Process Automation Traps To Avoid-5 tips for CEOs

Process Automation Traps To Avoid-5 tips for CEOs

Automation is a hot topic. Artificial Intelligence (AI) promises to automate the repetitive tasks in service industries, driver-less cars will move us around, whilst aerial drones deliver our packages. We could even have robots walking around doing our jobs -well, some of them.

CEO’s may be thinking that, their profits will climb as automation will reduce their overheads.

Consider these practical 5 tips that I learnt through actually running businesses with automated processes.

Tip #1- automation may not be so flexible.

Humans are very dexterous and flexible in movement. We can perform a wide variety of tasks. Robotics are much more limited and need specific programming.

Imagine a spectrum where at one end, fully human processes are highly flexible and at the other end, fully automated processes are highly rigid.

Somewhere along this spectrum will be the best fit for your business. Think carefully about how your customers would be impacted by automating your processes. Generally, customers don’t welcome rigid service solutions unless there is a clear benefit for them.

If your business has lots of different physical tasks that can change constantly, then perhaps the very flexible end of the spectrum is best for you, as it may not be as well suited to automation.

Where your business perhaps, pumps out high volumes of items, then you may get benefits from a high level of automation, as flexibility is less important than perhaps the unit cost.

Make sure your chosen technology offers the right balance on this spectrum.

A partial or mixed approach can work very well but keep your eye on your customers.

Tip #2- reliability is critical.

Moving parts wear, plastics can become brittle causing electrical short circuits and software can get bugs.

These are just a few issues I have experienced that caused breakdowns.

Understand the impact of a breakdown on your business when it happens (not, if it happens!).

My business was not able to ship from an automated warehouse for 3 days because of a breakdown. This was a massive problem, as I was in an FMCG business that shipped hundreds of pallets every day.

Remember, depending upon the design of your installation, it may not be possible to do things manually in the event of a breakdown.

In my example, conventional fork lift trucks would not fit down the very narrow warehouse isles and the safety guards were specially designed to keep humans out!

Negotiate detailed agreements with your suppliers, including a list critical parts they must store locally. Better still, keep the critical spares on consignment stock at your premises. Waiting for service engineers or parts can be a killer.

Work out a contingency plan as part of the design process !

Tip #3- cost versus the benefit

Investing in automation must obviously give a suitable payback to be worthwhile. Make sure that your calculations allow for when things don’t quite turn out as planned. For example, you might reduce the number of plant operators but then find out you need to recruit skilled people to oversee the automation and manage the machines.

Don’t assume the machines will not need a supervisor of some sort.

In one factory, I found the original capital justification was 20-30% too optimistic about the cost savings.

Check if you have the skills in house to maintain your automation. If not, factor in what this will this cost you to get an accurate cost saving.

Tip #4- nothing lasts forever so neither should your depreciation

Your system will need replacing or upgrading at some point. Use a realistic life expectancy to set your depreciation rate.

Do not fall in the trap of depreciating a major capital asset over a longer period than its life expectancy. Otherwise, when you need an upgrade, the redundant system may still has a large net book value!

The rapid rate of change in this technology and built in obsolescence, means your installation can become outdated fairly quickly.

Tip #5 – your company culture

Assess whether your company has strong culture of continuous process improvement and if automation is a natural step for you.  If your organisational culture is more intuitive than analytical,  implementing automation may be a significant culture shock.

Evaluate your readiness and capability carefully. The machines will not just come along and fit in, as they will have their own needs and demands.

Automation can bring great benefits to business but remember, it is never without a compromise.

Find out more about how I might be able to help you, please email brendan@lindfieldpartners.com.au or call 0401018282. Brendan Barrow

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