Supply Chain Pressures Driving Changes in Manufacturing
Automation use by competitors, customers, and suppliers were three of the top five drivers of automation investment over the past five years, inferring a supply chain and industry influence on this business decision.
Latest News
Port of Baltimore May Not Reopen Until Summer Sales & Operations Planning (S&OP) Mastery A New Priority Greets Procurement Professionals in 2024 Cargo Shipping Remains on Hold in Baltimore Following Bridge Collapse Maximizing the Bottom Line: The Power of Procurement More NewsLatest Resource
Sales & Operations Planning (S&OP) Mastery In this Special Digital Edition of Supply Chain Management Review, you will find insights on the importance of sales and operations planning (S&OP) to an organization’s bottom line.All Resources
The MAPI Foundation - the research affiliate of Manufacturers Alliance for Productivity and Innovation - notes that supply chain pressures are becoming a transforming influence behind automation.
Automation use by competitors, customers, and suppliers were three of the top five drivers of automation investment over the past five years, inferring a supply chain and industry influence on this business decision. It also suggests that as supply chains become increasingly global, automation activity by U.S. manufacturing companies will likely spread around the world.
The impact of new technology on product quality was another top driver. The survey shows that the two most common criteria used by U.S. manufacturers for evaluating the performance of new automation technologies are whether they lower total production costs and whether they improve product quality.
Manufacturers that opted not to invest in automation responded overwhelmingly that the perceived return on investment did not justify the total cost of purchase and implementation. Waldman noted that the economic outlook does not appear to be a big motivator in the decision to invest or not to invest in automation.
Stratified by company size, a sizable majority of all cohorts invested or planned to invest in automation. Three-quarters of manufacturers whose average annual global revenues are less than $200 million engaged in automation investment activity in the prior five years. On the other extreme, 97% whose revenues were greater than $10 billion engaged in such investment activity.
But this investment trend is not without potential impediments. According to Waldman, “Human capital challenges, including the difficulty of finding and retaining computer-literate production workers, certainly show themselves to be a cost of automation if nothing else.” Still, given the overwhelming incidence of automation investment, Waldman says, “It seems clear that cost and performance pressures are by and large trumping workforce and other internal impediments in the automation decision function.”
The rapidly changing global manufacturing landscape suggests the need for a broader framework to evaluate the investment in and performance of new automation technologies that goes beyond traditional ROI metrics. In the MAPI Foundation’s final study on productivity, Waldman will examine how companies should measure the ROI of new technology and will discuss the most effective metrics for evaluating the implementation of largely untested technologies.
About the Author
Patrick Burnson, Executive Editor Mr. Burnson is a widely-published writer and editor specializing in international trade, global logistics, and supply chain management. He is based in San Francisco, where he provides a Pacific Rim perspective on industry trends and forecasts. He may be reached at his downtown office: [email protected].Subscribe to Supply Chain Management Review Magazine!
Subscribe today. Don't Miss Out!Get in-depth coverage from industry experts with proven techniques for cutting supply chain costs and case studies in supply chain best practices.
Start Your Subscription Today!
It’s high time to go beyond visibility Driving supply chain flexibility in an uncertain and volatile world View More From this Issue