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The Barriers, Risks, and Benefits of Automation

This will be a three-part series on the Barriers, the Risks, and the Benefits of automation in supply chain and logistics processes.  In this first part of the series, we will pursue some of the barriers to automation.

Even during the infancy of lean process development in the automotive industry, Taiichi Ohno in his book, Toyota Production System, discusses the idea of jidoka, or autonomation, which is the term used to describe machines that are automated but still require a human to supervise and make decisions. The ultimate goal was to have fully automated machines that could both think and run automatically, but the technology was not available in the 1950s and 1960s.

 

In other words, automation in not only the manufacturing realm but in the workplace in general is not a new concept. The route that we take to arrive at the goal and the technology that we use to get there are new, but the concepts are not.

We all have visions in our minds of The Matrix or of Terminator and how the machines will take over and leave all humans as glassy-eyed avatars of our former selves. The reality is that fully autonomous robots used for supply chain and logistics processes are years — and in many cases, decades — away. The same goes for fully autonomous cars with no steering wheel.

 

The problem is not necessarily the technology itself but the infrastructure, governmental regulations, and public opinion. Even Amazon has stated recently that a fully autonomous distribution center is at least one decade away.

 

So, while the alarmists among us may be quick to say that the machines are coming for us and for our jobs, even the possibility of such a thing is far off into the future.

 

Just as it happened with the smartphone and with the personal computer before it, researchers are making new developments on automation in leaps and bounds. There is discussion about automated doctors, customer service agents, and mortgage officers. The mining industry already has a fully automated gold mine in Mali (West Africa) that is ramping up production in 2019 to its non-automated production levels.

 

This is a brave new world for all of us that have a supply chain element to our operations, and this is an excellent opportunity to extract further value from our operations with automation.

 

Let’s explore some of the barriers that may prevent us from developing into a fully automated economy.

Barriers To Automation

Infrastructure

Automated machines require data inputs from many sources and must provide data outputs, too. As their complexity increases, so will the demand for bandwidth. Make no mistake about it: Automation will be extremely data intensive. The transportation, management, and warehousing of this data requires infrastructure that most logistics operations do not currently possess. Outsourcing this data management could prove to be very expensive, at least for now.

 

Even simple robots like the inventory-taking machines that Wal-Mart has begun to employ in their stores require a slightly different world than we currently have available. These robots must learn their route and can often become confused when something is in their way. Even as more intelligent robots are developed, the aisles that are currently in these stores may need to be changed, and, as new stores are built, they should be designed with these robots’ limitations in mind.

 

The maintenance and daily management of these robots will need to be carried out by humans and potentially special facilities. In the same way that an automotive mechanic has their own facility, some of these specialized and likely very complex machines will require maintenance facilities tailored to their needs.

Government Regulations

A few weeks ago, the Los Angeles City Council vetoed a permit request for a shipping company to use an electric, automated container handler at the Port of LA. This could have just as easily fallen under the Public Opinion bullet, because the argument against the usage of the automated machine was that it would cost some dock workers their jobs.

 

The city council even voted to conduct a study to determine the economic impact of an automated cargo handler. One of the supervisors on the city council’s board proposed the study. She was quoted as saying, “Do we want a society full of robots?”

 

With workers’ unions still being very popular in many industries, local and state regulations may prevent the introduction of robots that potentially eliminate jobs in their areas.

 

But this is not just an issue related to workers’ unions. All across the globe, automation is being stymied by legacy regulations meant to grow the economy by providing much-needed entry-level and low-skill jobs. Many of these regimes must be toppled by continual lobbying to ensure that automation can be successful.

Public Opinion

Workers in the Philadelphia, PA area were recently polled on automated machines and their impact on jobs. Many of the workers were completely unaware of the advances being made in automated technology and how they could make an impact on their jobs. The workers that were aware of the technology did not think that their employers would be implementing the new technology any time in the foreseeable future.

 

In other words, many workers are either unaware that this technology exists or they are unaware that the technology could potentially replace their jobs in the coming years.

