EMS@C-LEVEL

Navigating Tariff Challenges with Cofactr Co-Founder Philip Gulley: The Future of Procurement

• Philip Spagnoli Stoten

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Supply chain disruption, tariff uncertainty, and the quest for manufacturing stability take center stage in this enlightening conversation with Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr. Recorded at APEX 2025, the discussion reveals how manufacturers are finally clarity amid prolonged uncertainty about global trade policies.

"The unfortunate situation is there's a lot of instability, and that is not great for the world," Phil acknowledges. Yet this instability has catalyzed remarkable growth for Cofactr, whose practical solutions help companies navigate the complexities of international commerce. Their focus on documentation, traceability, and strategic planning enables manufacturers to understand landed costs, avoid double-paying tariffs, and maintain production schedules despite customs delays.

What distinguishes Cofactr's approach is their refreshingly pragmatic use of AI. While many technology vendors make grandiose promises about digital transformation, Phil describes their AI applications as "insanely boring and very practical"—precisely what manufacturers need. By automating procurement processes, tracking vendor communications, and surfacing potential issues before they impact production, Cofactr delivers measurable ROI that resonates with operations leaders.

The conversation also explores the crucial but unglamorous work of data normalization across disparate systems. Before manufacturers can achieve the dream of integrated, enterprise-wide AI insights, they must first establish accurate, accessible data foundations. As Phil explains, "Right now, I think we're all pushing the idea down in the weeds, getting your bit right—just how do you get that foundation of data accurate and accessible?"

From a company that was "loitering in the aisles" at trade shows three years ago to a 40+ person organization opening a new West Coast facility, Cofactr's growth story reflects the urgent need for practical solutions in today's manufacturing landscape. 

Listen now to understand how smart data management is transforming supply chain resilience during these turbulent times.

EMS@C-Level Live at APEX is sponsored by global inspection leaders Koh Young (https://www.kohyoung.com) and Creative Electron (https://creativeelectron.com)

You can see video versions of all of the EMS@C-Level pods on our YouTube playlist.

Philip Stoten:

Hello, I'm Philip Stoughton. I'm at Apex 2025. I'm on the Creative Electron booth and I'm joined by Phil from Cofactor. It's the Phil and Phil show. Yeah, indeed, he's squared there. You go Good to talk to you. You guys are growing gangbusters at the moment. You seem to be in the right place at the right time. So many supply chain issues to deal with. Yeah, how's it feel? It must be pretty exciting.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

It is. It is. I mean. The unfortunate situation is there's a lot of instability, and that is not great for the world. Now what we're really happy about is that we can help bridge some of those concerns and make sure that manufacturers are staying on track, yeah, that they're not double-paying tariffs, that they're managing their materials responsibly, that they have the traceability, and so the work that we've been doing since we were founded we continue to do Circumstantially. The world needs it a lot more right now.

Philip Stoten:

Yeah, and when you look at the challenges we are seeing at the moment, there are kind of two elements to it. There's obviously the tariffs, but the secondary effect of the tariff is this extreme uncertainty we don't know where we should be manufacturing, we don't know where we should be buying. We don't know how to work out the tariffs on our bill of materials. That's a real pain point. That's something you can help with.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

Yeah, so the well one. I think things are actually settling right now. There's been a huge amount of uncertainty, as you said, that has left people in sort of a stagnant position Because process change for any of these organizations especially when you look at the really large primes or the really large OEMs that investment to make a change is so substantial that until you know what you're actually working with, you can't really make that decision. Now that we understand it a little bit better, there's a lot more clarity and now that sort of the administration has said look, it's happening, yeah, it's like it's coming on.

Philip Stoten:

The fourth are we sure, though do we believe it?

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

I well, there was a question is it a threat or is it a reality? Yeah, and I think the recent call that Trump had with some leaders in the automotive space it sort of laid out like look it is coming.

Philip Stoten:

Yeah, what it looks like.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

And at least then you know what you're working with.

