Will your customer pay for your automation project ?
Are you replacing people with robots and automated solutions ? It’s happening all the time both in production and office environment and it has been going on for more than 300 years. Still, despite the gloomy predictions of mass unemployment more and more people are employed.
Besides the positive message that human beings will always be needed for the creation of growth and well being it is also a reminder to us that automation will only be successful when applied with respect for the organisation and the company as a whole.
Having worked with many companies in various businesses and technologies I have seen the same mistakes again and again when companies pursue productivity and cost reductions by automation:
1.The first typical mistake is to create an extremely profitable business case for the automation project. But often it’s based on current performance from a non-optimized process (manual or automatic) where a 30-50% cost reduction would be possible for a fraction of the price of the replacement. But who wants to stand-up and spoil an excellent business case and suggest a “boring” optimization instead ?
2.For companies that are just embarking on the journey of automation and advanced equipment it often comes as a surprise that employees skills need to be upgraded to get the full benefit. Not least the technical staff will need an upgrade to avoid being too depended on external service and long leadtime for repair.
3.To make a strong business case the equipment will need a high volume and high utilization. This is often done at the cost of flow and leadtime in the entire process. So all processes upstream and downstream to the automated solution will typically suffer from larger batches and constant replanning to fulfil customer requirements within the promised lead time. These “side effects” are never included in a business case
4.Technology will never be a competitive advantage in itself. Everybody can copy a technical solution and still benefit from lower labour cost and strong organisation etc. So, without a supporting company culture, skilled employees and strong problem solving and continuous improvement processes the investment will soon be neutralized by competitors similar moves.
I am a big fan of automation and digitalization. It brings a lot of opportunities for improving work conditions for the employees. It will often improve quality and done correctly it will improve productivity and lead time as well. Unfortunately, the people who knows about these critical elements are often not included in projects related to equipment and digitalization.
The company culture is critical here. I have seen presentations of the implementation of automated solutions where the employees were not mentioned with one single word. I don’t need to dig deeper to know that this is not going to be a successful move for the company. If the company culture is all about technical solutions, automation and equipment utilization, then for sure there is no place for thinking the critical element of people engagement not to mention flow and lead time which eventually is what matter for the customer. The excellent business case for the new automated solution may more often than not hide the unpleasant truth about poor customer service and lost sales.
So, do you really believe that your customer is willing to pay for your automation project ?