 

This is concerning in several ways. These are the workers that may need additional training and development the most, yet they seem to have the least knowledge of this technology and the impact on their jobs.

 

In many other areas, such as the aforementioned city council meeting in Los Angeles, workers are afraid of losing their jobs to machines and are lobbying against automation, despite the benefits that we will explore in a few minutes.

 

A large portion of the jobs with the potential to be replaced by machines are labor-intensive or entry-level. While these jobs are vital to our economy, the solution may not be to appeal to these workers and let them keep their jobs.

 

One potential solution is to play the long game and develop these workers even before they complete their primary education and ensure that they have a clear career path to something with greater demand.

 

The United States is falling further and further behind on STEM, and despite recent efforts to improve our education system in that realm, it is not currently enough. Focusing on developing workers years before they exit high school and focusing them on a more STEM-related career path could provide America with a much-needed boost in that area and also provide workers with the skills that they would need to enter the workforce in a position that may not be replaced by robots in the coming decades.

Risks Of Using Automation

Labor Market

Assigning robots to less-skilled jobs will cause a shift in demand for more higher-skilled jobs. This is partly because the elimination of lower-skilled jobs pushes the average skill level of the job pool higher and partly because robots require skilled workers to design, build, operate, and maintain them, creating higher-skilled jobs.

 

If we do not have any availability of higher-skilled workers, then the shift to automation would be all for naught.

Over-Specialization

As robots are developed to perform a specific task, this reduces the flexibility that is offered by a human worker. A human could inspect a product for quality, package the product, move the product to the shipping floor, load the product onto the truck, and complete the shipping paperwork. While these tasks may not all be performed by the same person in a traditional production environment, the flexibility offered by cross-training workers is helpful to businesses.

 

This flexibility may not be available with robots, depending on the tasks and the robots in question. These over-specialized robots may be excellent at performing their dedicated tasks, but considerations must be made to ensure that the operation still maintains the ability to shift with the needs of the business.

Obsolescence

Along the same lines as over-specialization, if the service life of the machine runs out before you have realized the fully return on your investment, then either an inaccurate analysis was conducted on the potential of automating a process in your operation or the wrong machine was selected.

 

Automating a process that requires a highly specialized machine may mean that the machine must be in operation for an extremely long period of time. If the process changes and the machine can not be updated or modified to change with the process, then the machine will be rendered as obsolete.

 

Machine learning and AI are coming, but they are currently in their infancy. This means a proper analysis must be conducted on the process that you desire to automate, or otherwise, you will not realize a return on your investment before the machine becomes obsolete.

Benefits Of Using Automation

Safety and Health

Manufacturing and logistics jobs that require repetitive movements throughout the day, dangerous jobs with a high risk of injury or long-term health issues are excellent positions to automate. This provides higher overall quality of life to the workforce by allowing machines to do things that are not necessarily good for humans.

 

Autonomous machines can do things that humans may not want to or be able to do. There are machines being developed to decommission nuclear reactors. Imagine an autonomous machine that can clean up after zoo animals or detect and defuse bombs.

 

The meat packing industry is investigating autonomous machines for their processes. There are a number of unsanitary, dangerous, or less than appealing jobs out there for which machines may be an excellent fit. Handling raw meat can be hazardous to human workers, and sanitized machines could potentially provide health benefits to consumers, too.

Accuracy

Quality inspection in the middle of or at the end of the production line are becoming increasingly viable opportunities to use automation. Cameras attached to robots can use special algorithms to identify blemishes, cracks, inconsistencies, or other quality-related defects at greater speed and with greater accuracy than humans can. This allows you to keep the production line running with fewer — or zero — human quality inspectors.

 

Along the same lines as a job with repetitive movements, a production process that requires complicated movements that are easy to complete incorrectly may be a good option for automation.

 

Peeps, the marshmallow treats in the shape of bunnies or birds that are traditionally sold around Easter, used to be produced and formed by hand. Decades ago, a machine was developed and patented to complete this special movement needed to form the Peeps from the marshmallow. This not only increased the production rate but also decreased the health risks of handling food products by hand.

