What the UK can learn from China about robot adoption
The UK has a rich history in manufacturing starting from the industrial revolution. It was also among the early adopters of robots in the automotive industry. Yet, today reports suggest it has fallen behind other comparable nations in productivity and the adoption of robots and automation.
“It feels as if we’re falling behind a number of other countries in the use of robotics. There’s something we’re not getting right, and we’re only just starting to realize this,” says Matthew Burton, Partner and EMEIA Supply Chain and Operations Leader at EY.
The challenge, he says, is a strong-lived and popular myth about robotics: That their main purpose is to replace people when labour costs are high. The reality is often quite different.
Take a walk through the typical British factory and you will find relatively few robots, despite high labour costs compared to the global averages. In China, however, the situation is increasingly the opposite. Despite relatively low labour costs, robotic adoption is among the highest in the world.
This should provide food for thought for manufacturers in the UK, Matthew Burton suggests:
“If Chinese companies are investing heavily in robotics despite dramatically lower labour costs, then we must conclude that it isn’t just a matter of replacing worker costs. It’s much more about creating a longer-term view, improving resilience and agility in operations, and getting people engaged in the part of the work where they add the most value,” he says, adding:
“One of the challenges I often see in the UK is taking an overly narrow view on the benefits and expecting a very short payback horizon.”
UK manufacturing competitiveness at stake
According to Matthew Burton, there are several strong reasons for manufacturers in the UK to rethink the business case for automation and increase robot adoption.
For one, the UK is experiencing a substantial labour challenge with an aging workforce across many sectors, including manufacturing. Robotics can make manufacturers less exposed to the shortage of human hands.
It is not that manufacturers in the UK aren’t investing, he says. Very routine tasks, such as palletizing, are more frequently automated. But the pace of adoption risks being too slow for the UK to keep up with the global competition:
“The use of robotics in factories and warehouse operations can really help create a much more level playing field in terms of cost competitiveness. However, a failure to invest at pace carries the risk of UK manufacturing becoming even less cost competitive as others progress with automation. I worry that we’re still just experimenting on the fringes of what’s possible,” he says.
On top of this, a shift in consumer demand is increasing the pressure on manufacturers to improve their cost competitiveness, speed, and agility. Because of the growing importance of ecommerce, consumers today expect faster delivery times, which again pushes manufacturing supply chains to adapt, Matthew Burton points out. Onshoring and nearshoring production give a lead time advantage – if the costs of producing in the UK can be managed:
“If you can’t produce quickly and cost-effectively, then the advantage of onshoring risks being lost compared to producing in countries with lower costs and longer lead times,” he says, adding:
“Building resilience through onshoring production adds a significant argument to a strategic business case involving investments into robotics and automation.”
Missing business cases create “pilot purgatory”
One of the key barriers to accelerating automation in the UK, according to Matthew Burton, is how companies approach the business case.
The cost of robots is often perceived as high, resulting in lengthy investment horizons, he says. This makes manufacturers reluctant to make automation a priority, especially given the financial headwinds at the moment:
“The short-term pressure to deliver to shareholders in the current economic climate makes it hard to get approval for large-scale robotic investments,” Matthew Burton says.
Some businesses make smaller investments in pilot projects but often struggle with scaling them. The pilot may have worked technically, however poor initial choices of which business problems to tackle mean that the expected benefits don’t add up when doing the math on the scaleup, he says:
“These businesses end up in ‘pilot purgatory’ with dozens of smaller pilot projects that aren’t completed and fail to scale.”
Businesses need help to navigate new technology market
The solution, Matthew Burton suggests, is to look at automation – and the business case – more broadly across the business.
This means not just looking at each project in isolation, but also how they fit into the overall company strategy and the ongoing transformation of the business.
“When companies take a more holistic view of automation, they can create self-funding roadmaps where each investment can help pay for the next one and the company leadership are on board from the beginning,” Matthew Burton says.
Of course, this is easier said than done, he acknowledges. For one, it involves deeply understanding what the most pressing needs and most beneficial use cases are across manufacturing lines and sites and then carefully prioritizing use cases and solutions into a logical largely self-funding roadmap.
“It means figuring out what the priority use cases to automate are as opposed to getting caught up in an interesting vendor presentation at a conference or copying a bit of automation seen at a site visit somewhere else,” Matthew Burton says.
Secondly, businesses should understand what their options are in terms of automation solutions and how to address suppliers. This again can be a challenge, he says, given the complexity of the technology and breadth of suppliers on the market. The UK alone has 480 robot and automation suppliers according to data from HowToRobot.
“With so many suppliers and technology choices, where do you even start? It’s vital for businesses to get clarity about what the different solutions do, and get on the same page with suppliers about how those solutions address the goals of the business,” Matthew Burton says and concludes:
“Businesses often need external help and support to navigate this market.”