Rise of the machines

In the 1984 classic movie The Terminator, machines have taken over the world and enslaved the human race. This perennial fantasy embodies our worst fears, but also our grandest ambitions about the potential power of automation. I am an optimist and prefer to see the good side of what the Terminator can do (see the sequel T2 for a friendly version of Arnold Schwarzenegger’s memorable character). I also think the time is nearly upon us.

International Federation of Robotics data on installations does indeed show a recent spike (see my past blog on the future of work). But as one executive I spoke to recently wondered, how much of this is a backlog from the deep trough experienced during the recession in 2008-09? Hard to say, but for those waiting on the sidelines until this wave proves itself, consider this finding from SCM World’s new manufacturing study: by a factor of 30:1 respondents say they plan to increase rather than decrease investment in automation and/or robotics. In fact, nearly twice as many say they plan to spend more than even just hold steady. The trend is even more pronounced among senior executives.

Robot revolution

Discussions with top supply chain leaders confirm that essentially all industries, from automotive, where robotics is well established, to food preparation, healthcare and even apparel manufacturing are interested in doing more with automation. More compelling, perhaps, is that these new installations are expected to be disproportionately in China, long looked upon as the land of infinite cheap labour. ABB and Siemens, two of the biggest producers of advanced robotics, have both pointed to surging demand in China, including at least one RFQ for 5,000 units. Considering that total worldwide installations are currently running at around 160,000 a year, that’s a big order for one customer.

The implications of this trend should not be underestimated. Robots confer several advantages beyond the obvious of replacing labour with capital as a cost-saving move. Robotics and automation first deliver such precision and perfect repeatability that Six Sigma barely captures the levels of quality achievable. Robotics also allow for better labour standard compliance by taking human beings out of hazardous work environments. Why, for instance, do furniture manufacturers in North Carolina use people to spray toxic adhesive chemicals on to foam rubber when a machine that can’t suffer nerve damage could do it?

According to Mike Corbo, Vice President of Global Supply Chain at Colgate-Palmolive, robotics and automation have also helped to reduce energy consumption dramatically, saving both money and carbon emissions. Having personally seen the lights-out operation based on Kiva robots in Quiet Logistics’ Massachusetts fulfilment centre, it’s easy to see how much greener the supply chain can be with smart automation.

Cost will come down

Traditional big users of robotics in manufacturing have been concentrated in high-cost countries like Japan and Singapore, and in Northern Europe. They have also generally been in industries with huge capital equipment budgets making big, expensive things like cars. The price tag for many has thus been too high. Another limiting factor has been the long and complex set-ups associated with most existing robotics and automation. All of this is getting ready to change.

First off, hard automation, which uses numerical controls rather than software programming and offers scale in exchange for flexibility, looks likely to yield share to truly advanced robotics, which are much more easily programmable. This means efficiency and super high quality will be available in a far wider range of applications. Shorter runs will be economically viable, potentially to the point of item-by-item production.

Second, the volumes expected as the Chinese double down on robotics are likely to kick off a steeper learning curve as producers iterate ever more quickly. Consider also that most of the cost of a typical robotics installation is software. It seems reasonable to expect at least a bit of the Moore’s Law magic that has driven down the costs of computing to take effect here as well. If, as is possible, robot installations hit one million per year within the next five years we could see costs drop fast.

Design is the key

Even with all of the wonderful possibilities in automation and robotics, little will happen without gifted manufacturing engineers and smart supply chain strategists to apply the tools in clever ways. We hear a lot about the talent gap in supply chain, especially as it relates to thinking across functional boundaries. To stay ahead of this trend, supply chain network designers should quickly school themselves on what is possible with automation and how it might help the business strike a winning balance between not only capital and labour but also flexibility and scale.

Kevin O’Marah
Chief Content Officer
SCM World

Please contact me directly with any comments, questions or suggestions. I welcome your feedback.