How to achieve growth with automation
Overcoming the challenges of running a small and medium-sized manufacturing business starts by being smart about which processes and parts are automated first and by how much. Making the right automation decisions at the right time is key to achieving growth in an uncertain economy.
Consider automation as the risk shock absorber. Doing nothing is the surest path to having customers stolen as competitors automate and excel at meeting delivery dates with high-quality products. The competitive intensity has never been higher for small and mid-tier manufacturers. It’s on.
Robotics drive a compelling business case
Manufacturers often turn to robotics first as a core part of their automation strategies. With a chronic labor shortage, fluctuating supply chain and operating costs, and the need to meet customer shipments more important than ever before, robotics helps solve multiple economic challenges simultaneously. I explore the factors that drive small and mid-sized manufacturers in this article.
The business case for robotics in small and medium manufacturers is compelling. Robotics can deliver measurable results at scale. McKinsey found that robotics can reduce maintenance costs by 10-40%, increasing productivity by 3 to 5%, and reducing time-to-market for new products by 20 to 50%. The cost savings extend to quality control and inventory holding, with reductions of 10-20% and 20-50%, respectively. Furthermore, the automation of knowledge work can lead to a productivity increase of 45% to 55% for technical professionals.
The global market for industrial robots is expected to grow at a compound annual growth rate (CAGR) of 9.39% and reach a total market value of $30.5 billion by 2030. The collaborative robot segment, core to small manufacturers due to their flexibility and adaptability, is growing even faster, with a CAGR of 14.7%.
Explaining Robotics-as-a-Service (RaaS) growing popularity
For many small manufacturers, the cost of robotics remains a barrier. To overcome this, they are turning to Robotics-as-a-Service (RaaS) providers. RaaS enables small manufacturers to access and use advanced robotics technology without large upfront investments through flexible, subscription-based contracts.
The RaaS market is expected to soar to $78.4 billion by 2030. RaaS can help small manufacturers reduce costs, improve productivity, enhance product and process quality, and improve worker and plant safety. It can also help them reduce their environmental impact, improve supply chain efficiency, and open up new business opportunities.
Robotics help close the chronic labor and skills gap
One of the challenges facing manufacturers is the widening skills gap. A 2021 Deloitte and Manufacturing Institute skills gap study forecasts 2.4 million unfilled U.S. manufacturing positions by 2030, potentially costing the economy $1 trillion in 2030 GDP. Globally, the World Economic Forum predicts a shortage of over 7 million skilled manufacturing workers by 2030.
These studies and more like them reflect how competitive the labor market is today, with global e-commerce leaders including Amazon, Walmart’s online business, and others willing to pay more per hour wages and offer more opportunities for advancement than small to mid-size manufacturers.
Robotics’ hidden opportunity is workforce reskilling, upskilling and retention
Forward-thinking manufacturers are offering their employees the opportunity to learn robotics techniques and maintenance to further their careers. Recent studies of the effectiveness of focused training programs integrating robotics skills shows it has the potential to improve worker productivity on automated tasks by over 70%.
Any manufacturer can create career paths for their employees by investing in ongoing reskilling and upskilling programs. Helping employees learn new skills and promoting them into new roles that center on getting the most out of new automation technologies is the goal. One plastics manufacturer provides training and paid certifications in robotics programming, maintenance and repair.
The goal is to achieve a win/win with the employees, who gain marketable skills while also helping reduce the costs of maintaining machinery. The plastics manufacturer offers a $2,500 bonus for anyone passing the certifications and a $5 per hour raise. They offer profit sharing, making them one of the most progressive plastics manufacturers in the southwestern United States.
Conclusion
In conclusion, small and mid-size manufacturers see the lasting impact of choosing the right automation technologies at the right time to improve efficiency and reduce costs. By leveraging robotics, any manufacturer can improve productivity, quality, and efficiency while addressing the skills gap and reducing costs. With RaaS, small manufacturers can access advanced robotics technology without large upfront investments. The success of small and mid-sized manufacturers in automating their production workflows with robotics is just starting. As AI-based tools and systems pervade shop floors, robotics systems will “learn” in real time bringing further efficiency, cost, and growth gains to manufacturers.
Discover more
Download the DELMIA eBook, Enabling Digital Continuity with the Robotic Virtual Twin, to learn more about how DELMIA Robotics can help you achieve intelligent, optimized, and autonomous manufacturing with artificial intelligence and robotics.
Louis Columbus is currently serving as a member of the DELMIA Marketing team, where he assists with DELMIAWorks and robotics solutions. Previous positions include product management at Ingram Cloud, product marketing at iBASEt, Plex Systems, senior analyst at AMR Research (now Gartner), marketing and business development at Cincom Systems, Ingram Micro, a SaaS start-up and at hardware companies. Professional experience includes marketing, product management, sales and industry analyst roles in the enterprise software and IT industries. Columbus' academic background includes an MBA from Pepperdine University and completion of the Strategic Marketing Management and Digital Marketing Programs at the Stanford University Graduate School of Business. He teaches MBA courses in international business, global competitive strategies, international market research, and capstone courses in strategic planning and market research. Columbus has taught at California State University, Fullerton: University of California, Irvine; Marymount University, and Webster University.