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Investing in automation: Strategies manufacturing companies need to know

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Learning Objectives

  • Investing in automation and the Internet of Things (IoT) can help keep manufacturers ahead of the curve.
  • Companies also need to invest in future workers and develop the current workforce.
  • Technologies like remote monitoring and asset tracking in the supply chain can help prevent production losses.

Investing in automation is one of the largest trends amongst small- to medium-sized manufacturing enterprises today. While manufacturing is poised for recovery and growth, there are obstacles and barriers businesses need to address to achieve and sustain desired growth that can be solved through an increased investment in technology.

Key elements of automation to consider

Progressions in automation have been a staple in manufacturing environments for generations, but until recently, they have been quite capital-intensive and time-consuming to implement. The introduction of intelligent software and new technological advances provides a flexible, fast and affordable automation solution.

Investing in technology on the shop floor is one of the first steps to start this process. More business owners and entrepreneurs in manufacturing are preaching “efficiency, efficiency, efficiency” and automation investment is a huge piece to that puzzle. Whether it be robotics or just pure capturing of key performance indicators (KPIs) through Internet of Things (IoT) equipment, automation makes it easier to sit back and adjust certain leverage in production, which include operations for sequencing cheaper and more consistent products.

Opportunities and challenges in digitization, data and artificial intelligence

The largest forms of automation develop from new opportunities in data and artificial intelligence (AI).

Today’s newest technology in the manufacturing sector can take in a combination of sophisticated data from sensors, machines, processors and people and tap into algorithms designed to optimize operations, improve network infrastructure needs and achieve better production.

According to Oxford Economics, 34% of manufacturers said they have prioritized investing in AI, while 27% are prioritizing analytics or predictive analytics, and 19% machine learning (ML)-based initiatives. All of these can be used to augment their workforce, solve critical challenges, and start their organizations on a long-term transformation.

Microsoft’s 2020 IoT Signals hypothesis report shows manufacturing companies are adopting digitization like IoT – 93% of those we surveyed indicate they have adopted this technology. They turn to IoT to improve efficiency along the entire manufacturing process, from production to field operations to employee productivity.

Unfortunately, manufacturing digitization can present some fundamental challenges, like added cybersecurity risk. Before diving deep into digitization investment, key stakeholders within each manufacturing company should recognize the most critical information assets to protect, identify how that information flows through the organization and verify the level of risk if that information was lost or compromised. This establishes a foundation for how to address potential risks to that information while developing risk management roles, building secure procedures and establishing appropriate safeguards.

Attracting and retaining qualified talent through automation

As manufacturing faces a shrinking labor pool, higher costs and a skills gap challenge, it will become even more critical to attract and retain qualified employees. In the short term, some companies are reevaluating their talent base and are moving forward with fewer employees for some functions that can be done by higher tech and AI.

That aside, when sensors are used to measure machine operations, human skill is still needed to install the sensors, understand the outputting data and create comprehensible dashboards to track productivity. People with these skills are in short supply and collectively, businesses need to stay ahead of the technology curve to keep these employees engaged because of their value.

In addition to a greater focus on attraction and recruitment through manufacturing automation, company leaders also should focus on keeping and cultivating the workers they already have and avoid further losses. Automation has shifted the need for skill to different areas of the shop, which is important to keep in mind when developing new opportunities.

Investment in cross-training is playing an increasingly important role, including the potential to shift a shop’s organizational structure. The combination of automation and cross-training allows fewer people to produce more and hopefully retain talent for the long term.

IoT implementation for better operations

The old way of doing business is becoming less viable and IoT adoption is becoming crucial for business resiliency, competitiveness and growth. With estimates indicating the manufacturing industry will spend up to $670 billion on IoT by 2023, according to a Gartner report, it will be important to understand how IoT enabled-processes can drive efficiencies and margin enhancements, improve operations and lead to better integration across systems.

A manufacturing facility that uses IoT to collect real-time data often means quicker improvements to production and a service efficiency that drives more activity and creates less downtime. As the turnover of the business increases, technologies like remote monitoring and asset tracking in the supply chain can help prevent production losses.

While adopting and building new digital strategies, choosing the best resources to maintain transparency in processes that lead to higher efficiency can be important. Company leaders in manufacturing should be asking vendors how they will mitigate connectivity downtime. It also is worth remembering IoT technologies require constant maintenance. The right lender can help create and guide businesses through the proper investment strategies for these types of long-term maintenance costs.

The automation impact on ROI

Investment in automation can optimize more than manufacturing leaders may think. It impacts not only the machines in use, but the humans operating those machines. A smart automation strategy can connect to more resiliency, flexibility and adaptability. Smart automation also identifies opportunities to continue developing productive and meaningful employee achievements, which increases the likelihood of building more return on efficiency (ROI).

Before making a greater investment in automation, company leaders should consult with a finance and lending expert to develop a personalized, strong and cohesive plan to fund an automation investment. If enough manufacturing businesses take small steps toward progressing automation, it could benefit their companies and create a ripple effect among manufacturers, which could positively impact everyone from employees to end-customers.

John Felix, head of originations at White Oak Global Advisors. Edited by Chris Vavra, web content manager, Control Engineering, CFE Media and Technology, cvavra@cfemedia.com.

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Keywords: digitalization, manufacturing, Internet of Things

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