points and challenges that our customers were facing.A lot of startups — not manufacturing companies — begin with 3D solutions right from the get-go because they are machine-friendly (better fit with “tech”) and fancier. However, the reality is that manufacturers still use 2D for supply chain (downstream funnels) and 3D for designs. We noticed that a lot of parts are designed in 3D CAD, but 2D is the predominant format used in procurement and manufacturing. Starting from the pain points rather than the solutions allowed us to realize we need to focus on 2D in order to truly address our customer’s needs.While it’s tempting to chase every trend, I’ve learned that true innovation comes from focusing on real problems and delivering meaningful solutions. By balancing our knowledge of market trends with a commitment to differentiation, our company has been able to stay true to our roots while continuously pushing the boundaries of what’s possible.<h2>#4. Have a clear mission statement</h2>A focus on “unleashing the potential of manufacturing” drives my company’s direction. This mission ensures that all products, services, and strategies align with transforming manufacturing industries. For startups and scaleups, revenue is of paramount importance. While immediate revenue opportunities are tempting, there’s a constant tradeoff between short-term gains and long-term impact.Learning from history has provided valuable insights. I’ve found inspiration in understanding benchmarks like the shipping container, which transformed the global economy.To navigate this balance, our strategy at CADDi is carefully aligned with our mission. By prioritizing initiatives that contribute to our mission, we aim to grow sustainably without sacrificing our long-term vision. Our mission serves as our North Star, providing clarity and guidance in our decision-making processes. It simplifies complex choices and ensures that we remain focused on our overarching goals. To keep our team aligned with our mission, we emphasize its importance in all our communications. Regular team meetings, workshops, and training sessions are used to reinforce our mission and values, ensuring that everyone understands and works towards our common objective.<h2>#5. Embrace foundational principles</h2>As I reflect on my journey so far, I realize that returning to foundational principles has been a guiding force throughout my career. Resources like Dale Carnegie’s books and teachings offer timeless principles for success, reminding me to return to the basics and focus on simplicity. Even though How to Win Friends and Influence People was written nearly 90 years ago, the core lessons in it continue to ring true. As leaders, we’re all simply trying to win over more people to our side and influence them to act, whether it is encouraging a team member to be better or a customer to buy more of your product or service.Learning from history has provided valuable insights. I’ve found inspiration in understanding benchmarks like the shipping container, which transformed the global economy. Malcolm McLean, a U.S. trucking magnate, invented the steel shipping container in 1956 after he bought a steamship company. He was looking for a way to simplify moving goods between trucks and ships (he identified an obvious pain point within his business). He patented this transportable container, revolutionized logistics, and began its mass production. Years later, his invention is probably one of the first things you think about when someone says “supply chain.”By embracing basic principles, seeking truths in history, and returning to core values, I’ve likewise been able to navigate challenges and make informed decisions. This commitment to foundational principles has not only shaped my leadership style but also guided CADDi’s direction. As we’ve faced various challenges and opportunities, these principles have remained constant, helping us stay grounded and focused on our mission.Looking ahead, I’m confident that by continuing to embrace these basics, we’ll navigate future challenges successfully and continue to make a meaningful impact in the manufacturing industry.

