Wall Street Journal: Manufacturers Use New Technology to Stay Running

Tools from venture-backed startups, including software, sensors and AI, support assembly lines and supply chains during the pandemic

Tools from venture-backed startups, including software, sensors and AI, support assembly lines and supply chains during the pandemic

By Tomio Geron | June 15, 2020

Factories around the world are turning to technology to help them safely open back up after being shut down by the coronavirus pandemic.

Venture-backed startups are aiding this effort with software, sensors, robotics and artificial-intelligence tools that make it easier for workers to keep their distance in factories and let engineers monitor and fix problems remotely.

While these technologies were built before the pandemic to increase speed and efficiency, demand has surged since the outbreak upended the economy.

“Covid has really been the catalyst and accelerant for the adoption of software solutions to automate workflows and make it more efficient and have less risk when you have less people around doing things,” said TJ Nahigian, managing partner at Base10 Partners.

Manufacturers are focusing on using software to continuously assess and dynamically change assembly lines, said Eclipse Ventures founding partner Lior Susan, who has invested in several startups in manufacturing and supply-chain management.

Last year, e-commerce technology company Shopify Inc. bought startup 6 River Systems Inc., which provides robots in fulfillment warehouses for e-commerce deliveries, for $450 million. Mr. Lior expects more such acquisitions.

Instrumental Inc., a startup backed by Eclipse, Root Ventures and First Round Capital, uses AI to help companies remotely do quality inspections in real-time. For electronics manufacturers—Instrumental’s main clients—mistakes, defects and wasted time add up to 25% of manufacturing costs and often require engineers from the U.S. or Taiwan to visit factories in China and elsewhere to fix problems, said Anna Shedletsky, chief executive at Instrumental.

Instrumental’s AI system scans images of every product produced on an assembly line to identify anomalies and defects. Engineers can then analyze and fix them remotely. This means fewer people have to go to the factory floor, reducing the risk of infection.

“Companies for decades have been sending engineers from the design center to help with discovery of new issues and also fixing things when they come up,” said Ms. Shedletsky. “They’re flown around the world. I used to do that when I was at Apple as a product-design engineer.”

Instrumental has seen a significant uptick in new customers since the pandemic, while existing customers are seeking to increase their use of the product, Ms. Shedletsky said.

Another startup, Drishti Technologies Inc., backed by Emergence Capital Partners and Andreessen Horowitz, uses video and computer vision to analyze factories.

Some manufacturers have used technology to stay open. Olde Thompson, an Oxnard, Calif.-based food manufacturer that produces spices, remained open as an essential business during the pandemic and used Accel-backed Plex Systems Inc., an enterprise resource planning software maker, to remotely manage its manufacturing, supply chain and finances.

“Thirty percent of our workforce went to work from home,” said Marcus Merchant, director of information technology at Olde Thompson. “To have the ability to be nimble and move quick really is what made it key for us.”

Meanwhile, technology is helping manufacturers deal with disruption to global supply chains stemming from factory shutdowns. ClearMetal Inc., a startup based in San Francisco, helps companies manage the logistics of inbound and outbound materials at factories.

Many companies don’t have clear visibility into tracking their goods and supply chains. ClearMetal, whose customers include McDonald’s Corp. and Georgia-Pacific LLC, has proprietary data from sources such as satellite data, shipping ports and trucking companies, along with artificial intelligence that can predict problems in supply chains and help companies change shipping methods or suppliers in real-time.

Adam Compain, chief executive of ClearMetal, expects that manufacturers’ move to digital tools will continue after the pandemic. “After this global crisis cools off, there’ll be an acceleration to even more of a continuous versus static supply chain,” he said.

While companies are trying to get through the current disruption, many are also starting to prepare for the next crisis. Many are looking to use automation in factories to increase space between people and keep operations running in case people can’t work during this pandemic or the next one.

“What we’ve seen is people start to invest to get ahead of the next one,” said Amar Hanspal, chief executive of robotics startup Bright Machines Inc., which has raised $200 million from investors including Eclipse, Lux Capital and BMW i Ventures.

Supply-chain problems caused by factories closing in China have caused companies to look to move manufacturing closer to home.

“They want to take away the dependency on one single factory halfway around the world,” Mr. Hanspal said. “The only way to do that is automation,” he said, adding that companies want factories closer to customers to reduce vulnerability to crises and tariffs, while automation enables reducing costs in the U.S.

Founded in 2018, Bright Machines provides automated assembly lines in a modular format for use in smaller spaces than large factories. Bright Machines, whose customers include contract manufacturer Flex Ltd., from which it originally spun out, uses software to make quick modifications to its machines without having to rebuild them.

One of Bright Machines’ cells can do the work of three people, and the smallest setup is two cells, while the largest so far is seven cells doing the work of about 25 people, Mr. Hanspal said. Instead of paying eight employees $120,000 a year each, Bright Machines would cost a company $120,000 a year total for three years, he added.

Previously, automation was only used by large automotive or aerospace factories with budgets of millions of dollars with long production cycles, Mr. Hanspal said. But Bright Machines can deploy its cheapest configuration for half a million dollars in three months, he said.

Write to Tomio Geron at tomio.geron@wsj.com


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