Philip Stoten:

Yeah, absolutely, that's what they want. They all want clarity.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

Yeah, now I think the big challenge and this is like biotech, aerospace obviously you have supply chains that are heavily reliant on Chinese manufacturers in critical industries.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

You have to start figuring out what's the effect of the unit economics, what's the financial environment I'm living in, how do I get through this and how can I keep manufacturing without it being an existential threat to the products I'm producing? And that's kind of where we come in. If you can't get around the realities of tariffs and supply chain issues, you at least need to be able to understand very clearly what is the scenario I'm walking into. If you're shifting a manufacturer, that's going to be a really significant issue, especially in critical industries. You have to recertify the manufacturer themselves. So there's a few things that we've always done which I think are a lot more useful right now when you look at things like temporary import, bonding and just how do you sort of still receive these materials, hold on to them, not have to pay those tariffs until they are put into a product and then sold. That helps a lot with cash flow's duty drawbacks, which is a big challenge.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

Just the documentation it's complex about managing those materials and keeping everything in line so that you can work with a partner to make sure that you are getting those duty drawbacks and not double paying tariffs. Yeah, this is all this sort of documentation and the traceability of stock that we've been doing the whole time. Yeah, now it becomes a lot more important that's critical more impactful?

Philip Stoten:

Yeah, it becomes critical, doesn't it Absolutely? And are you able to do that much more through automation? You're not replacing your manual processes for their manual processes. You're actually making it a lot more streamlined and, hopefully, more reliable at the same time.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

Yeah, yeah, and I think one of the big things is you don't know what these challenges are going to mean.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

One of the big things is you don't know what these challenges are going to mean, especially when at the port you have customs having to deal with a lot more potential issue in the transfer materials. Something that we already do for our customers is something gets held up in customs. We're tracking that material. So when we see that something hasn't been shipped, hasn't been received, we'll proactively reach out and say, hey, what's going on? Was there an issue with some amount of tariff? That sort of proactive resolution of those issues, I think, is what's really going to pay dividends to our customers, especially if you start looking at the threat of de minimis no longer being a part of the equation, because as soon as you drop and you say, any material moving into the country is going to have this tariff on it. That creates a real bottleneck at every one of these customs locations. So there's sort of the more strategic long-term how do you deal with the cash flow issues? And then there's the day-to-day how do I make sure that those materials are still getting through?

Philip Stoten:

customs Getting through and we've got it right. We've got the documentation on point. Yeah, I think that's huge. It's fascinating because when I've been talking to EMS leadership which is most of what I've been talking to this week they've come here with kind of a number of specific issues. One is many of them are AI curious, so they think they can leverage AI, but they're not sure how.

Philip Stoten:

And it's kind of like they're really disappointed in Industry 4.0 because it didn't give them the dividend they were promised. Right, and that was 10 years ago, for God's sake, and all they've got out of it is connectivity. That's great because they've got data, but they're not quite sure what to do with it. The other thing is they're looking for kind of tangible projects that have got KPIs and ROI that they can really deliver on. And many of them say one of the areas that they're looking at that for is the supply chain, sometimes the procurements outside, sometimes accelerating the quoting process, but always that how do we get shit right before we're even at the SMT line? That seems to be really important.

Philip Stoten:

That's kind of music to your ears, I guess.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

Yeah, I would say that our application of AI is insanely boring and very practical, that's perfect.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

That's what they want to hear yeah, it's a lot of. Here's a full bill of materials. I need to get these POs out. I need to connect those to the invoice and the packing slips. I need to make sure that these materials are running on time. If there is any issue, if it's a partial shipment, if there's a delay, I need that surface, and especially for a larger EMS or a larger OEM, and especially for a larger EMS or larger OEM.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

You're dealing with hundreds, thousands of lines being regularly procured. How do you get your focus to the right strategic issue at the right time? And that's where we live. And this sort of automation and tracking of vendor communication is the most practical use of AI inside of co-factor and there's other bits of it, for sure, but that's where we really see ROI very, very quickly is. You do just get more efficient procurement teams. You see materials showing up at the dock on time and in the condition you expect and a lot of these problems that might have not surfaced themselves until, all of a sudden, the lines held up are just resolved before that moment happens yeah and Phil.

Philip Stoten:

Would that give them the opportunity to run what-if scenarios? So say that we think there's going to be a particular tariff come in place. What if that happens? What does that mean to my cost of that bill of materials? How do I plan for?

