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AutomAtion chAllenges for smes

While automation promises improvements in efficiency & management agility, it also brings in its own challenges, as far as its realisation by SMEs is concerned. Implementing automation technology can sometimes mean putting a lot of time, effort and additional investment into maintaining and updating that technology as well. This round-table analyses approaches for SMEs to examine automation as a strategy for increasing productivity & reliability in their manufacturing operations.

According to many business survey reports, finance has been identified as the most important factor for determining the growth of SMEs, in both developing and developed countries. Despite the importance of SMEs to the economies of both developing and developed countries, they have difficulty in obtaining formal credit or equity. But, additional investments for automation is inevitable for SMEs. This is because SMEs always face challenges in terms of reducing cost, maintaining quality & quicker delivery schedules. So, unless some automation is adapted, these challenges would assume

dangerous proportions. As such, understanding the value chain of automation for SMEs is crucial. At the same time, adoption of any form of automation leads to some level of support requirement too.

The round-table analyses approaches for SMEs to examine automation as a strategy for increasing productivity & reliability in their manufacturing operations. Suggesting views on the same are industry stalwarts PV Sivaram, Managing Director, B&R Automation India; Ramesh Ramachandar, Manager - Machine Tool Industries, Festo Controls; Bipin Jirge,

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Kulkarni opines that investments will help SMEs to remain relevant, flexible and competitive in dynamically changing environment of industry.

How can SMEs value automation?

SMEs are facing good heat on improving inside out and gain critical mass and competitiveness. “The diktat is from the customer who is becoming more and more demanding. Unless every employee is educated, trained and involved in this process of change management, the fruits would never be sweet,” says Ramachandar. He believes that SMEs, who consider the total cost of ownership, while adopting automation will be able to realise their ROI much faster, which includes realisation of assets, knowledgeable human resource and valued partnerships. Adding his thoughts on the same, Jirge suggests that a step-by-step approach is very necessary, along with investment in automation.

On the other hand, Kulkarni believes that for SMEs, investment in automation is very huge even for a simple robotic cell, assembly station or material handling system. “SME should invest in modern manufacturing process to compete with the world. Automation provides repeatability, quality control, waste reduction and integration with business systems, increased productivity, and reduction of labour costs,” he advises.

To address the challenges of the global market, Sivaram opines that many reforms have to be undertaken by a forward looking SME. “Embracing automation is just one dimension of this transformative act. As with upgrading technology, process, procedures, and also for automating the methods, investment

Managing Director, ifm electronic India; Sanjay Kulkarni, Managing Director, Pilz India and Sagar Jeevan Bhosale, Managing Director, Schmersal India.

Investment is inevitable for SMEs

Since SMEs face several challenges, additional investments for automation become inevitable. Pointing out these challenges, Ramachandar says that they are compounded by competition, both from within and outside. “One needs to look at investments into automation as investments, and not as additional investments. Unfortunately, our school of thought in India was inclined towards this investment as additional cost, loss of labour and meant only for the biggies. But this is changing now. Benefits of automation is realised today by our SMEs. Today, more managers are aware that to reduce cost, produce consistent quality products and deliver in time; investments into automation is the only way out.”

Addressing the challenges for SMEs, Sivaram believes that automation is imperative. As such, spending on this must be viewed as an investment rather than cost. Focusing on the importance of automation, Jirge says that there are some parameters like quality and safety, which cannot be measured in short term, “But if done appropriately, automation will certainly bring more productivity and profits in long term for SMEs,” he adds.

It has also been observed that despite the increasing adoption of newer technologies by large enterprises, small enterprises are not confident about the prospects of automation technology. “SMEs face problems in the areas of skilled labour at affordable costs, technology knowledge, investments, etc. They need to understand that automation allows them to streamline their business processes, reduce costs, improve productivity quality, and leverage industry best practices consistently,” asserts Kulkarni.

Investments in automation are necessary for SMEs since customers demand more value proposition from their suppliers.

“Reducing cost of non-conformance in product and services is possible only through implementation and training on automation,” says Bhosale. Further elaborating on investments,

“IT brings visibility & enhances data management & analytical capabilities of the enterprise” Ramesh Ramachandar, Manager- Machine Tool Industries, Festo Controls

“We need to assess automation need and decide on one-go or partial automation”, P V Sivaram, Managing Director, B&R Industrial Automation

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in terms of cost, training and rethink is needed. This will reduce stress of the market competition,” he suggests. Also, automation has to be considered as an essential avenue for business growth. Highlighting this, Bhosale says, “ROI cannot be calculated directly in most cases, but returns are immediately seen due to transparency in system, better overview of complete system and accuracy of data & reports, which is necessary to take decision for business growth.”

Advantages of IT platform

Automation systems integrate factory, warehouse, production & administration, data collection systems, and processing of data and production times. Data is exported to ERP and management software platforms. In this context, Kulkarni opines that there is a hardware and software for identifying and marking for traceability along the production chain. “With the use of technological platforms, it is possible to link systems from different suppliers, both through integration in the ERP software or by directly connecting production processes. It is possible to view the production status at any moment and to graphically see the trends on important parameters. This allows for proactive management,” he says.

