Leveraging Low cost automation for Cost Effectiveness

Even though the challenges for both large and small organizations are broadly same like increase in labor cost, non-availability of people, pressure on pricing, increase in expectation on quality standards and service, the large organizations are adopting automation of processes to some extent to mitigate the challenges, the small organizations are struggling to get most out of the automation.

While some of the SME business heads are getting exposed to innovative automotive trends like robotics, machine learning, artificial intelligence, and industrial 4.0; either they become scared of those developments, or some people are feeling guilty of not being updated in the organization and trying to look for automation.

In my view, those innovative trends are catching up and need to be evaluated on the investment and adaptability to small size organizations. Even large size organizations are in the investigation and preliminary implementation stages in the organization except a few, who leveraged the benefits mostly on the robotics application. We need to learn and watch the trend, and as far as small size organization is concerned, a lot of opportunities are yet to be explored in low-cost automation itself.

In this article, i have tried out to give an overview of leveraging low-cost automation possibilities in small, emerging organizations for cost-effectiveness.

Level of Automation in SME organization

I can classify the automation implementation  in SME's in 2 phases viz

• Basic Automation Implementation
• Advanced Automation Implementation

Basic Automation can be defined as the creation and application of technology, which makes equipment, process or a system operate automatically with or partial involvement of people.

Advanced  Automation systems represent a level of capability and performance that surpass in many ways the abilities of humans to accomplish the activities. 

Most of the SME's are in the stage of leveraging basic automation only and i dwell more on the basic automation and its application areas, challenges, and solution approach in implementing organization-wide basic automation system.

Why business head is reluctant to automation so far?

There are many factors that contribute to low-level interest in automation and in my personal experience, the following are the reasons

1. Lack of shifting the focus on people dependence on automation:

Most of the SME's are still comfortable and dependant on manpower even though the realization started on the need for automation wherever the repetition of the process, need of skill requirement. The business heads are feeling more comfortable and convenient to hire and deploy people than looking for automation solutions and upgrading to unknown subjects.

2. Investment:

some organizations are reluctant to the investment and comfortable with the recurring expenses.

3. Lack of supporting system:

Even though the organization is ready to move from manual to automation and for the investment, they are not getting the required support in terms of reliable sources for automation, after service and support, internal people training, irregularity on the power source, inconsistency in the parts.

Now things are changing in all the above factors thanks to compelling pressure on the competitive pricing and the change in the ecosystem for automation. But we need to go a long way in bringing in awareness and creating an environment for thinking towards automation and successful implementation.

some organizations in SME have consistently focus and investing in automation, and hopefully, this will continue, and there will be a widespread focus on automation.

Opportunity areas for automation in small, emerging organizations

Conditions under which we should consider automation?

1. Massive material movement by manually or semi-automatic  which leads to accidents, fatigue or delay or low efficiency
2. Too much dependant of human intervention in ensuring process parameters which leads to quality problems like defects and defectives, rework
3. The repetitive and standard process where fatigue seems to exist

Primarily, when there is a need for

1. Accident prevention and ensuring safety
2. Improving manpower efficiency
3. Ensuring process and product quality

Typical application areas for automation

1. Movement of materials through material handling systems ( trolleys, hand pallets, stackers, conveyors, cranes, etc
2.  Reducing the dependence on manual intervention in a repetitive process like 100 % inspection or sampling inspection, where it is unavoidable to bring it under process quality through test rigs and scanners etc

3. Reducing the dependency on manual intervention where process consistency is important like molten metal pouring, chemical, powder mixing and in some cases automating loading and unloading the components in the machine

4.Avoidance of human intervention in mere data collections like attendance, machine utilization data, people efficiency details through software, data capturing devices 

Should we give strategic importance to automation initiatives or let it be operational initiatives?

In order to bring holistic achievement in the automation, the business head should give strategic importance to the automation initiatives. I mean, the business head should look at the business processes and manufacturing process in a holistic way for optimizing the resources through the automation route. 

Instead of trying automation in a localized, opportunities areas, if the business head looks at the overall opportunities in the system, identifying potential areas, forming core groups, evaluate the cost-benefit analysis, partnering with right solutions providers, involve all the stakeholders and implement as an important initiative, the benefit would be huge compared to the standalone, ad-hoc way of initiating some automation in the system.



How to identify opportunities for automation projects?

Automation opportunities can be identified at the overall business process level and within the process, in each elemental level, automation can be identified.

This can be done using process mapping techniques and micro elemental analysis.

Process Mapping Techniques:

for example, you consider one commodity or RM, and you can map the process from the moment it enters the security gate for GRN entry to final FG dispatch as shown in typical process mapping.

In each business process, the team should ask the following questions.

1. Is there a possibility for automation to improve the safety, efficiency, and accuracy of the process?

the team should look at each process only from the lens of AUTOMATION to get the benefit of quality, efficiency, and improving safety aspects. Most of the time, we are using a different lens like waste elimination, variation reduction, people interface etc, sometimes we overlook the possibilities of automation. of course all the waste elimination and reduction methodology may ultimately lead to automation, but when we go through the process only from the automation benefits like efficiency improvement, safety practices improvement, and quality improvements, there is a high probability to find automation projects.

After identifying the potential projects, the team can do the techno, commercial benefits evaluations to select the highest potential automation projects.

Micro Elemental Analysis for identifying the  Automation opportunities:

Another approach is using micro elemental analysis in which the engineer list down the operations into elements and each element is being questioned for the improvement through low-cost automation possibilities.