The young CEO: 5 essential lessons for emerging leaders

Growing a global business is not for the faint of heart. Operating internationally puts under a microscope a CEO’s ability to develop a strategic vision, drive relentless execution, and, most importantly, build a stellar team. I’m not going to shock anyone by saying something like, “The foundation of any successful enterprise lies in its people.” But as it’s said, cliches become that way for a reason: they hold some modicum of human truth.During my time leading CADDi, our greatest successes have all come on the other end of herculean efforts from our people. That was true when it was just three of us living together in a small apartment. It remains true now, with a team of over 600 across two continents. The cliche has contained far more than just a modicum of truth. So, lest you begin to think that all your many successes are entirely of your own doing, just remember assembling the right team is crucial to driving innovation, ensuring adaptability, and achieving sustained growth on a global scale.That is not to say that attracting and developing great people is easy. If it was easy, everyone would do it. In this article, I’ll share insights from years of experience building and cultivating a high-performing team for international success.Optimizing for Capacity Over ExperienceWhen building an international business, it’s essential to prioritize capacity over experience. While experience can provide valuable insights and context, an individual’s capacity to rapidly acquire the new skills needed to meet their evolving challenges is what will drive innovation within your team. If you take nothing else away from this piece, remember this. It is not a probability that your team will encounter challenges they’re unprepared for—It is a certainty. Experience is good, but eventually, you will reach the edge of the map and will be operating in uncharted territory. Hire accordingly.Hiring for capacity means looking beyond a candidate’s resume to assess their core skills, adaptability, and growth potential. This approach is particularly important in international business, where navigating diverse markets and cultures is crucial. For instance, candidates with strong analytical skills, a knack for creative problem-solving, and the ability to learn quickly will likely excel in new and challenging environments, even if they lack direct experience in the specific market or industry.A team with diverse capabilities brings a wealth of perspectives, fostering creativity and innovation. When expanding internationally, this diversity becomes even more critical. Employees with different cultural backgrounds and experiences can provide unique insights into local markets, helping to tailor products and strategies to effectively meet regional demands.Prioritizing capacity also forces you to commit to your team’s continuous development. If you’re not hiring explicitly for deep experience, you need to find ways to shorten learning curves. Training courses, coaching programs, cultivating a rich learning environment, and establishing a culture of risk-taking and psychological safety all are good approaches, so long as you fully commit. If you’re only paying lip service to developing the team while prioritizing capacity over experience, then you’re likely to do significant harm to the company. This investment in your team’s growth not only enhances their capabilities but also demonstrates your commitment to their professional development, boosting morale and retention.The Importance of Problem-Solving ExpertiseProblem-solving expertise is another critical component when building a team for international success. Identifying, analyzing, and solving problems quickly and effectively is invaluable in navigating the complexities of global markets (See above, “uncharted territory”). A problem-solving approach is one of the trickier things to evaluate because it forces the evaluator to find the line between challenging cross-examination and full-blown railroading. Only the very best managers I’ve worked with have been able to do this consistently.At CADDi, we’ve approached this by putting candidates through practical interviews intended to put their problem-solving and decision-making on display. We make them domain-specific, so the candidate is operating in a sphere where they have some expected mastery, and our interviewers prepare questions meticulously to get underneath the candidate’s decision-making.&nbsp;Behavioral interviews focusing on past experiences and specific challenges the candidate has faced are also useful, but there’s no substitute for confronting someone with a new challenge in real-time. This approach offers you insight into how candidates approach and resolve real-world problems. Always look for individuals who demonstrate creativity, critical thinking, and a proactive approach to problem-solving.Empowering employees to make decisions is crucial for fostering a culture of innovation and agility. In an international business, where time zones and geographic distances can create barriers, having team members who are confident and capable of making informed decisions is essential. This autonomy speeds up the decision-making process and encourages a sense of ownership and accountability among employees.Encouraging collaboration and knowledge sharing across your teams enhances problem-solving capabilities. In an international context, this means leveraging technology and communication tools to facilitate collaboration across different locations and time zones. By fostering a culture where employees feel comfortable sharing ideas and seeking input from their colleagues, you can harness your team’s collective expertise to tackle complex challenges.Building a Team Aligned with Organizational Goals and ValuesThe importance of aligning new hires with the organization’s goals and values cannot be overstated. This alignment goes beyond merely assessing technical competencies; it involves a deep understanding of the cultural and strategic fit of each candidate. Ensuring that team members resonate with the company’s core principles creates a cohesive and high-performing environment that is essential for navigating the complexities of global markets.To attract and retain top talent who embody these values, a multi-layered hiring process is essential. This process should be rigorous and comprehensive, ensuring that only the best candidates move forward. The first step is to define clear hiring criteria that align with your organization’s mission, values, and strategic objectives. This should include both technical skills and cultural attributes such as adaptability, teamwork, and alignment with the company’s vision.Cultural fit is particularly crucial in an international business context, where employees must navigate diverse cultural norms and practices. It’s about finding individuals whose values, work styles, and communication preferences align with the company’s culture. For example, at CADDi, we emphasize principles such as radical candor, extreme ownership, and exchanging autonomy for mastery that solicit these outcomes.Radical candor involves providing honest, direct feedback that fosters transparency and continuous improvement. Hiring candidates who are comfortable with and can thrive in an environment where open communication is encouraged is vital. Extreme ownership, popularized by Jocko Willink and Leif Babin, ensures that team members take full responsibility for their roles and the overall success of the organization, promoting a culture of accountability and proactive problem-solving. Additionally, we believe in giving employees the autonomy to manage their work while continuously striving for excellence, a concept we term exchanging autonomy for mastery. This approach empowers individuals to take initiative and drive their professional development, aligning personal growth with organizational success.Bringing these concepts into practice, we have seen firsthand the benefits of hiring individuals who align with our core principles. The hiring process itself should be continuously evaluated and refined. Gathering feedback from candidates and hiring managers allows for ongoing improvements, ensuring the process remains effective and aligned with the evolving needs of the organization.As we navigate the complexities of international business, one truth stands paramount: success hinges on the caliber of your team. Beyond mere qualifications, the fusion of capability, problem-solving acumen, and cultural alignment propel organizations to new heights. Cultivating a team that embodies these traits requires a multi-faceted approach to hiring—one that prioritizes potential over pedigree and champions diversity of thought. By embracing these principles, we fortify our organizations against the uncertainties of a global marketplace and pave the way for transformative growth and innovation. Your team is more than a workforce; they are the architects of our global vision and the driving force behind enduring success.

