September 1, 2016 / continuous improvement, Cost Management, industry news, LIT, productivity, quality, resource allocation, ROI, strategic planning
For years, experts have touted the benefits of automation. The efficiency and quality improvements are perhaps the biggest draw for industrial metal-cutting companies, especially as customer demands for faster turnaround and tighter tolerances continue to increase.
However, automation may not always be the most cost-effective solution. According to the white paper, Tackling the Top 5 Challenges In Today’s Metal-Cutting Industry, in today’s uncertain market, managers need to strategically determine whether or not allocating resources to automation and technology will offer a true return on investment.
“For example, precision circular saws can outpace band saws 3 to 1 when it comes to cutting certain materials; however, band saws are more economical and offer cutting versatility,” the paper explains. “Therefore, managers need to carefully consider their costs, customer base, and long-term goals before upgrading equipment.”
Of course, this leads to several questions: What does that look like in practice? How do others determine whether or not automation is worth the investment? Who is—and isn’t—investing in automation?
Over the summer, the Manufacturers Alliance for Productivity and Innovation (MAPI) released the results of a national survey that attempted to answer those questions and more. According to the Executive Summary, the survey polled U.S. manufacturers, gathering data on the prevalence of actual and planned automation investment, the drivers of and impediments to automation investment, and the criteria for evaluating new automation technologies.
In general, the study found that actual, planned automation investment is high among U.S. manufacturers. The following is a summary of the survey’s major findings: (You can read the full report here.)
- Widespread automation investment suggests a fundamental reshaping of the production landscape that could eventually have implications for most aspects of manufacturing activity. Since the Great Recession, automation investment has been widespread in the U.S. manufacturing sector, with 83% of respondents to a December 2015 national survey having automated some part of their product-producing process in the five years prior to the survey, and 76% indicating that they plan to do so in the three years following the survey.
- Increased global manufacturing integration is raising the pressure for automation investment, as cost minimization with quality maximization looms ever larger as an operating paradigm for U.S. manufacturers. The survey reveals that the two most common criteria used by U.S. manufacturers for evaluating the performance of new automation technologies are whether they lower total production costs and whether they improve product quality.
- As supply chains become increasingly global, it is likely that automation activity by U.S. manufacturing companies will spread around the world. Supply chain pressures are at work in motivating automation activity. Among the top drivers of automation investment by U.S. manufacturing companies are use by competitors, use by customers, and use by suppliers.
- Global macroeconomic pressures that are affecting every manufacturing industry are catalyzing automation investment more than industry-specific factors. While the survey data show that larger manufacturers have a greater propensity to engage in automation investment than smaller manufacturers, there is no significant difference in the incidence of automation investment between major manufacturing subsectors.
According to Cliff Waldman, one of the MAPI analysts who conducted the study, one of the most interesting findings of the survey was automation activity by company size. Specifically, the survey revealed that automation investments increase as firms grow larger. “Among other things, larger companies have greater output over which to spread the cost of investments,” Waldman writes here on the U.S. Chamber of Commerce web site.
Waldman adds, however, that the prevalence of automation activity among small manufacturers is also notable. “By allowing for significant efficiency improvements in at least some aspects of production, it is possible that automation makes it easier for manufacturing entrepreneurs to overcome often significant barriers to entry as well as for small manufacturing companies that might otherwise have exited the market to stay and compete,” he states.
Waldman concludes that automation technology “does not offer a complete solution to lagging productivity,” but he believes that “an effective strategy for the development of a globally competitive manufacturing sector requires attention to the promise of new technologies being implemented worldwide.”
In other words, manufacturers both small and large still have a lot to gain from investing in automation. In fact, this article from manufacturing.net states that automation is one of the top-three investments manufacturers can make this year. Do you agree?