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3 Key Drivers to Automation

Lately, automation has become the hottest trend in manufacturing and warehousing – for good reason. Ever since the Digital Revolution, automation has proven its many benefits; although, up until recently, these benefits have been constricted by technological limitations. Now, everything is connected, and computers are a mainstay of work in all of its forms.

We know that automation isn’t necessarily a new phenomenon. However, it is more impactful than it has been before. Why? Interconnectivity. The principle of the internet of things (IoT) means that devices now communicate and interact with one other. This translates into more powerful automation at a more affordable price.

Think about this for a second. In 2016, 180 million devices were connected to the internet.

ConnectedDevices

Source: Statista

Projections place this number at approximately 260 million by 2020, a 45% growth rate over 5 years. Clearly, IoT translates into increased use of devices and a greater dependence on the internet and the interconnectivity it provides.

One place that IoT is having a significant, manufacturing is “transforming traditional, linear … supply chains into dynamic, interconnected systems,” and automation, in conjunction with IoT principles, is driving this.

So, why should you implement automation in your facility?

1. Reallocate Human Capital

In the digital age, human beings, with all of their creativity and brain power, are an important commodity. Why waste them on performing repetitive, boring tasks? According to WorkMarket’s 2020 In(Sight) Report, 53% of employees believe they can save 2 hours a day with automation, and 78% of leaders think automation can free 3 hours a day, or 360 hours in a year. What can that free time do for your business?

Aside from that free time, think about what this means in real dollars. According to Forbes,

Let’s suppose the average department at this Fortune 500 company has 500 employees, with an average of 3 business leaders for each respective department. Those employees make an average of $77,000 per year (or $38.50/hr), while the business leaders earn $155,395 per year (or $77/hr). The magic of math reveals that employees who save 240 hours/year offer their employers $9,240 in savings annually, while business leaders who save 360 hours per year generate $27,720 in savings. Total savings for the average department: $4,620,000 (employees) + $83,160 (business leaders) = $4,700,000.00. In one year.

All of that without cutting jobs.

2. Improve Quality

Automation facilitates smoother transfer of products, especially within manufacturing industries. Think about how an automated guided vehicle (AGV) moves compared to how a forklift moves. Controlled stops and starts versus human-directed movement that resembles your daily morning commute.

What does this amount to? Fewer dropped loads, more efficient transport, and more predictable output.

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3. Reduce Costs

Perhaps the biggest driver of automation, reduced costs amount to a persuasive argument for automating. These costs come from lower human capital costs, which we examined earlier, from decreased liability, and from eliminated damage.

Decreased Liability

Forklifts are involved in numerous accidents over the course of the year. These accidents subsequently involve workers’ compensation claims and company exposure because 80% of them involve a human being. In such cases, direct costs can amount to $38,000, and indirect costs to $150,000. Aside from this, OSHA fines may apply. These can range from $12,675 to $126,749 per violation.

The benefit of moving to automation lies in its ability to virtually eliminate these accidents. This means that you and your company get to avoid unnecessary costs and potential damage to your brand reputation.

Eliminated Damage

Similarly, damage to product and to infrastructure often results from forklift accidents. This means unnecessary cost.

It’s estimated that forklift damage can add as much as 5% to the cost of a standard truck lease.

Source: CertifyMe

The National Institute of Standards and Technology states that forklift accidents cause $135 million in immediate cost. Can your company afford this?

Other drivers certainly impact the implementation of automation within manufacturing and warehousing. Your company’s overall profitability often plays a pivotal role, especially within the Fortune 500. Even if you have a smaller organization, you can quickly gain a leg up on the competition by automating. Frankly, the advantages of automating are endless. It’s the way of the future. Don’t get left behind.