Operations & Management
Supporting automation plans with the right information
March 2, 2016 by Barrie Hall,
Mar. 2, 2016 – While pervasive views of manufacturing in Western economies have been pessimistic for decades, the true picture is more complex. Persistent decline in manufacturing jobs has undeniably occurred, but manufacturing is still a crucial growth engine. Automation is the key to revival not just in manufacturing itself, but as a broader stimulus for innovation. Economist Martin Neil Baily says, “the biggest factor transforming manufacturing has been technology; and technology will largely determine its future.”
Manufacturing automation offers the promise for manufacturers in industrialized countries to make their operations more profitable and boost competitiveness in the global arena, even in areas that may have previously been considered impossible.
However, fulfilling this promise is an ambitious goal requiring careful preparation and evaluation based on relevant, accurate information. Information gathering and research, therefore, is an essential foundation for automation planning. Ideally, the right information mix comprises of three foundational ingredients.
The first is a clear set of objectives. Media outlets often proclaim that automation is the cure for manufacturing’s decline, but automation is a means to an end, not an end unto itself. Automation’s objectives should be uniquely derived from the specific challenges and opportunities that each manufacturer faces. They may include cost reduction, quality improvement, lead-time reduction and capacity expansion. It is essential to clearly identify target outcomes.
A reality check on the existing operation is the second foundational ingredient. This requires removing oneself from the office and travelling to the factory floor. When an existing process is under consideration, careful observation in the workplace should reveal opportunities for process improvement. Acting upon these opportunities may accomplish an automation project’s objectives, without the initial expense and disruption of actually automating.
Process observation can also uncover areas where improvement is needed regardless of automation plans. This offers an opportunity to address individual steps that are poorly designed or can be omitted altogether — before wasting money on automating them.
Implementing completely new processes presents the paradox of reality checking something that doesn’t yet exist. Computer simulation and simple prototypes of key process elements can offer effective means to develop the detailed process characterization needed.
A well-executed reality check provides a clear baseline of existing process performance; it is a false economy to scrimp on this. This valuable baseline characterization helps to determine what can, and should be, addressed by automation. Most importantly, it forms the basis for credible side-by-side comparison of pre- and post-automation performance, which is required to make realistic projections of the results. Unfortunately, a reality check is often viewed as an impediment and consequently performed in a sloppy manner or skipped entirely. In these cases, successful automation becomes a matter of chance. Conversely, when projected outcomes are rigorously developed and aligned with objectives, an automation project can move forward with a high degree of confidence.
The third ingredient is recognition that many automation benefits can be defined through financial analysis. Quality and customer service improvement are areas that often fall into the category of benefits that can be readily defined in a qualitative statement but may be difficult, if not impossible, to convincingly convey in terms of financial payback. Investment approval processes that are limited only to financial considerations overlook these important considerations and can lead to poor decision-making.
David Halberstam cites an excellent example in his book The Reckoning. In the 1970s, Ford engineers proposed an automated undercoating process that would greatly improve rust resistance on its vehicles and remedy customer complaints of sheet metal rust, which plagued cars of that era. Ford had no means of qualitative analysis to convey the benefit of investing, or the consequences of not investing, in this quality improvement. Ford’s investment approval process was limited to financial payback considerations, and the proposal was rejected. Ironically, this technology was invented by Ford and had already been adopted by several competitors under licensing agreements. This decision contributed to Ford losing market share to an emerging group of Japanese competitors, a loss they’ve not recovered to this day.
If not financial, in what context should these qualitative improvements be evaluated? Answers can come from several areas. Directing automation to the enhancement or protection of a company’s brand is a good strategy for qualitatively justifying investment. If Ford had been focused on building its brand on exceptional quality, the decision to invest in improved rust resistance would likely have been positive. In a related context, automation focused on establishing a competitive differentiator or eliminating a competitive gap can also provide a qualitative reason for investment. Whatever context is relevant for a specific automation investment opportunity, qualitative impacts should always be weighed equally with quantitative benefits.
Automation provides great promise for North American manufacturers to compete more successfully against manufacturers in lower cost regions of the world. Automation planning based on a foundation of clear objectives, reality checks, and understanding of qualitative impacts are essential if manufacturers are to realize maximum benefit from their investments.
Barrie Hall is SVP Fulfillment at Fujitsu Network Communications. In this role, he leads an organization tasked with ensuring the highest standards in manufacturing and supply chain operations. He has spent the past 20 years driving manufacturing quality excellence and supply chain innovation throughout the fulfillment organization.
This column was also published in the June 2016 issue of Manufacturing AUTOMATION.