To Automate or not...?

Should automation be institutionalised in this economy? What are the potential benefits of automation and where & how can one go wrong with it? Step by step procedure to ascertain the level of effectiveness automation would have in your businesses, where automation would be best suited and a means for evaluating the benefits of automation. Should you invest in automation?

These were some of the aspects covered by Mr. Arun Menon, Director - Strategi Automation Solutions Pvt Ltd.

Excerpts :

Right off the bat, Mr. Menon talked about how automation, if executed efficiently, could cut costs of production tremendously.

For one, manpower being replaced by automatic equipment drastically cuts labour costs. But in planning for automation a certain limit of payback time must be decided on; paybacks of 18 months and below are considered to be good cases for automation. If payback takes longer than 18 months it is probable that this solution would not be as cost-effective as expected. This is experience talking.

If the cost of a customer rejection is high and quality standards strict, automating your production line with reliable equipment must be considered in order to cut production costs. Clearly, for example, in the jewelery sector, a manual sorting of stones would be highly unreliable, and automation would be justified in this case. Not only does use of machinery here cut average variable costs of production, but it also increases quality standards. Quality checks need be conducted less often, further reducing costs.

Labour is often unreliable in terms of speed on the assembly line. When the production line is restricted by the speed/efficiency of labour, it appears logical that an automated system would be an effective solution. Automating such processes increases productivity and hence cuts cost per piece. Although this is one of the most time-tested solutions it often implies making a portion of the work force redundant or subject to training which may rise costs in the short term.

Where is automation best employed?

The good cases for automation seemed to include those that induced monotony in the workforce.

Overly repetitive, "mind numbing" jobs on assembly lines and in manufacturing are often not best suited to a labour intensive solution as motivation levels hit a big low. Boring jobs can easily be automated increasing consistent productivity and lowering average variable costs.

Sometimes production may need a great deal of training and is best treated with automation. For example jobs that need training to manufacture a component. Often these skills may not be available in the market. They may not be easily replaceable without training. This rises overall costs and is not necessary with automation.
Jobs that need doing in hazardous environments are best undertaken by machinery and best automated, for the obvious reasons of safety and efficiency. Heavy payloads may also necessitate the use of machinery, to increase productivity.

Welding/spray painting are other jobs that may be automated.

Life testing applications are also best automated.

Mr. Menon then spoke of the next step which included the evaluation of the benefits of automation

The first words on the topic were well spent in dispelling the idea that low cost automation was synonymous with low initial cost. Many other costs must also be considered. Running costs must be taken into account. The Cost of spares is equally important. Maintenance costs must be considered. Therefore life cycle costs cannot be ignored.

The next step in evaluating the benefits of automation must be on an overall basis. Simply considering reductions/replacement in man power is not enough.

It is also best to make automation labour friendly. It must be certain that labour and automation can coexist. Before paying a visit to a vendor, it is best to develop an internal feasibility report. No one knows your business like you do. Approach a vendor with your own budget rather than going by figures you are given.

Finally, should you invest in automation ?

The simple formula for this is initially; "No cash. No invest". This is the easiest decision you can make with regard to investing in automation in the current economy.

If however, you have cash and can invest, the decision must be based on a simple cost benefit analysis. Also the producer must bear in mind that automation is NOT a magic pill.

Arun K Menon began his career in Kennametal India as  a Design Engineer for Special Purpose Machines and later worked in Kotak Mahindra. He founded Strategi Automation Solutions Pvt.Ltd. in 1996 to be in the business of Factory Automation with a special emphasis on Motion Control. Strategi designs and manufactures FA equipment like Gantries, positioning stages, pick and place equipments and machine loading/unloading systems. During the course of his entrepreneurial journey he has encountered and successfully executed several requirements of customers who wanted to reduce costs through Automation. He is an active member of the ISA, GBIA and the BMA and clubs like the eclub. 

He was speaking at a Panel discussion organised by Businessgyan and TASMAC on the topic "Reducing The Cost of Operations"

Compiled by consulting Correspondent, Sushant Chari for Businessgyan

Issue BG97 April09