Consistency

Repetitive jobs that can become tiring and mind-numbing to humans are potential options to automate. A machine can consistently fold a box or install a part onto your product without becoming tired or bored.

Benefits

Jobs where 24/7 production is vital for profitability are also jobs that could be ripe for automation. A machine does not require any breaks, or even lunch or sleep, so around-the-clock production can continue without shift changes or breaks.

 

Machines do not require benefits other than regular maintenance. They do not require health and dental insurance, a 401(k) with a match, worker’s comp if injured, or a costly and extensive search for the right fit for the position. They also do not require a promotion or a raise, and they will never ask for additional tasks so that they can continue to develop in their careers.

 

These are all valuable benefits for a human, and I believe in all humans obtaining a fulfilling job that is an excellent fit for their desires and skills, one in which they can continually develop and learn. Positions that lack these benefits could be automated, which increases the quality of life of the valuable humans in the operation.

Availability

With unemployment still at lows, the availability of labor to fill many jobs is just not there. Machines, provided they are maintained, are always available to fill a job that they were designed to do. This allows companies to invest their labor savings in higher-paying jobs that potentially more candidates would want to perform.

Labor Costs

If labor costs are a major determining factor in site selection, then automating labor-heavy parts of your operation can minimize the effect of labor costs. This allows you to select a site for other reasons. You now would have the ability to locate your operation closer to your suppliers or to your customers, depending on which has the greatest benefit. This can significantly reduce transportation costs, which could include import and export tariffs.

Re-Allocation

Displacing manufacturing and other manual labor-intensive jobs has, historically, relocated many of those workers to other industries, such as transportation, construction, and office / administrative.

Bringing it All Together

A report from the McKinsey Global Institute expects that almost 40% of jobs in the U.S. will shrink over the course of the next decade, affecting largely entry-level positions. Another report from the Metropolitan Policy Program at the Brooklyn Institute expects that 25% of American workers’ jobs will be taken over by robots in the next 10 years.

 

As minimum wages increase and jobs are automated, the risk of lower-paying, entry-level jobs being taken over by automated machines is not only real, it is inevitable. This should give us cause for alarm, not because more people will be jobless but because our education system needs to be overhauled to support the need for more mid-level and higher-skilled jobs. As entry-level jobs decrease, the demand for more skilled workers will increase because those are the type of workers that are needed to develop, operate, and maintain automated machines.

 

Many countries have excellent apprenticeship programs. In Germany, a student is required to select a general career path at an earlier age than in the States, which allows them to receive more and more specialized training as they progress thorough their studies and select a more specific career. By the time a student is ready to enter the workforce, they are well-educated on their craft or field of work and can enter an apprenticeship program with an excellent foundation upon which they can build.

 

The U.S. does not have such an education system en masse, and now — or 20 years ago — is the time to improve what we have. This obviously costs money that is not sitting in a government slush fund somewhere, waiting for such a need to arise. In other words, higher taxes are possibly the only real way to fund such a massive education system overhaul. Germany, by the way, has a much higher progressive taxation system than the U.S.

 

Ultimately, the question is not whether or not automation is here to stay. The question, rather, is how we adapt to the impending change. Do we embrace the change and find ways to maximize the usage of this new technology in our workplaces while also finding ways to fill the new job openings with our existing workforce; or do we fight the change and maintain our legacy operations while our competitors maximize their efficiency through the usage of this new technology and continue to invest in its development?

 

Automation is not for everybody. What works for one operation may not work for another. To ensure that we receive a viable return on our investment, we have to carefully navigate the risks of and barriers to using automation so that we can reap the rewards.

 

Titanium Consulting, LLC helps businesses to solve problems, improve processes, and identify opportunities to increase efficiency. Automation is a real option for many businesses.

 

If you would like an objective third party’s analysis on your operation and what opportunities there are for improvement, contact us today to schedule your free, no obligation consultation.

Brad Couvillon, CPIM, CSCP

Lean Six Sigma Black Belt

Founder, Titanium Consulting, LLC