The Importance of SME Automation
Published on : Monday 30-11--0001
From time immemorial, humans are driven to automate every repetitive process with various automation tools with a simple goal to continuously improve the Process, Productivity, Quality and Delivery times. The automation tool ranges from a simple sharp stone in Stone Age used for hunting, to an innovative Robot/Machine/IoT device currently used in Industrial Automation.
Innovations in industrial automation, especially in the last two decades have increased by leaps and bounds with SCADA, PLC, HMI, AI, Motion Control, Robots and Industry 4.0 solutions. Every large manufacturing organisation attributes its success and growth to innovations in Industrial Automation. At one end large enterprises are exploring, experimenting, implementing and reaping benefits from innovative automation solutions, on the other hand SMEs (Small & Medium Enterprises) are struggling to catch up with industrial automation.
SMEs and large enterprises are facing same challenges in every industry with increasing raw material costs, labour costs, safety costs, constant price competition, high quality standards and shortage of skilled resources. While large enterprises are leveraging industrial automation to retain their industry supremacy, SMEs are lagging in the automation race thus negatively impacting their profitability and growth.
Why SMEs are not catching up?
SMEs can be broadly classified as OEMs and Suppliers. OEMs are more involved in end-to-end operations involving R&D, Product & Process management, whereas Suppliers are driven by customer process and more focused on Production process.
In developing countries like India, SMEs are the backbone of manufacturing sector positively impacting the job market, entrepreneurship, innovations and GDP Contribution. In India SMEs constitute around 90% organisations contributing around 45% of GDP. And all of this is achieved with least or no automation in SMEs.
Some of the major challenges hindering SME Automation are:
• Finance & Investment – Any automation – Hardware & Software – demands a huge upfront investment. With cut throat competition and constant price reduction negatively impacting profit margins making it very difficult for SMEs to take the path of automation. Even obtaining finance from banks and other financial institutions is very cumbersome, time consuming and with high interest rates making it a non-viable option.
• Infrastructure – Automation is Productive and Profitable only if infrastructure is reliable. Automation needs a very robust infrastructure – continuous power supply, skilled resource availability, quick maintenance service providers and many more. Imagine a scenario where we automate the entire process and do not have enough power supply to run the machines, or the non-availability of skilled resources to operate and maintain the machinery, and many more infrastructure gaps in developing countries that will negatively impact automation in SMEs.
• Implementation Partners – SMEs who are taking the leap into automation are finding it very hard to find right automation solution and right implementation partner who can handhold and be part of the SME automation journey. Currently the solutions and service providers are mostly catering to needs of large enterprises with very less focus on SMEs. Mostly the solutions provided to SMEs are strip down versions of solution provided to large enterprises, which may not match to SME needs and processes.
Source: https://techcrunch.com
Way forward for SMEs to join Automation Race
Though SME automation in India is in its infancy, slowly but surely SMEs are making way into automation. When competing with large enterprise, SMEs are still no match and are lagging in the automation race. Large enterprises have the luxury of deep pockets to acquire knowledge, infrastructure, resources and solutions to explore latest innovations and maintain lead in the automation race. Even though SMEs also face the same challenges as large enterprises like increasing quality standards, reducing costs and improving on delivery times, but SMEs do not have the same luxury of deep pockets and access to solutions as large enterprises.
To deliver on par with large enterprises and to be in the industrial automation race, SMEs must take a cautious approach and leverage the industry learnings, especially from large enterprises and leapfrog in implementing SME automation solutions.
Here is the high-level strategy or roadmap to optimise SME Automation implementation:
• Business Process Analysis – If an organisation is planning to automate process, it is mandatory that the top management must clearly define objectives and implementation timelines. These objectives must be defined by conducting a detailed Business Process Analysis (BPA) involving all the departments impacted by the new automation process.
Based on the inputs from BPA, an internal core group with help from external expert consultant must perform gap analysis and identify the automation solutions to fill in gaps and improve productivity and profitability.
Once the automation solutions are identified, perform solution feasibility analysis, cost-benefit analysis, identify capital expenditure and Operating Expenditure and decide on commercial viability of automation solution. Only if top management is convinced on Return on Investments (RoI) along with fulfilling the automation project objectives, is it desirable to initiate the automation project.
• Low Cost Automation – As discussed above procuring finance can be a big challenge for SMEs, to counter this challenge, an innovative methodology Low cost automation (LCA) can be very helpful. Some of the simple techniques to accomplish Low cost automation are procure reused Robots, automate only complicated and critical processes, focus on automating existing machines, tools, processes, people etc., and always be innovative in reducing costs and increasing automation.
• Implementation Partner – Choosing a right implementation partner is very critical, focus on Total Cost of Ownership (TCO) in finding a knowledgeable, experienced and innovative partner. The implementation partner should have real experience working with SME sector and must be innovative to implement optimized and Low cost and effective solutions.
Few quick tips for successful project implementation are:
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Always start with a Pilot Project
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Work closely with Implementation Partner team
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Core team should have Middle Management and system users
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Always go for multi-phase project implementation, and
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Never opt for a Big Bang implementation.
Advantages of SME Automation
Automation has solved many long pending challenges in every manufacturing industry and we are looking forward for many more innovative automation solutions. But a word of caution, Industrial Automation is not a silver bullet to solve all challenges in SME industry; it’s just a leveraging tool for SMEs to improve Productivity, Quality and On-Time Delivery and help in delivering consistently quality products on par with large enterprises.
Some of the most important advantages with SME Automation are:
• Human Resources – Retention of unskilled human resources is always a critical issue in SME sector. The core objective of any automation project is to automate every repetitive and unskilled task. Thus, automation helps reduce human resource dependence.
• Faster ramp up time for New Employees – As process is defined and automated as per standards, it’s much easier and faster to ramp-up any new employee, thus increasing productive time of resources.
• Increased Productivity and Profitability – Direct impact of any automation project is to have a positive impact on increasing productivity and translating into increased profit margins.
• Increase Product Consistency and High Quality – Any repetitive process which is automated with robots or automatic machines and tools will deliver product consistency, resulting in a high-quality product output repeatedly.
• Market Expansion – Increased automation results in increased productivity thus providing an opportunity for top management to expand in existing business operations or explore into new markets.
• Create Better Jobs – It is true that that automation results in layoffs and job cuts, but the other perspective is automation leads to new and better jobs resulting in increasing skill level with higher payouts.
My conclusion is automation is the need of the hour for SME sector to retain their market share. Unless SME sector takes a leap into automation and produces high quality products at less cost, there is minimal chance for existing SMEs to grow. So, for growth of SME organizations and retain their position as a leading job market and as a backbone of manufacturing, every SME must take their first step towards automation.