Cost of automation – a lean thought

You might know by now, I am not for cutting-edge technology. I believe technology is only a tool. We have to use it when it is required, in correct dose just as we would take medicine. If we take too much, it will not good for our health.

Today organizations drive their automation initiatives hard, expecting benefits like cost savings, improved quality and reliability. I have to admit, sometimes, automation is the only solution. But is it the case always?

One important observation I have made when I work with people is that, they are completely blind to the cost of automation. Some people introduce systems so complex, maintaining the system itself will cost them more. Sometimes these systems can hinder their quality and reliability too. All these are obviously, things automation wanted to remove from their systems.

One of the main automation systems is the documentation system. People use complex ERPs, computer systems and so on, only to increase their IT costs without realizing. From the cost point of view they might end up paying much more, although there can be improvements in data consistency and reliability.

As in anything to use any automation system optimally, we have to balance pros and cons. Automation for the sake of automating will just heart the organization.

I am sure you have good experience in this. Please leave your comments below. If you agree with me, please LIKE this by clicking the LIKE button below.

16 thoughts on “Cost of automation – a lean thought”

  1. I would agree but I would add you need to do a root cause analysis of the problem before you jump to the solution. This usually results in continuous improvement of the business process before applying expensive technology to make a bad process more “efficient”.

  2. My immediate feeling is that automation is a good tool when used in a proper context. It has contributed to giving us more spare time, and it is sometimes necessary for keeping production costs down. the car industry is a good example. At other times it may be needed for keeping an even quality, where the human eye and/or hand is not good enough. But the total costs must of course be taken into consideration, you mentioned that. Taking it one step further by thinking of consequences for society… well, that is more difficult. I do not yet have any opinion on that.

  3. Indeed, automation is not always the best solution to improve quality and efficiency. Root cause analysis is absolutely a must to determen what really is causing waist. A low level solution, such as writing production progress on a whiteboard, could be quite sufficient in most cases. But in other cases automation can do a job much more efficient. I am currently doing a Lean project in a public service organisation. When I first came there 2 months ago, one of the employees came in extra early to print long lists of data, sort this stacks of paper (10 to 50 cm high) into a stack to process and trash the remaining. Altogether this took about 2 to 4 hours a day, each day. Waste, you name, its there. I wrote a small programm which takes care of this whole procedure, and takes only 80 secondes to do the job. So it all depends on the root cause of the problem and the possible solutions whether automation will be the most fitting solution.

  4. Current studies and business surveys both conclude that – despite the fact that a project was completed and the new system implemented – >60% of ALL business improvement projects FAIL to deliver ANY bottomline benefits . This has been verified time and time again. Why?

    The simple answer is that the WRONG project was selected. For example, one of my customers was a digital print shop, generating >1 million credit card statements/mo. He used large computer printers to print the statements and they – in turn – used huge rolls of paper. However, the fork-lift operator could deliver the rolls far faster than the printer could ever print them. ANY EFFORT TO ‘IMPROVE’ THE ROLL DELIVERY PROCESS WOULD HAVE YIELDED NO INCREASE IN STATEMENT OUTPUT BECAUSE THE PRINTERS WERE MAXED-OUT. BUT SUCH AS PROJECT WOULD HAVE, NONETHELESS, COST MONEY. Only efforts directed at the PRINTERS THEMSELVES would have had a bottomline impact. Any localized improvement project will have the same result unless it is the bottleneck.

    Automation is one of those glamorous improvement projects that look like they can’t fail. However, there is a double-whammy with automation – one, it costs like HELL, and two – it takes ‘way longer to implement than most which means much greater risk that the project will never finish successfully or go into cost-overrun. Many times the business model changes WHILE the project is underway (years to complete an automation project is not uncommon)and – when finally done and rolled-out – it solves a problem that went away six months or a year prior.

  5. I agree to a certain extend….BUT the best thing to be do when implementing an Automaton initiatives or project is to do a complete cost-benefit analysis (CBA)to access the cost and saving from the automation effort in reducing cost (cost saving)….CBA will help us to eliminate or reduce the error made in automation implementation such as leading to higher cost.