According to Ramachandar, the IT platform is a perfect springboard for SMEs who want to take their enterprise to the next level of growth. “It brings in visibility & enhances the data management & analytical capabilities of the enterprise,” he says. IT is also important for monitoring customer base & enquiries, generating orders for production, inventory management, scheduling debtors and managing AR and AP.

“Resources, which are freed from doing the routine repetitive task can be deployed for more productive work,” says Bhosale. On the other hand, Jirge believs that IT brings many advantages, one of them being traceability to the last process parameter.

“However, the IT platform must be affordable to the SME level also. That means it should have just enough functions to start up, with a upgrading feature as the team can handle more complex automation over the time,” he claims.

Enhancing production process

Administrator training, transfer of technology and a mix of classroom, practical and on-the-job training are few examples of flexible models for SMEs to enhance production process. Answering how productive are these models, Sivaram opines that it depends largely on where the enterprise sees a gap between expectation and actual performance. Some areas of suggestions he advices include cost reduction, improvement in quality and better utilisation of resources, getting a free-hand for further improvement in the process, getting the staff trained in-house in relevance to their own process, etc.

As per Ramachandar, the transfer of technology and a mix of training is very essential for SMEs to improve production processes. He focuses on indigenous technologies that have been very insignificant in the growth story of India. However, he believes that interaction between industry and academic institutions is not so encouraging. “This nexus, if promoted, can bring in a lot of innovation in the industry especially for the SMEs,” he says.

Kulkarni suggests that practical training helps SMEs to understand the technology in an easier way, rather than the information of technology. “Administrator training, technology transfer & on-job training is a vital component to the changes brought in processes, skill for improvement in productivity. The benefits would include meeting skills demand in terms of relevance and quality to sustain in competitive market, boost employee confidence level & morale, and sustain a dynamic development process,” adds Bhosale.

“SMEs should invest in modern manufacturing process to compete with the world”, Sanjay Kulkarni, Managing Director, Pilz India

“A step-by-step approach is necessary, along with investment in automation”, Bipin Jirge, Managing Director, ifm electronic India

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Towards appropriate automation

What would be an appropriate automation for a company? How to go about the automation deployment? How to decide on the right automation supplier/partner? Suggesting solutions to such queries, Sivaram opines that a comprehensive assessment of automation need is important to improve the current situation. “We need to assess automation need and decide whether to go in one go or partial automation.” Speaking on similar lines, Ramachandar says that it depends on the scale of thought too. “Factors to be considered include how flexible & scalable are the present resources? How prepared is the human resource pool to take on the challenge and is there a clear budget for the project? On the other hand, the process of deploying automation must be a well-defined roadmap. It would begin on an interaction with a control and automation company and end with a run-in period completely managed by the automation company,” he explains.

Regarding the right automation partner, Ramachandar says, “When deciding on this partner, some questions can be considered like does he have enough experience to handle the job? Does he have enough resources to carry out the job? Is he backed by a strong technical team to handle the intricacies of such a deployment? What level of service support can he offer and are the technologies state-of-the-art, safe and environmental friendly?”

Highlighting on how would life after automation look like, Sivaram points out that data volume would increase multifold and will undergo massive growth; all sorts of new information will be at fingertips; achieve productivity gain and cost reduction and finally make up the mind to live with complexity to maintain the same. According to Ramachandar, “One would have more data to manage & analyse, and would have knowledgeable employees managing the most sophisticated tasks with ease.”

According to Bhosale, appropriate automation for any company is a solution, which helps it to reduce errors, do

repetitive tasks with scheduled interval, with accuracy and safety and generate easy-to-monitor reports that provide scalability. “Automation deployment has to be step-by-step as getting people from various departments used to it, is very critical. Visiting organisations having implemented automation can give clarity for the overall roadmap, as well as their experience with different suppliers or vendors,” he suggests.

Suggesting roadmap for SMEs

Today, industry experts in India believe that a suitable roadmap for Indian SMEs to be acquainted with solutions provided by the IT & automation industry is pre-requisite. Elaborating on this, Sivaram suggests that one must grapple with it, so as to realise the benefits and shortcomings. “There should be a deeper understanding of gap with respect to the current market trend. One should decide the automation requirement and not follow the suit. To begin, one can go for low-cost automation (LCA), which would enable to automate a set up to a certain degree, by leveraging on the existing equipment, tools, methods and people and using easily-available standard components that involves low investment,” he clarifies.

While Ramachandar believes that the roadmap could possibly start with a core team within the organisation, Kulkarni believes that SMEs should consult the supplier/partner and set the benchmark. Concluding on the possible roadmaps, Bhosale asserts that the first important step towards developing a suitable roadmap is having firm conviction about the positive impacts of IT and automation. He says, “The areas in an SME business, which has largest human interface can be the ones, where there is a need of priority. Making a small but definite budget allocation every year and implementing it judiciously will help getting IT and automation in an seamless way into the organisation.” ☐

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“Visiting organisations having implemented automation can give clarity for roadmap”, Sagar Jeevan Bhosale, Managing Director, Schmersal India