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

that. Yeah, understanding the landed cost is huge and just seeing that applied tariff prior to the moment of procurement and being able to scenario plan, that is a critical. I was on the phone with a customer just two days ago and he was voicing hey, I know what the actual unit costs were. What I need to understand is what my landed cost was and I need to see that in the context of my suppliers so that I can start sort of leveraging all of this data Renegotiate or whatever we need to do.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

Exactly, and a thrilling thing was I was able to say oh, here is where you can find that data.

Philip Stoten:

Yeah, I think it's fascinating. One of the other areas that I've been talking to people about is they see solutions like yours where it's kind of ring-fenced and they understand what's going on and you do have a KPI. You can measure if co-factor are doing what what they said they, what they said they do. You do have an ROI because you're you know you're saving whatever you're saving in terms of in terms of the team that would be doing this very complex but manual task.

Philip Stoten:

Yeah, so that's very clear and they see that elsewhere. So they maybe see that with their inspection data, or they see it with their pick and place data. Pick and place is maybe giving them families of components that they're going to end up in the factory, but what a lot of them are curious about is how they bring all that together. Do these AIs talk nicely, and I wonder if we're at that point maybe not yet, but in the future where we need to look at agentic AI as a kind of AI overlord to keep to synthesize all those AIs. Is that what you see, and does that mean you need to collaborate with other vendors that use AI?

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

I think that's sort of an evolution of where we are now. A lot of what we do is just data normalization and connection to systems. I think that is where the industry is. And so when we think about what are the broader themes how do I get that BI dashboard? That's really blowing my mind. We want to get there, obviously as an industry and understanding the, the risks and the opportunities sort of across the whole of an enterprise. That is the goal.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

Yeah, right now I think it's about accessibility of data, the ability to surface these concerns and really just get the data into a repository where you can leverage sort of a more holistic AI model to pull out those insights.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

I mean, this is the stuff that you see. You know companies like Palantir offering these sort of larger solutions, but to get to the point that that's even a legible body of data, you have to do so much sort of normalizing and deduplicating and making sure that the base data is accurate. And I think that's where we are as an industry and that's a lot of what we're doing is how do you take for an OEM, the design documentation information out of the PLM? How do you get that into the EMS? Combine that with the inventory data, get it into the ERP so that you can get those insights out of it, and that's a lot of the value. I think we do a lot of procurement, we do a lot of risk management, but you could also say, hey, this is process automation and data normalization across systems, and so I look forward to a future where we can say, hey, it's all seamlessly integrated, you have one system to rule them all. I love that idea.

Philip Stoten:

Right now, I think we're all pushing the idea You're down in the weeds getting your bit right.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

Yeah, just how do you get that foundation of data accurate and accessible?

Philip Stoten:

Yeah, last question I think the first time I met you and Matthew was out here I don't know whether it was two or three years ago, but you were just getting started. Phenomenal success and growth in that time, congratulations, thank you. On that. Just how many people are you now? How big are you in terms of scale and what's next?

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

Yeah, so we are just above 40. Right now we are opening a West Coast location, which is great. So we've been operating. We have a physical warehouse in New York not the most logical place to store electronic components, especially when we're working a lot in new space which is here on the West Coast. So we're really excited to be opening a facility in Long Beach. We've signed the lease. We're building out a space. Now we're going to see the team grow with that. We're growing the engineering function, hiring a lot of leadership, which we're very excited about. They're coming from some incredible organizations.

Philip Stoten:

Yeah, you're building a really good team at the top.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

It's great, right, yeah, yeah, I mean this is the advantage of, I think, the ecosystem of venture capital, where we have the opportunity to solve some real problems.

Philip Stoten:

Yeah, and move fast.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

Yeah, and so it's been a really exciting. I mean, I think two years ago we were shoved back in the corner. Yeah, you're near the loading dock, yeah, and, and it does feel.

Philip Stoten:

It's probably three years three years ago that we met and you have a booth at all.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

You were just wondering, loitering in the aisles. Can we do something to help?

Philip Stoten:

And you have so, so great job, phil. Thanks for your time, thanks for chatting and look forward to keeping up with your exciting journey.

Philip Gulley, Chief Strategy Office and Co-Founder of Cofactr:

Thank you, phil, thanks for your time, thanks for chatting and I look forward to keeping up with your exciting journey. Thank you, Phil, thank you.