  6. Automation is an attractive solution to all problems as when it is presented in conference halls by suppliers it comes out to be the most effective and efficient way of managing all your concerns.
    In my opinion all this facade crashes down as soon as it is implemented and change management is not effective. Desired results are not evident, cost of implementation and maintenance are sky high.
    It is very important to use brains before technology. There are no situations which cannot be simplified by simpler solution with or without use of technological solutions.
    I beleive innvative solutions over technological solutions.

  7. Automation should be evaluated much more thoroughly. Much of the side effects of automation are worse than the causes which drive the implementation from the outset and unanticipated costs of maintaining the systems and it’s state of concurrency are normally much higher than anticipated, having a negative effect on responsiveness and customer service. That said, a carefully considered, evaluated and implemented solution which is elegantly designed can also work wonders. Understand your problem and your possible solutions first.

  8. Not only automation but any investment or program without root cause analysis and need will create problems instead of solving them. Problems are not just from the cost side even from discomfort of people. Before applying automation we have to make sure that how we are going to utilize it. We have to train people and make them aware about the new technology introduced. Automation implemented with proper analysis will give the best desired results so automation itself is a best tool provided the vision of management is based on root cause solution.

  9. Sundar Raman

    1.Before going for automation compare the cost of automation and human resources utilization because in some of the process automation is best if the country is USA but the same thing is not acceptable for country like india because cost of automation compare to human resources may be high.
    2.Utilization of manpower
    3.Check is it possible to balance the process with the help of manpower instead of automation
    4.Check the critical factor of process using manpower
    5.One should check the above factor before going for automation
    Automation balanced with human aid will give better result
    Instead of going for automation we can select semi automation for achieving better result
    Select automation with mechanical system instead of pneumatic and hydraulic
    Use multidrive system in automation for reducing power consumption

  10. I think an optimal balance is required between automation & manual interventions. I have seen that in the name of automation, organizations bring in more trouble. I have also seen industries weigh their options properly and bring in automation in limited scale. So, my suggestion is organizations should gauge their options properly through a systematic approach weighing pros & cons properly before going for automation on a big way

  11. More than the cost of automation, it is the need for automation which has to be addressed.Automation if implemented successfully should lead to overall improvement in Quality, productivity, Delivery and finally costs.It is therefore necessary to weigh the options at case to case level on a.NO AUTOMATION b.SEMI AUTOMATION.C.FULL AUTOMATION and ALL of these at ALL STAGES should result in the overall improvement as stated above.
    v dwarakanath

  12. Once you have a process, yes automation is based on a process, that is mapped, waste eliminated, and at a future state that all stakeholders agree upon, customer requirements can be gathered for automation. Based on customer requirements which will determine automation resources/costs versus savings due to process improvement, you can make the business decision based NPV, ROI, etc. Simplistically stated, but that is the basis of using lean in combination with automation to improve your business. The biggest struggle with transactional processes is the ability to quantitate intangible savings which makes the business case difficult.

  13. Good Debate.I am giving some Japanese practices.
    1.Defect Prevention/Detection : They use Mechanical pins, Trained persons(skill level 4, JH practices) instead of placing costly electronic sensors or automations.
    But for the productivity angle (cost benefit) they apply low cost automation or high level automation after calculating the ROI.

  14. I believe that Lead still is the way to go if we want to frame problems effectively, and to formulate and test solutions for them, whether we talk about manufacturing or management.

    By using Lean concepts, we can efficiently establish a direction for the company’s improvement efforts and blueprints for the lean transformation. It will also help visualize improvements to the overall production flow, instead of spot improvements to single processes.

    By using Lean manufacturing and management, one can create the basis for an effective implementation plan by designing how a facility’s door-to-door material and information flow could operate. Lean concept gives operators, engineers, and managers a common language and process for continuous improvement.

  15. I stumbled accross this blog while doing some research on
    health and safety in the workplace, six sigma and quality
    management, and I can safely say I have bookmarked it as
    the content is excellent!

    I particularly like the section on the cost of automation.

    Thanks for such a great resource!

    Roman G

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