For example, in one of my client operations, they engage in press shop operations and when the process engineer lists down the elements like Picking the comp, loading, pressing, ejecting and unloading the component, they identified opportunities to eliminate ejecting and unloading by providing low-cost automation which takes cares of ejecting and unloading into the container automatically once the pressing operation is over.

The point is for the small organization, we need both approaches to identify the potential opportunities for automation.

Levels of Automation :

1. Fixtures / simple low cost mechanical/ Hydraulic / Pneumatic  setups
2. Material Handling facilities
3. Low-cost Special Purpose machines
4. Standalone High-cost automation
5. Integrating multiple machines and human interfaces

A typical checklist for successful automation projects

In most of the SME organizations, one common pattern i am seeing is that the organization is not getting the benefit of the automation even though the concept or the intention behind the automation projects was clearly thought-out and articulated.

The success will be materialized only when the team ensures some of the factors right from conceptualization to operationalizing the automation in line with customer's demand or flexibility.

The following factors need to be considered in the planning and execution stage to get the full benefit of the automation.

• Clarity on the objective of automation, whether the automation is meant for efficiency or safety or quality or the combination of all.
• Conceptual idea or drawing about the automation before discussing with the external service provider
• Desirable cycle time and matching with existing and future takt time requirements
• Selection of reliable source who is having integration experience in electro, mechanical and digital space
• Ergonomics consideration
• Availability of spares requirement
• Basic maintenance guidelines and adherence
• Meeting return on investment as per organizational guidelines

Like any other initiative, when the automation initiatives are conceptualized holistically and executed correctly by involving all the stakeholders, any automation will give more significant benefits to the organization.

How do you measure your business or plant effectiveness as a Business Head?

As you are aware the famous quote, "what you measure is what you get."

Measuring is very significant for business performance, and what and how you measure is very critical. If you measure wrong or suboptimal or standalone, then your business performance will also be suboptimal.

Typically, we use to measure our business or plant in the following ways.

1. Utilization perspective :

2.Efficiency perspective :

3. Capacity perspective :

4.Machine hour rate perspective:

5. Yield performance perspective:

All those measures are right and serve the purpose to some extent for what it is intended. For example, you may be measuring capacity utilization as the ratio of production qty/capacity installed, which measures say, for example, 80 %, that means you may conclude that 80 % of the installed capacity is utilized. It may not give the other information like the efficiency during the production and how much actively passed through quality specification and how much cost you incurred and so on.

Likewise, all the above typical measurements will give you standalone, suboptimal information to you about each function, and you need to look at altogether to arrive at some common conclusion about your overall business or plant performance.

To overcome the above limitations only, smart organizations adopt one measure, which will give a holistic view of your plant or business effectiveness rather than standalone performance or utilization or yield performance.

Introduction to Overall Plant Effectiveness  or Overall Equipment Effectiveness :

OPE 

In case your plant is small, one or few lines is determining your business profitability. You can take that line for measurement, which will have a direct correlation with your business performance. You can measure as Overall Plant Effectiveness.

OEE:

In case your plant is relatively large and consists of many types of equipment and lines, you can identify the most critical or constraint equipment, which you can measure holistically. There you can measure as Overall Equipment Effectiveness

In a small, emerging organization, if we apply OPE or OEE rightly, this will have a direct correlation with delivery performance, sales turnover, and profitability, as I have seen in my client organizations irrespective of their manufacturing industry classification.

The measure either OPE or OEE will consider the importance of EFFECTIVENESS rather than any standalone measure like efficiency, utilization, or yield performance. 

Now let us discuss the elements of OPE or OEE :

It consists of 3 parts namely, Plant Utilization, Output efficiency, and product yield performance 

 detailed working is given in OEE Introduction to OPE / OEE measurement

In the picture above, 

the plant utilization is given as 75 % as it is derived from the ratio of working hrs ( 6 hrs)  to available hrs  ( 8hrs)

The output efficiency is given as 83 % as it is derived from utilization data. For example, in a given 6 hrs, the plant supposes to deliver 600 nos ( assume 100 per hour), whereas, the plant produces the actual output as 500 no's. hence plant efficiency is  500 / 600 equals to 83 %

the quality performance is given as 80 % as it is derived from efficiency data, For example, 500 no's produced and 400 no's only pass through the quality test, and the final yield is 400/ 500 equal to 80 %

Hence, Overall Plant Effectiveness (OPE) is a multiplication of Plant Utilization and Output efficiency and Yield improvement, ie, 49 %

So, instead of looking at standalone measure either 75 % plant utilization or 83% people or output efficiency or 80 % yield performance, we are getting a HOLISTIC MEASUREMENT to say  EFFECTIVENESS  as 49 %.

This measure will give you a HOLISTIC idea about your plant's Effectiveness at the end of the day.

Business Implication of EFFECTIVENESS measure:

what does 49 % OPE or OEE indicate?

Given your current sales turnover or profitability, whatever you achieve is due to operating the plant at 49 % effectiveness. If you want to improve sales turnover or profitability, it is only possible by enhancing plant effectiveness measures. Improvement of plant effectiveness measures can be working on plant utilization losses, people efficiency losses, and improving quality issues.

Benefits of Holistic measurement :

1. As this measure encompasses utilization, efficiency, and quality performance, you will get a holistic idea about your plant effectiveness at the end of the day

2. Easy to communicate to all FUNCTIONS 

3. Since all functions involved in the improvement of this measure, this measure enhances engagement

4.Helps to focus on the overall performance of the plant rather than standalone areas

5. It has a direct correlation with sales turnover, profitability 

The action point is to understand your current plant or equipment effectiveness and the reason for the losses and the improvement actions to improve the Effectiveness and, in turn, your business performance.