Breaking the Bottleneck | Issue 62
[10/14/2024] Amazon's Robots, Quantifying Semi Fabs, Figure Factory Tour, & More!
Breaking the Bottleneck is a weekly manufacturing technology newsletter with perspectives, interviews, news, funding announcements, manufacturing market maps, and a startup database!
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Content I Enjoyed Last Week 🏭🗞️🔬 📚
News:
The 8 Robots Powering Your Amazon Deliveries [Amazon News]
Since acquiring Kiva Systems in 2012, Amazon has developed, produced, and deployed over 750,000 robots across its operations network. The eight robotics systems include:
Sequoia: Sequoia transports inventory directly to employees at ergonomically designed workstations, enabling Amazon to identify and store inventory up to 75% faster
Hercules: A drive unit that brings pods of items to employees for order picking. Hercules makes critical navigation decisions using cameras and a grid of encoded markers on the floor to locate pods, enhancing efficiency in item retrieval.
Titan: Similar to Hercules but capable of lifting twice as much, focusing on larger or bulkier items like small household appliances or pallets of food.
Sparrow: A robotic arm used to pick up and move individual items from containers into specific totes for customer orders, streamlining the order assembly process.
Robin: Robin is the first robotic arm deployed by Amazon Robotics. Robin sorts packages before moving them to the outbound dock. It grabs packages from conveyor belts and places them onto robotic drive units.
Cardinal: A robotic arm selecting individual packages up to 50 pounds from a pile, lifting them with air suction, reading labels, and placing them into appropriate carts for shipment.
Proteus: Amazon's first fully autonomous mobile robot, Proteus navigates freely throughout the site using sensors to detect and avoid obstacles. It works alongside Cardinal to move carts from the outbound dock area to the loading dock.
North America Has Five Years to Catch China [Voltaiq]
Voltaiq CEO Tal Sholklapper warned that North American automakers and electric vehicle (EV) battery firms have five years to overcome China's dominance in battery technology and manufacturing. He warns that as long as China's subsidized industry can produce batteries at around $50 per kilowatt-hour, it will continue to pressure North American firms. He emphasized that battery manufacturers need to focus on producing high-quality cells by bringing in external experts for analytics, learning and iterating faster, and scaling up production swiftly. Sholklapper also pointed out that original equipment manufacturers (OEMs) must acknowledge the challenges of making batteries in-house, noting that electrical engineers cannot simply transition to battery production due to the complex electrochemical nature of batteries. He stressed the importance of collaboration between OEMs and battery companies to overcome this: "You need to focus on your core strength. And whether it's the vehicle integration, whether it's making cells... One thing that you need to do to be successful is focus on that and then bring in best-in-class providers to help you with the rest."
In America’s Factories, Even the Robots Are Getting Less Work [WSJ]
Manufacturers are reducing their investments in automation equipment as production slows and more human workers become available. Based on data from the Association for Advancing Automation, orders for factory robots in North America plummeted by nearly one-third last year from 2022's record levels. This decline continued in the first six months of this year. During the COVID-19 pandemic, companies heavily invested in automation to mitigate labor shortages caused by high absenteeism and workers seeking better pay or less physically demanding roles. While robots have been seen as ideal solutions for boring, repetitive, or physically taxing tasks, some companies underestimated the maintenance and programming skills required for more complex operations. "Robots are pretty finicky. The use of robots is not going away, but it is slowing down," stated Jack Schron, President of Jergens, a manufacturing company in Cleveland. The automotive industry, traditionally the largest user of industrial robots in North America, saw a 20% drop in robot orders in the second quarter compared to the same period last year. Robots for the auto industry accounted for 46% of all robot orders in the quarter, down from nearly 60% in 2022. Despite the overall decline, some sectors are still increasing their use of robots. Second-quarter robot orders from food and consumer-goods manufacturers rose by 64% from the previous year. In summary, while automation and robotics remain integral to manufacturing, current economic conditions, including lower production volumes and reduced labor shortages, have led companies to reassess and often reduce their investment in robotic equipment.
Quantifying Semiconductor Fab Performance [McKinsey]
The surge in semiconductor demand has created rapidly changing market dynamics and product demand. This volatility forces the industry to oscillate between cost reduction and throughput maximization, complicating strategic planning for semiconductor fabrication plants (fabs). To navigate these challenges, the article proposes three analytical frameworks that can help fab leaders optimize manufacturing processes:
Variance Curves: Also known as alpha or frontier curves, these tools chart capacity utilization versus normalized cycle time (how long an operation takes compared to the theoretical minimum). Variance curves facilitate comparing current performance against historical benchmarks and industry standards, helping fabs identify deviations from peak performance. For example, a fab that reduced variance observed a 70% increase in on-time delivery and a significant decrease in shipment variance by setting and adhering to line balance and variance targets.
Saturation Curves: These curves compare work-in-progress (WIP) to throughput, helping fabs identify the optimal inventory levels to maximize throughput without causing bottlenecks or increasing cycle time. The relationship holds until a saturation point is reached; additional WIP can clog the production line. Fab leaders can visualize the throughput saturation point by analyzing historical data and determining optimal inventory levels. Some fabs decreased WIP levels by 25% while maintaining stable monthly shipments over a 12-month period by leveraging saturation curves.
