The economic crisis brought on by Covid-19 has uncovered hidden vulnerabilities in global supply chains. One of the most glaring: a lack of responsiveness and adaptability. The sudden inability to purchase goods from toilet paper to equipment for data centers shines an unforgiving light on just how we make things. Production lines have been exposed as unable to scale, incapable of reconfiguring to build the things we need most, and often, unfit even to operate in an environment with limited access. Manufacturers need resiliency, flexibility, and scalability. In other words, they need automation.
For all the slick videos of robots picking and packing, for all the references to artificial intelligence and the hype around Industry 4.0, automation is not widely deployed in manufacturing. By some estimates, high levels of automation play a role in only 3% of all goods produced. The vast majority of manufacturing remains dependent on human labor and access to physical space. That makes it vulnerable to repeated disruptions. While Covid-19 proved that point in the worst way, we had ample warning: Manufacturing has been routinely disrupted by tariff wars, by supply chain disturbances tied to climate change, and by regional conflicts throughout history.
The question is not if there will be another manufacturing disruption. There will be. The relevant questions are when it will come, and how well prepared the industry will choose to be. As the late Jack Welch said, “Control your destiny, or someone else will.”
We can’t afford to learn this lesson the hard way yet again. Instead, we must place resiliency and responsiveness at the center of the manufacturing agenda, right alongside cost and quality. We need to design systems that are robust, scalable and flexible. Automation will allow us to achieve a globally distributed, highly resilient and responsive manufacturing ecosystem.
Manufacturers have been understandably reluctant to turn to automation for several reasons. Chief among them is that for the past 20 years, manufacturers have been chasing one goal – low cost at reasonable quality – over everything else. The pursuit of this target mandates that companies stand up factories and supply chains in geographies with ready access to cheap labor, land and shipping infrastructure. Now, the push to reduce dependency on China is spurring a manufacturing migration to countries with even lower labor rates.
And automation has done itself a disservice by being bespoke, time-consuming and expensive. To make manufacturing automation work, you needed a project with a long lifecycle and a large capital budget. Mostly, that meant automotive, aerospace and smartphone projects. Your average toaster? Not so much.
Then there’s the fear that automation will take away jobs. For governments already reeling from the impact of globalization, automation has become a bad word.
Fortunately, these obstacles are becoming less daunting as robots, and the business models supporting their use, evolve to better suit industry. Automation is becoming faster and easier to deploy. Advances in computer vision have made robots far more capable of assembly and inspection. Improved software eliminates the need for expensive fixed tooling, enabling robots to be reconfigured in a matter of hours.
Just as the software industry was dramatically changed by the introduction of software-as-a-service, automation can now be leveraged by essentially hiring a robot. That shifts capital expenditures to operating expenses, minimizing both cost and risk for manufacturers. Companies can enable an automated production line to take over mindless, repetitive and potentially dangerous tasks—for about the same cost as a year’s worth of labor.
Using robots to do these tasks frees up human workers to supervise and manage automation. The way forward is not for humans to compete with robots. Instead, people will work alongside these advanced machines, just as we collaborate with more traditional technological tools. As companies embrace automation, the World Economic Forum predicts that up to 133 million new jobs could be created.
In March, the Brookings Institute predicted that the coronavirus “may well prompt a new spike of automation” across several key verticals. This is already true of the industrial sector. According to Thomasnet.com, sourcing for automation equipment has increased 147% year-over-year and is up more than 20% compared to last quarter.
Companies that have deployed artificial intelligence and robotics can operate some of the world’s most sophisticated manufacturing equipment with a single employee on a factory floor. Relativity Space provides perhaps the best example I’ve seen. They’ve managed to produce an entire rocket with just one person physically present on the factory floor—but they’re not eliminating jobs. Even during a global pandemic, Relativity is hiring.
Given their example, why wouldn’t the world’s biggest companies strive to manufacture everything from network routers and household appliances in a similar fashion? Why wouldn’t they look to a solution that keeps employees safe, enables flexible and resilient production, and still allows them to grow? In short, why wouldn’t they automate? The next disruption is inevitable – but its impact on the economy doesn’t need to be.
