Industrial Automation

November 2018

SP Automation & Robotics are an award-winning systems integrator and bespoke machine builder for Industrial Automation applications in advanced manufacturing sectors. We offer a turnkey service from design concept to project completion. Our team of highly qualified engineers design, build, test, deliver, install and commission complete automation solutions within an ISO 9001 quality-driven environment.

As indicated in the name, automation refers to something automatically occurring. Within manufacturing, process and production automation occurs with the use of robots and control systems, amongst other things that reduce direct human involvement. So, what is the cost of industrial automation?

This has led to an increase in labour productivity rate and a mystified belief that industrial automation costs jobs; however, in reality, the cost of industrial automation is not job loss as these jobs are just recreated as new upskilled roles.

In fact, 85% of jobs that will exist in 2030 have yet to be invented. Industrial automation can be traced back to 1947, with the early use of basic pneumatic and hydraulic systems; great advances have since transformed how automation works.

Investment in Robotics

Although automating production processes can be extremely cost-effective, the initial capital investment with the cost of industrial automation can be significant, and the return on investment might not be as quick as hoped. This tends to make smaller firms reluctant, meaning they lag behind, but there are government initiatives and help out there for the industry.

Systems do not have to be fully automated and incremental automation and innovations can be implemented over time to reduce the costs long term. There has been an acceleration in the growth of fully automated production facilities as cheaper, more capable and flexible technologies emerge overseas.

At one factory in Japan, industrial robots are producing industrial robots under the supervision of only four operators per shift. Again, this removes human involvement by allowing them to upskill to less repetitive and dangerous roles. Also, in turn, improving quality, eliminating errors and cutting manufacturing costs.

Cost of Industrial Automation

Advantages of Industrial Automation

Lower operating cost

Industrial automation eliminates healthcare costs and paid leave and holidays associated with a human operator. Further, industrial automation does not require other employee benefits such as bonuses, pension coverage, etc. Although it is associated with a high initial cost, it saves the monthly wages of the workers, which leads to substantial cost savings for the company. The maintenance cost associated with machinery used for industrial automation is less because it does not often fail. If it fails, only computer and maintenance engineers are required to repair it.

High productivity

Although many companies hire hundreds of production workers for up to three shifts to run the plant for the maximum number of hours, the plant still needs to be closed for maintenance and holidays. Industrial automation fulfils the aim of the company by allowing the company to run a manufacturing plant 24 hours a day, 7 days a week and 365 days a year. This leads to a significant improvement in the productivity of the company.

High Quality 

Automation alleviates the error associated with a human being. Further, unlike human beings, robots do not involve any fatigue, which results in products with uniform quality manufactured at different times.

High Flexibility

Adding a new task in the assembly line requires training with a human operator; however, robots can be programmed to do any task. This makes the manufacturing process more flexible.

High Information Accuracy

Adding automated data collection can allow you to collect key production information, improve data accuracy, and reduce your data collection costs.  This provides you with the facts to make the right decisions when it comes to reducing waste and improving your processes.

High Safety

Industrial automation can make the production line safe for employees by deploying robots to handle hazardous conditions.

Disadvantages of Industrial Automation

High Initial Cost 

The initial investment associated with making the switch from a human production line to an automatic production line is very high. Also, substantial costs are involved in training employees to handle this new sophisticated equipment.

Advancements in Robotics

The International Federation of Robotics (IFR) estimated that 2.3 million units of automation technology will be deployed this year compared to only 1 million units in 2009. As more and more robots are produced, the cost of industrial automation and these robot arms have gone down significantly.

There has also been an ease of integration which has been brought about by the advancements in computing and software development. As machine learning improves and sensors develop further, this allows robots to become smarter. Where early robots blindly followed the same path, lasers and vision systems can now be used to detect the orientation of parts and adapt their movements in real-time.

Robots and humans can now work safely alongside one another. These collaborative robots (cobots) are equipped with sensors. These sensors allow them to automatically stop or alter their path if they come into contact with humans.

Assessing the full costs of automating production is not a simple task as every industry has its own unique operational requirement set of raw materials, so it is not a case of “X costs less than Y; therefore, X is better”. There are so many different types of robots and so many more different types of automation systems, all of which would suit their own automated manufacturing process. Things such as payload, environment, material and flexibility all have to be taken into account. As well as the operational costs, downtime, operator training and a long-term strategic plan need to be set out.

Payback Period

Many organisations believe a two year payback period on the cost of industrial automation is the maximum. Any longer than this then they believe they cannot do the project. This is based on a traditional means of calculating the ROI based on direct labour savings and short-term benefits. Ron Potter, Director of Robotics Technology for Factory Automation Systems, a 45-year veteran of the automation industry, stresses that “Justification of ROI should be a STRATEGIC decision made by informed management that balances the short term goal of SURVIVAL with the longer term goal of GROWTH to posture a company for competitive advantage. It should not be relegated to an accounting function without foresight of long-term strategy.”

Below is an example of a typical ROI cash flow analysis to give an idea of investing in a basic robotic arm.

Many companies base payback periods over two years, but this short-term thought process can stifle growth. If this is stretched to an additional year, instead of having £200k (2x£100k) from the above figures, this could be increased to £300k. This could potentially provide a system that will future-proof your business in terms of growth. The automation will still be running in 15 years. Providing higher quality and higher output, businesses really do need to look long-term for the duration of payback.

Generally, in the cases that we see, the ROI when looking to automate manufacturing processes outweighs the reasons not to invest. The overall value of automation is to decrease costs and increase revenue. This is done by increasing the throughput, improving the quality, increasing repeatability and reducing labour-related costs. Your customers want it faster, better and cheaper. Your competitors are closing in, and the stakes are getting higher for sustained profitability. The robots spending is booming. The cost of industrial automation is coming down. Also, as robots are getting smarter, long-term investment in industrial automation must be seriously considered.

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Read more about our automation here…

• Benefits of Automation
• The Benefits of Machine Vision Technology
• Robots & Cobots – What is the Difference?
• Robotic Automation
• What is a URS? Why is it Important?
• Cost of Industrial Automation
• Advantages & Disadvantages of Robotic Automation

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