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.

Enhance your Planning Window for Sustainable Growth

Most of the small, emerging organizations are working on the current month or week or day and may not have much clarity about the immediate medium term. This practice results in the scenario "always busy" or "firefighting" mode to serve the customers all the time. But as a business, it will lose the long sight vision or growth potential.

One of the ways to come out of firefighting mode is to enhance the planning window.

Planning Window :

Instead of planning for the current month, extend the planning horizon for the next 3 months so that the business head and the organization will have visibility about the sales potential, working capital requirement to buy Raw material, capacity availability vs. requirement. Also, this enhanced planning will give more time to RESPOND to uncertainty.

Tool for enhancing the planning window:

The simple, yet powerful tool is 1+3 planning format. This could be used for sales projection or forecasting, working capital planning, or even for profitability projection.

For example, let us take the case of sales projection into a 1+3 format.

In a 1+3 sales format, you need to fill the data with sales projection for 1+3 months timeframe.

1 - a month is the current month, mostly firm / confirmed order

3 months can be for the next 3 months projection with firm/ confirmed order and then tentative  orders

Advantages of extending planning horizon :

1. When you see your sales projection data down the line 3 months from now, you will come to know the order position vs. target gap. That will give you response time to reach out to existing customers for more orders or pitch-in new customers for new orders
2. Since any new order requires time for approaching the right customer- processing inquiry - price finalization- proto proving- getting bulk order, this 3 months time horizon will give the flexibility and sufficient response time

3. If you know the projection for the next 3 months with some level of accuracy, that will help you to utilize your capacity well, manage the cash flow proactively.


The thought process of the business head must be proactive and beyond the current day or month for sustainable growth. This 1+3 projection will help to stimulate your thought process!

Customer is not interested in your inventory

In one of the client organizations, the team has kept two months' inventory worth of say 20 Lakhs to service the customer as directed. The client organization is supplying to one of the reputed, large scale engineering organization. The monthly avg billing is around 10 Lakhs, and the customer insisted the client keep a minimum of 2 months FG stock at any point in time. The customer made it as one of the key performance metrics for the client organization and advised to keep the customer updated on the FG inventory status periodically.

As I diagnosed with the organization, their overall average delivery schedule actualization to the all the customers around 60 % only, and the manufacturing plan is usually based on the urgency or followup by the customers daily.

We worked with the organization and identified the constraints in the casting process, and their OEE was also low as 25 %. Eventually, within nine months, their OEE started rising to 60 %, and the business head is also working on machine maintenance improvements, technology up-gradation, daily planning based on capacity rather than urgency, and so on. 

The above said customer 's order was being fulfilled at a 100 % rate every month, and the organization's business head felt that there was no need for keeping two months FG stock as the production capacity increased to deliver the order commitment every month. So, they reduced the inventory to the safety level of 15 days, and the customers' also getting the KPI dashboard periodically as usual. 

Things were moving smoothly. During one of the conversations between the customer's representative and the business head, the customer said that they were not particularly interested in insisting on minimum FG stock. Since their history of delivery commitment was not so good, for safer side, they asked on maintaining minimum stock. They were ok with the reduction in inventory norm as long as delivering on time.

The moral of the incident :

The customer is not interested or does not want to penalize the supplier for insisting on keeping a minimum level of inventory in the name of vendor managed inventory or warehouse stock etc. as long as the supplier has the capability and flexibility to serve them. Keeping inventory is only to protect the variation in demand or supply, not to penalize the supplier.

It is up to the small organization to be smart in the manufacturing process, capacity, and planning to avoid or reduce the inventory and prevent the customer from imposing any rule on keeping inventory!

Business planning process for existing business in a small, emerging organizations

Most of the Small, Emerging firm's business head think that business plan is meant for banks/finance institution to get financial assistance when they start a new business or expanding the existing business.

Actually, in the existing business itself, the business plan needs to be done at least once in a year irrespective of expansion or new plant. This planning process drives your thought process to navigate future opportunities and challenges in a proactive manner.

What is business planning or preparing a master plan is all about?

1. Visualizing the future opportunities/threats
2. Anticipating the risk
3. Proposing counteractions
4. Preparing your organization for next-level growth

How to do business planning for your business?

Inputs required for business plan

• Industry Trend / Changes in the business environment
• Volume forecasting/projection for the next 3 years
• Your organizational goal aspirations on profitability and growth 
• Customer segment or new customer's opportunity 
• 
  

Planning areas

Likely output from business planning Process

• Organization structure / Engagement initiatives
• Financial plan
• Organization development plan
• Initiatives on productivity/cost and quality aspects
• Product portfolio / business model / integration / diversity plan
• Marketing initiatives

This is a collective visualization and introspection process to make your organization to manage any uncertainties as well as to prepare your organization for future!

Importance of Manpower Planning during Growth phase

Like any other planning is being done in functions like marketing, sales, finance, and material, equal importance has to be given on MANPOWER PLANNING  particularly during the growth phase. Else, it would affect the organization growth badly. Having Right people in Right place at Right Time is critical for accelerating the growth.

The execution calls for detailed planning of manpower on the following aspects.

1. No of people required
2. Level of people required regarding skill and positions 
3. Compensation and Budgeting 
4. Recruitment methodology either dependence on the internal source or external support
5. Org structure, the communication process 
6. Infrastructure and facilities for increased manpower 


The typical problem with manpower  in small and medium-sized organizations are

1. Non-availability of right people 
2. Mismatch of manpower requirement vs. availability
3. High attrition rate 
4. Engagement of people towards organizational objectives

Typical mistakes the business head is doing in manpower planning during the GROWTH  stage 

1. Lack of forwarding thinking on manpower planning process:

it means the lack of thought process on the quantitive projection of manpower requirement, qualification, skill level, and how they would be positioned in the existing organizational structure and engagement plan.

2. Adhoc recruitment 

It means either compromising on the talent or fitting the people to the position rather than need. sometimes organizations recruit the people based on some reference either from relatives or friends or association, and they may not be fit into job requirements

3. Non-checking on the cultural fit :

Not verifying during selection  about the candidate's suitability to the organizational culture and values


. So when we are not planning the manpower properly in advance, the organization will lead to chaos or cost overrun on manpower budgeting. 

When Manpower planning has to be done for the organization?

Manpower planning is immensely required during the following scenario

1. Plant expansion
2. Drastic Increase in volume and variety 
3. New product  / new business lines getting added 

Benefits of manpower planning 

to plan budget/manpower cost in each category
to determine the job description/type of talent, you look for
to recruitment timely and induct
to focus more on external priorities than managing internal manpower problems.

So the point is manpower planning is one of the essential tactical activities of the organization, and  it is a continuous activity to ensure operational effectiveness and growth.