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Manufacturing Automation: Finding The ROI In A Digital Strategy

The state of shop floor automation has changed drastically in the last five years as IT capabilities bring advanced software functionality, highly flexible infrastructures and more options in deployment, including SaaS and cloud computing.

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Modern IT technologies promise to reinvent the industry and turn factories into digital enterprises. Industry 4.0, a concept which touts the value of machine-to-machine (M2M) connectivity, is gaining traction as manufacturers use smart sensors to monitor assets and predict maintenance needs. Robots are increasingly taking on more tasks, and some tech enthusiasts even project “lights out factories” which can largely operate without the need for human engagement. Will this reliance on automation be a positive trend for manufacturing or bring with it unexpected risks? Can manufacturers rely too heavily on automation and fall into auto-pilot complacency? This is certainly a question with no easy answers, but one that deserves further consideration.

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The state of shop floor automation has changed drastically in the last five years as IT capabilities bring advanced software functionality, highly flexible infrastructures and more options in deployment, including SaaS and cloud computing. A Chief Information Officer must, at times, feel much like the so-called kid in a candy store as the options for vertical-specific ERP solutions, point solutions for specialized capabilities and advanced business analytics provide unprecedented functionality and automation.

The Industrial Internet of Things (IIoT) is one of the most disruptive technologies to impact manufacturing. The IIoT uses smart sensors embedded in devices to send signals to each other, controllers, and IP Networks for sharing with enterprise systems that apply required business context for interpretation and analysis. The sensors detect and communicate a wide range of conditions--including location, speed, weight, volume, flow, temperature and vibration.

According to Gartner, approximately 3.9 billion connected things were in use in 2014, and will likely reach 25 billion by 2020. Some technology providers even project that there could be as many as 50 billion by 2020. Another recent report even forecasts that the economic impact throughout the supply chain will reach $1.9 trillion. No matter which report or which projection you believe, there is little doubt that the IIoT is important to manufacturing and deserves careful consideration.

Robotics is a closely related technology that is creating a paradigm shift in manufacturing. The Robotic Industries Association (RIA), the industry’s trade group, estimates that some 230,000 robots are now used in factories in the U.S., with a wide range of applications, including spot welding (76 percent), arc welding (39 percent) and assembly (29 percent).

Product configuration tools provide yet one more way that technology is helping manufacturers keep up with the escalating expectations of today’s consumer. As customers expect greater collaboration and increasingly more customized products, these tools provide a valuable resource for interacting with end users, allowing them to enter specifics and see visual renderings of their personalized design.

These are just some of the ways that automation is changing manufacturing and helping organizations to offer customers greater speed, more product options and greater value.

While the use of automation has grown exponentially over the last five years, moving from a “nice to have” to an absolute necessity in order to remain competitive, the degree of automation used by a particular plant still fluctuates between extremes. The type of vertical industry, the size of the organization and whether the business model is largely make-to-stock (MTS), engineer-to-order (ETO) or make-to-order (MTO) all influence the degree of automation which is practical—and cost effective.

Finding the right balance between convenience, speed and a measurable return on investment (ROI) is the critical part of this automation journey. Simply automating because “it’s possible” is a dangerous undertaking which can divert valuable resources away from other IT initiatives which can provide meaningful results.

Planning an effective automation strategy

Direct labor and material costs are two of the biggest operational cost centers for any manufacturer. A manufacturer cannot achieve operational efficiency without understanding, tracking and controlling these costs. At the very least, an automation solution should provide the ability for plant operators to access the right information at the right time to increase productivity. If plant floor operators are constantly looking for updated job packets, or if supervisors lack clear visibility to team activities, productivity is seriously being impacted — and escaping detection.

In order to take the first step, managers should consider shop floor automation solutions that will help speed operations, remove road blocks and better manage resources. These solutions will start reducing dependencies on inflexible and opaque processes, such as paper based manufacturing. Automated processes which operate in real-time and can be updated instantly help manufacturers react to marketplace changes in a timely manner. There is no longer a need to reference job packets, clip boards or spread sheets that are outdated the minute they are printed.

The next level of shop floor solutions allow manufacturers to automate and streamline a wide variety of manufacturing processes. Event triggers and workflows can be created so that next steps in the production cycle are assigned automatically, speeding processes and eliminating inconsistencies. Automation can also track complex processes, such as multi-level serial number hierarchies, material consumption, scrap rates and machine run rates. Manufacturers, who have automated these activities, have reported a marked increase in their operational efficiencies. They have also benefited from improvements in traceability, leading to increased regulatory compliance.

By automating the right plant floor activities manufacturers can increase operational efficiency as well as influence factors driving profitability, such as uncovering factors causing increased scrapping or operational waste.

Evaluating automation options

In order to remain competitive, it is important for organizations to continually evaluate their current processes and look for opportunities for improvement. Knowing where to start can be overwhelming.

When reviewing automation options, manufacturers should keep in mind that it is important to deploy a solution that is highly flexible and will allow for future expansion and enhancements. It’s also important to choose solutions which can be accessed through a variety of devices, from tablets to smart phones.

Deployment options should also be considered when choosing IT solutions today. For the manufacturer that needs agility and speed of implementation cloud deployment offers a smart solution. A recent survey conducted by IDG Research indicates that manufacturers are increasingly turning to cloud-based solutions in order to meet aggressive growth plans. Half of all respondents cited the need to keep up with complex regulation requirements as one important driving force. IT managers, in particular, said standardizing processes and technologies across locations, increasing the speed of service delivery and managing fluctuations in demand and supply are all problems that must be solved for their business to expand successfully — issues that cloud deployment simplifies.

Almost half of all respondents (46 percent) said deploying cloud-based business applications has proven to be essential or very important to their expansion strategy.

Finding ROI

When does investment in automation begin to offer measurable ROI? Manufacturers must continually evaluate response, not only in the increased productivity, but the improved insights to customer needs and the ability to predict customer trends. Automation, when fully integrated into the ERP and customer relationship management tools, helps support a full customer-centric approach.

Customer centricity provides a key differentiating ability. Manufacturers increasingly risk commoditization of products and increased competition from countries with low wages. A focus on customer relationships helps elevate loyalty — making buying decisions transcend price alone.

Concluding Insights

Automation is a tool, but not the end-all solution. Manufacturing is still about innovation, customer insights and applying data for creative problem-solving. Machines, internet connectivity and advanced software solutions cannot replace the creative spark of the people who manage the automation.

While automation is essential today, it is just one element of the smart manufacturing redesign. Automation frees people from the burden of repetitive tasks and allows them to focus on the truly essential elements that only humans can do: designing game changing products and building relationships with customers.

Larry Korak is Industry Strategy Director for Industrial Manufacturing at Infor

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