Building an International Business: It Starts with the Right Team

Once McKinsey’s youngest manager and now a chief executive, Yushiro Kato shares the insights he’s gained along the way.Embarking on a leadership journey requires more than ambition—it demands resilience, adaptability and a keen understanding of the principles that drive success. As someone who transitioned from a role at McKinsey to co-founding and leading a global manufacturing tech startup—all while in my mid-twenties—I’ve experienced firsthand the trials and triumphs of leadership. Like many emerging leaders, I’ve navigated the complexities of corporate life and entrepreneurial endeavors. In this article, I’ll share four critical lessons learned along the way, offering insights and strategies that any emerging leader can apply to their own journey.<h4>1. Hone in on the pain points in your industry</h4>Identifying and solving significant challenges within industries is the cornerstone of effective leadership. Whether you’re in a corporate setting or launching your own venture, recognizing the pain points that hinder progress is essential for driving innovation and making a meaningful impact. Take the time to listen to your customers, understand their needs and develop solutions that address genuine pain points. By focusing on real problems, you can provide tangible value and position yourself as a leader in your field.<h4>2. Don’t wait for your boss: Be the driver of your projects</h4>Taking ownership of projects is not just about assuming responsibility—it’s about driving outcomes and shaping results. Regardless of your title or position, seize opportunities to lead initiatives and make a difference. Embrace challenges, step out of your comfort zone and take charge of projects that others may shy away from. By being proactive and taking ownership of your work, you’ll gain invaluable experience, hone your leadership skills and set yourself up for future success.<h4>3. Understand market trends so you can differentiate yourself</h4>Staying ahead of the curve requires more than just following market trends—it demands a deep understanding of customer needs and a commitment to differentiation. Whether you’re in a traditional industry or a cutting-edge startup, take the time to understand the underlying challenges faced by your customers. Rather than chasing fads, focus on developing solutions that address genuine needs and set you apart from the competition. By balancing your knowledge of market trends with a dedication to addressing real pain points, you’ll carve out a unique position in the marketplace and deliver solutions that truly make a difference.<h4>4. Know your why: Define a clear mission statement</h4>A clear mission statement serves as a guiding beacon for organizational direction and decision-making. Whether you’re leading a team, a department or an entire organization, define a clear mission that encapsulates your purpose and values. Align all your efforts with this mission, and use it as a constant reminder of why you do what you do. By prioritizing initiatives that contribute to your mission, you’ll achieve sustainable growth and stay true to your long-term vision. Your mission statement will serve as a rallying point for your team, inspiring them to work towards a common objective and make a meaningful impact in your industry.As emerging leaders, the journey ahead may seem daunting, but it’s also brimming with opportunity and potential. Drawing from my experience at CADDi, I’ve learned that leadership is about more than just titles—it’s about making a meaningful impact and driving positive change.Success in leadership often hinges on mastering these fundamental principles. Whether you’re inspiring your team, engaging with customers or navigating challenges, the core principles of influence remain steadfast.By embracing these basic principles and drawing inspiration from historical successes, leaders can navigate uncertainty with confidence. These principles not only shape leadership styles but also guide organizational direction, fostering resilience and focus in the face of challenges.

