Episode 4: Cutting Cost with Automation

[Radar] This is Radar and Dorothy from the Valverus AI Team, with another exciting podcast exploring the new frontiers in value creation.

Hey everyone, welcome back. We’re going to be diving into the world of manufacturing automation today. 

How PE Firms are Transforming Companies

[Radar] Specifically how private equity firms are using automation to transform their companies. We’re talking AI millions in funding and the potential to really change product development time, you know, how fast products can hit the market. 

[Dorothy] Yeah. It’s really interesting to see how these firms are kind of approaching it from both sides. They’re investing in these really new startups  but also they’re using these more traditional automation strategies in the companies they already own. It’s all about efficiency and profit at the end of the day. 

Spotlight on Bright Machines

[Radar] Yeah, for sure. So let’s talk about Bright Machines, for example.  They just got a ton of money. I think it was like $106 million in funding with some really big names like Nvidia and Microsoft. Huge names.

And Bright Machines is using AI to make manufacturing smarter. But what does that actually mean? 

[Dorothy] So imagine an engineer, they design a product and then they basically just hit a button and a robotic system across the world manufactures that product. Wow. That’s the kind of vision that Bright Machines is working towards. 

[Radar] So it’s not just about speeding up production, it’s total rethinking of the process. 

[Dorothy] Yeah, absolutely. And that investment from these huge tech companies is a big vote of confidence in that vision. You know, they see that potential for AI to totally revolutionize manufacturing, especially for companies that are making really complex products like, you know, the AI servers that they need.

Traditional Automation Tactics in PE Holdings

[Radar] That makes sense. Yeah. That makes sense. What about the companies that aren’t building cutting edge tech? The Valverus article that we read talked about how PE firms are really laser focused on trying to cut costs and boost productivity in their more traditional manufacturing holdings.

[Dorothy] Right. And they’re all about streamlining operations, optimizing inventory management and using data in real time to predict when machines need maintenance. It’s about squeezing out as much waste and inefficiency as possible.

[Radar] So they’re taking these strategies and applying them across the board, not just in high-tech manufacturing. 

[Dorothy] Exactly. And the impact is huge.   They’re talking about potential reductions in costs of

20, 30%. Wow. And productivity boosts of up to like 15%. Those are serious numbers. Yeah, it’s a game changer for sure. 

Automation Tactics in PE Holdings

[Radar] So it seems like we’re seeing two different approaches here. Bright machines which is pushing the boundaries with AI-driven manufacturing. Right. And then the Valverus approach, which is about assessing, implementing, like you said, those more traditional automation tactics. 

[Dorothy] Yeah, and what’s interesting is that they’re not necessarily separate.  PE firms are probably using both approaches. So they’re investing in companies like Bright Machines, but they’re also implementing those more traditional strategies in the companies they already have. 

Using Automation to Boost Efficiency and Profits

[Radar] Like a double whammy of efficiency and innovation. The Valverus article had some really interesting examples of how PE firms are using automation to boost efficiency and profits. Can you kind of walk us through a few of those? 

[Dorothy] Yeah, sure.  One area they talked about was inventory management, which can be a big headache for manufacturers. And automated inventory systems can keep track of demand patterns and adjust stock levels in real time. 

[Radar] So you’re avoiding those situations where you have too much of something you don’t need or not enough of what you do need.

[Dorothy]  Exactly. It really streamlines everything, you know, reducing waste, cutting down on stock outs, and improving cash flow. 

[Radar] Yeah, and I imagine that has a ripple effect throughout the entire supply chain. Yeah, absolutely.

Automation for Predictive Maintenance.

[Dorothy] Another thing they talked about was predictive maintenance. So instead of just doing routine maintenance on a schedule, you’re using data to predict when a machine is likely to break down. 

[Radar] Oh, so you’re preventing problems before they even happen. 

[Dorothy] Exactly. It minimizes downtime, extends the life of your equipment and saves you a lot of money in the long run.

[Radar] Sounds like these PE firms are really like thinking of everything when it comes to optimizing these companies. 

[Dorothy] Oh, yeah, they’re definitely thinking strategically.  And it’s not just about throwing tech at every problem. It’s about finding the right solutions that address real business challenges.

[Radar] So the right tool for the right job? 

[Dorothy] Exactly. And I think that’s an important takeaway for anybody involved in manufacturing these days.

What Does This Mean for the Future of the Industry?

[Radar] So where do we go from here? What does this mean for the future of the industry?  Well, I think it’s safe to say that the manufacturing world is going to look totally different in a few years.

We’re already seeing that change happening towards smarter, more connected factories. And I think that’s only going to speed up

Skills Needed for the Future

[Radar] So what does that mean for the people working in those factories? Are we all going to be replaced by robots?

[Dorothy] Not really.   You know, automation is about helping people do their jobs better, not replacing them completely. It’s probably going to create all sorts of new jobs and opportunities.

[Radar] So what kind of skills are going to be really important in this new world of manufacturing?

[Dorothy] That’s a good question. For sure, technical skills are going to be huge, you know?

We’ll need people who can design, program, and fix these automated systems. But we’re also going to need people who are really problem solving, critical thinking and creative thinking. 

[Radar] So it’s not just about being good with technology. It’s about being able to think critically and adapt to change. 

[Dorothy] Exactly. The ability to learn new things and adapt is going to be so important in this industry because it’s changing so fast.

How Companies can Prepare

[Radar] What about the companies themselves?  What do they need to do to stay ahead of the game in this new landscape? 

[Dorothy] They need to be open to new ideas and willing to invest in new tech.  And they also need to focus on their employees, making sure they have the skills they need and creating a culture where everyone is always learning.

[Radar] So it’s not just about the technology. It’s about the people and the company culture. Absolutely. And I think that’s a key takeaway for everyone listening. The future of manufacturing isn’t just about machines. It’s about people. It’s about using technology to help workers create new jobs and build a stronger, more resilient industry.

Closing Thoughts and Key Takeaways

[Radar] I love that. That’s a great point. I think it’s a perfect place to wrap things up.

Thanks for joining us on this deep dive into the world of manufacturing automation.

[Dorothy]  My pleasure. 

[Radar] And to our listeners.  Keep those minds curious, and we’ll see you next time.  

This is Radar and Dorothy from the Valverus AI team signing off until next week.

Contact us today for an assessment of how we can help you create value.