Empirical Equipment Analytics: This approach uses real-time data to identify true bottleneck tools within the fab rather than relying on outdated capacity models or institutional knowledge. By plotting weighted cycle time against WIP level variation, fabs can empirically determine which tools are causing delays and prioritize resources to enhance output. Identifying structural and transient bottlenecks allows fabs to focus on improving tool availability and utilization where it matters most. Fabs employing this method saw a 30% increase in structural bottleneck tool group availability and a 60% decrease in sustained WIP.
The Good Old Days of Manufacturing Are Long Gone [NY Times Opinion]
Donald Trump and Kamala Harris have both pledged to spearhead a manufacturing revival in the United States, evoking the prosperous 1950s when well-paying manufacturing jobs supported strong communities and provided opportunities for many Americans without college degrees. However, replicating that era’s conditions is unlikely, given the significant shifts in demographics, education requirements, and global interdependence. By 2019, manufacturing employment had declined to just 10% of nonfarm workers, though numbers have started to recover under President Biden. Yet, many new roles will likely need to be filled by immigrants, and a National Association of Manufacturers (NAM) survey this past spring revealed that two-thirds of respondents cited employee attraction and retention as their biggest challenge. Even if all open roles are filled, total manufacturing employment would still be around three million short of its 1979 peak, according to data from the Federal Reserve Bank of St. Louis. Additionally, any resurgence will depend on global collaboration with key allies. While reducing reliance on China, especially in strategic sectors, the U.S. must work with overseas companies, particularly in industries like semiconductors, where critical supply chain components are dominated by firms in countries like Taiwan and the Netherlands. The extent of manufacturing’s comeback will also hinge on the next president's willingness to adopt policies aligned with these realities. A 2019 Federal Reserve study found that U.S. tariffs imposed under Trump in 2018 and 2019, along with retaliatory tariffs, led to a 1.4% reduction in manufacturing employment—equivalent to roughly 175,000 jobs. Achieving a true manufacturing renaissance will require a more nuanced approach than tariffs, which have been proposed by both political sides.
Research:
2024 Workforce Activity Report [UKG]
UKG surveyed more than 300 HR leaders at U.S. manufacturing companies on the state of labor and their workforce. Some key findings from the report include:
Roughly 31% of more than 300 HR leaders at U.S. manufacturing firms say their production lines are understaffed
Nearly 70% of UKG survey respondents noted that labor shortages impact their ability to meet production needs. Almost half of manufacturers say it now takes longer to fill open positions than a year ago.
Roughly 61% of manufacturers are struggling to fill critical labor gaps, down from 87% in 2022, as companies continue to grapple with a skills mismatch in the industry and ongoing workforce development challenges
Over the past year, cross-training (63%) and reskilling (57%) are the top mechanisms manufacturers for improving recruitment and retainment
82% of manufacturers proactively seek new ideas from frontline employees to improve processes. However, many still rely on manual (e.g., paper processes) or outdated electronic solutions (e.g., spreadsheets, emails) to manage and engage frontline employees.
The Global State of CPS Security 2024 [Claroty]
Claroty released new research on the significant business impacts of cyber attacks affecting cyber-physical (CPS) environments. Some key findings from the report include:
27% of organizations report a financial impact of $1 million or more from cyber attacks, with the most common being lost revenue (39%), recovery costs (35%), and employee overtime (33%).
53% met ransom demands of over $500,000 to recover access to encrypted systems and files to resume operations.
The operational impacts are closely tied to the financial losses, with 33% reporting a full day or more of operational downtime that impacted their ability to produce goods or services. 50% said the recovery process took a week or more, and 29% said recovery took over a month.
82% of respondents experienced at least one cyber attack, and 45% said five or more attacks originated from third-party supplier access to the CPS environment.
A majority (56%) have greater confidence in their organization’s CPS ability to withstand cyber attacks today versus 12 months ago, and 72% expect to see quantifiable improvements in their CPS security in the next 12 months.
Podcasts/Video:
Inside Agility’s Robo Fab
Manufacturing Deals🏭💵
Form Energy - A company developing a new class of cost-effective, multi-day energy storage systems for year-round energy storage
$405 million [Series F] - Led by T Rowe Price and joined by GE Vernova and insiders, including TPG Rise Climate, Breakthrough Energy Ventures, Capricorn, Coatue, EIP, The Engine Ventures, NGP, Temasek & Prelude Ventures
Molg - A company developing robotic microfactories to autonomously disassemble complex electronic products
$5.5 million [Seed] - Led by Closed Loop Partners and joined by Amazon's Climate Pledge Fund, ABB Robotics & Automation Ventures, and Overture
Drawer AI - A company developing a system that leverages the latest AI technology to perform a quantity takeoff of electrical plans
5 million [Seed] - Led by Brick & Mortar Venture and joined by Base10 Partners
Keychain - A developing the world's largest platform for CPG manufacturing, connecting retailers and brands with vetted manufacturing partners
$2 million [Venture] - From Hershey
Fortius Metals - A spun out from Elementum 3D technology to develop revolutionary wire-based materials
$2 million [Venture] - From Finindus
Downtime 🏭🧑🔧
A Complete Unknown [Bob Dylan]