4 Essential Leadership Lessons For Emerging CEOs

At Automate 2024, the conversation with Yushiro Kato, Founder &amp; CEO of CADDi Inc. focuses on innovative solutions in the manufacturing industry that address persistent challenges such as process redundancy and data management inefficiencies. A shining example of this innovation is the approach taken by organizations that leverage artificial intelligence to revolutionize procurement and design processes within manufacturing, particularly for small—to medium-sized enterprises.<h4>The Challenge of Redundancy</h4>In traditional manufacturing settings, redundancy manifests notably in the repetition of creating similar designs or procurement processes without recognizing or utilizing past data. This not only leads to inefficiencies but also wastes valuable resources and time. The necessity for a system that can centralize and leverage historical data is becoming increasingly evident as companies strive to optimize their operations.<h4>Centralized Data Systems: A Modern Solution</h4>Centralizing data into a single, accessible hub represents a transformative shift in managing and utilizing information. Such systems not only store critical data but also make it readily available for various operational needs, thereby enhancing decision-making processes and reducing the tendency to ‘reinvent the wheel.’ By integrating AI, these platforms can automatically connect disparate data types, from 2D drawings to quality reports, creating a cohesive understanding of available resources.<h4>AI at Work: Enhancing Efficiency</h4>The application of AI in these centralized data systems extends to extracting textual information from drawings and understanding component shapes. This capability allows for the identification of similar past designs when working on new projects, significantly reducing the time and effort spent in design phases. For manufacturers, this means accelerated project timelines and increased accuracy in creating new components, directly impacting overall productivity and reducing costs.<h4>Overcoming Implementation Challenges</h4>Despite the apparent advantages, integrating such advanced systems is not without its challenges. Resistance to adopting new technologies, particularly AI, often stems from a lack of understanding or fear of change. Addressing these concerns requires not just technological solutions but also strong customer support and educational efforts to demonstrate the tangible benefits of these systems.<h4>The Role of Preventive Maintenance</h4>Another critical application of these AI-enhanced systems is in maintenance. Maintenance personnel can use the system to quickly identify parts and determine alternatives if the original parts are unavailable. This capability is particularly valuable in urgent situations, offering potential temporary solutions that prevent prolonged downtimes.<h4>Cybersecurity Considerations</h4>With the increasing reliance on cloud-based systems to manage and store sensitive data, cybersecurity remains a top priority. While cloud systems offer numerous advantages over traditional on-premises storage, such as resilience to physical damage from incidents like fires, they also require stringent security measures to protect against digital threats. Dispelling myths and educating users about the security benefits of modern cloud solutions is crucial to gaining trust and encouraging adoption.<h4>Looking Forward</h4>The integration of AI and centralized data platforms in manufacturing is not just a trend but a fundamental shift towards more efficient, intelligent production environments. As the industry continues to evolve, the adoption of these technologies will play a pivotal role in shaping the future of manufacturing, making operations more streamlined and responsive to changing market demands.The interview was recorded by Greg Orloff from IIoT World during the Automate 2024 show in Chicago. This summary was created based on the video transcript with the assistance of https://chat.openai.com. It was edited by the IIoT World team.

Transforming Industrial Efficiency: The Power of Centralized Data and AI in Manufacturing

CADDi leverages AI to digitize drawings and procurement data, making manufacturing insights searchable by shape, text, dimensions and part names.

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