Pandemic-related business issues such as supply chain disruption and shortages have prompted firms to embrace robotics and other automation technologies.
For years executives have talked about automating their operations, but relatively few have implemented the technology. COVID-19 has motivated more organizations to make the investment, shifting automation into high gear across industries. Hernan Saenz, who heads Bain’s global performance improvement practice, estimates that by 2030, American firms will invest $10 trillion in automation. A 2020 survey from McKinsey found that two-thirds of global firms are “at least piloting the automation of business processes”.
Of all automation technologies, robotics is seeing the biggest gains, and this is expected to continue. Research firm Robo Global forecasts a rise in the global market for industrial robotics from $45 billion in 2020 to $73 billion in 2025, with the worldwide installed base of factory robots exceeding 3.2 million units by the end of 2021, doubling from 2015 levels. Michael Cicco of Japanese robotics firm FANUC says that supply chain disruptions have forced manufacturers to find ways to build flexibility.
Demand has been particularly high in material-handling equipment and “collaborative robots”, known as cobots, designed to interact with people. Ecommerce firms are using cobots in their warehouses, where surges in demand paired with labour shortages have made fulfilment a challenge. Dwight Klappich of Gartner says that cobots are helping with social distancing by moving goods to workers, which will help with productivity beyond the pandemic. In its recent survey of supply chain executives, consulting firm Blue Yonder found that the share of firms with automated fulfilment centres may rise by 50% within a year, The Economist reports.
Companies across the industrial sector – in mining, chemicals, energy and transportation, to name a few – are realising the benefits of various other automation technologies. One is remote monitoring. Stuart Harris, Group President, Digital Transformation at American automation firm Emerson, says his company’s revenues from remote monitoring grew by 25% last year. Peter Terwiesch, President of Industrial Automation at Swiss-Swedish industrial technology firm ABB, also reports a boom in remote operations systems, with annual sales doubling since the pandemic.
The use of artificial intelligence in industrial automation is also expanding. American startup Drishti, which specialises in analytics for manual assembly lines, uses AI and computer vision to analyse video data from the factory floor. German automotive supplier Hella used the technology to lift its throughput from a high-volume assembly line by 7% last year. Digital consultancy Publicis Sapient helped a division of a big European retailer avoid shortages by automating its inventory forecasting.
Automation is also transforming back-office processes, for example by enabling organizations to minimize their use of paper, as well as improve efficiency and security, with process automation. Allied Market Research predicts that global sales of process automation products will swell from $1.6 billion in 2019 to nearly $20 billion in 2027.
Of course, sceptics are quick to point out that these are hardly the first technologies to come along and win a following, only to fizzle out. Once COVID-19 is under control, the enthusiasm could wane, but there is an important difference this time around. While in the past only big firms with plenty of capital saw significant returns on their automation investments, today more advanced technology and business models are enabling smaller firms to realise benefits as well. This democratisation should increase demand, bringing down costs and encouraging wider implementation.
