Here is an excerpt from an article written by Jaime Macias-Aguayo, Maria Jesus Saenz, and Duncan McFarlane for MIT Sloan Management Review. To read the complete article, check out others, sign up for email alerts, and obtain subscription information, please click here.
Illustration Credit: Carolyn Geason-Beissel/MIT SMR | Getty Images
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Research reveals five factors that can drive automation costs up — or down.
Many executives at small and medium-sized enterprises (SMEs) associate process automation with expensive robots and assume that it’s within reach only for large enterprises. However, possibilities for reducing the amount of human involvement in tasks extend well beyond robots and include a host of affordable approaches. In our research with SMEs, we have uncovered strategies that can make automation feasible, even for businesses with lean budgets.
Consider how some SMEs have successfully implemented low-cost automation solutions in their production lines using barcode scanners and single-board computers to track order progress in real time. These solutions enable managers to provide updated information to sales and customer service personnel and to quickly react to potential delays — all for a technology investment that is often less than $300. Yet, most SMEs do not know where to start with automation or how to do it under their budget constraints and sometimes limited bandwidth for operational innovations.
Failure to embrace automation can put SMEs at risk of being less competitive. Our research with SMEs at Cambridge University’s Distributed Information and Automation Lab and MIT’s Supply Chain Digital Transformation Lab has revealed ways that smaller companies can start their automation journeys with a cost-effective approach. We’ll explore two strategies in particular: finding opportunities to automate peripheral functions, and looking for processes where stand-alone automation may offer benefits. And we’ll provide a framework for assessing the most cost-effective path for either strategy.
Why Peripheral Automation Can Be Cost-Effective
Many SMEs believe that automation yields benefits only if deployed in core activities such as production, which often require high levels of customization and must be highly reliable. One SME in the logistics delivery sector struggled to automate its core vehicle-routing process because the routing algorithms had to be extensively customized to accommodate a heterogeneous fleet, specific time windows, and backhauling, among other operational needs. But peripheral activities, such as monitoring work progress, can often be automated using sensors, actuators, cloud technology, and visualization platforms. These technologies are typically affordable, which gives them a significant advantage over technologies for automating core logistics activities such as order picking, whose costs can range from a few thousand to millions of dollars.
For example, U.K.-based freight forwarder Meachers Global Logistics successfully automated a container-unloading monitoring process by using low-cost auto-ID tracking technologies.
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Here is a direct link to the complete article.
Jaime Macias-Aguayo is a postdoctoral associate at the MIT Digital Supply Chain Transformation Lab and a former member of Cambridge University’s Distributed Information and Automation Lab (DIAL). Maria Jesus Saenz is director of the MIT Digital Supply Chain Transformation Lab and executive director of the MIT supply chain management master’s degree program. Duncan McFarlane is Professor of Industrial Information Engineering at the University of Cambridge, head of the Distributed Information and Automation Laboratory (DIAL), and founder of Digital Shoestring, providing low-cost digital solutions for SMEs.