STRATEGIES FOR AUTOMATION

2007-11-21T10:35:00.000-08:00

Strategies for Industrial Automation

Manufacturing means the transformation of materials into products. During the past many companies have adopted new strategies in automation of manufacturing processes

Conventional Manufacturing

There has been a decline in the percentage of people employed in the manufacturing industry during 1995 – 2002.

There is an increase in vertical integration of production, processing, and distribution functions, and increasing reliance on bio-tech and information technologies at all levels within the global system.

Manufacturing Strategies

Speed, quality, service, flexibility and global focus are identified as the essential elements for successful manufacturing. Manufacturers are measured by their ability to respond quickly to sudden, often unpredictable changes in customer needs.

In this new era, manufacturing strategy can be defined as a set of coordinated objectives applied to manufacturing functions and aimed at securing sustainable advantage over competitors. Issues generally addressed include: Manufacturing capacity, production facilities, technology advances, vertical integration, quality, production planning/materials control, organization and personnel. Of course, the strategic approach must be adapted to continuous improvement at an operational level to ensure competitiveness in global markets.

A key part of a manufacturing strategy is the definition of whether products will continue to be produced at the traditional manufacturing sites, or if the cost advantages make it beneficial to set up manufacturing in geographic areas with a lower cost base.

Many companies are taking into account the practical and logistical difficulties and the full financial implications of setting up and operating facilities in remote countries. Greater care is being taken to ensure that product quality issues are properly addressed in the outsourcing exercise, along with recognition of the requirement for active management and control.

Tactical Solutions

The trend over the last several years has been for companies to manage their inventories very tightly to keep costs down. If there is any unpredictability in demand, it is difficult to rely on suppliers that will take months to respond to their needs. In dealing with this uncertainty, they cannot expect a supplier to keep buffer stocks to meet their changing demands, with inventory liability if the market dictates that products must change. The ability to provide fast delivery presents an opportunity to offer significant value beyond the actual price of the products supplied.

So, offer customization, modifications and quick product improvements in response to market demands. Search for customers that have this need. They will be more loyal to demonstrated ability for fast turn-around on modifications and improvements. For the supplier, this means developing the ability to modify production quickly. All employees should recognize that this represents the company’s strengths, and every customer change-request should be welcomed as a compliment to the company’s ability to accommodate them.

Suggestions for small manufacturers: Look for customers that view your company as a valuable partner in their product development and design process. In the interest of cost cutting, many of customers may have cut back in some areas crucial for product development. Seek to develop process capabilities and areas of technological expertise that fill these gaps. Once you feel you have the potential to take over these activities on behalf of your to customers, change your sales pattern to convince your customer that you have additional ways to contribute to their long-term needs

Customization

The ways and means to achieving reduced manufacturing costs and improving profitability in a company is to focus its activities on a limited range of technologies, volumes, products and markets. However, while customers are demanding about cost, quality and performance, they still demand for more product customization.

Companies must adopt manufacturing strategies and production technologies (programmable automation, flexible robotics, etc), which will allow increased manufacturing flexibility and the capability to respond quickly with cost effectiveness to demands for truly customized products.

Technology improves Efficiency

While the industrial equipment industry has traditionally focused on cost cutting down to increase efficiency, the leading companies focus on improving the return on assets. Established companies constantly look for ways to become more efficient than their competitors. Companies that use the Web as a tool to improve processes and human performance, and to collaborate with customers and suppliers, tend to have the strongest financial principles.

Innovation

Innovation is mandatory for the long-term survival of any manufacturer. Good companies are motivated to become more innovative to increase productivity. Many automation companies have gone from simply producing and selling products to providing more complex services that address the usage and total life cycle of the product. They have developed smart products designed to increase their customers' productivity and capture valuable data. The key to creating smart products is to not only capture customer information, but also use it to adapt products and services to more precisely meet customers' needs. With products that interact across open platforms and provide new opportunities, the solutions may be more valuable to the customer than the product itself.

Truly innovative companies create a major segment of their revenue from products designed within the past five years, unlike other companies that derive much of their revenue from older technology, with too little invested in improvement or enhancement over the years. Most leading companies are using eCommerce and the Internet.

Global expansion

While many companies derive a majority of their revenue in their home region, those that generate more than half elsewhere are in a much better position to withstand regional and cyclical downturns. Japanese companies which derive a major portion of revenues in its own domestic markets have not performed well in the past. They are now striving for geographic expansion, with an aggressive promise to be the worldwide process controls leader within just a few years. Siemens has recently managed to generate more than half its revenue outside Germany, and is better positioned to ride out cyclical demand and economic booms and busts while serving an increasingly global customer base.

In addition to protecting against economic cycles, global expansion can be a source of growth in a flat market. Getting the first strike advantage in an emerging market can increase sales dramatically; but to sustain results a company has to be well prepared for business outside its home region.

Long-term success requires a solid infrastructure and attention to local personnel, political and cultural issues. One way to effectively address these issues and better ensure a quick return on investment is to partner with a company already operating in the geography. With a partner, the time it takes to handle issues such as infrastructure, employee recruitment and housing, and creating sales channels can be shortened dramatically.

Focus on Core Markets

Good portfolio management requires that companies focus on those businesses that are achieving results, and rid themselves of those units that are not directly related to the core business. Companies now focus on automation and power products. Results are excellent – Companies are now demonstrating excellent growth and profitability.

Conclusion

Companies should focus strictly not only on standard products in high-volume, big backlogs, maintenance, re-engineering and cost reduction but also in efficiency, innovation, market focus and global expansion