Find your optimal labor-to-automation mix

November 29, 2018

The three basic scenarios for operations that might use collaborative robots.

Labor requiredInvestment in automationBaseline+10%+20%Increased Operational Efficiency123

A balance of labour and automation optimises levels of efficiency.

Click on the graph here to explore the scenarios and what would best benefit your business.

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1. Relying on employees only

Making a well-informed, strategy-based decision to invest in collaborative robots is difficult – it requires time, knowledge and dedicated project-management.

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2. Substituting employees with collaborative robots

In the foreseeable future, it will likely not be possible to rely on collaborative robots entirely. And it certainly wouldn’t be operationally efficient – even if possible.

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3. Collaborative robots working alongside your employees

Optimal labor-automation mix leads to increased levels of efficiency, as repetitive and simple tasks can be outsourced to collaborative robots.

Relying on employees only

Making a well-informed, strategy-based decision to invest in collaborative robots is difficult – it requires time, knowledge and dedicated project-management.

A company must know its processes in detail, to be able to identify bottlenecks and possibilities to streamline end-to-end supply chain using collaborative robots. The financial side of the decision-making process should be based on a Return on Investment calculation, broadly conceived to take into account all efficiency gains, not just installation and maintenance costs (Deloitte). This in turn, requires detailed metrics of Key Performance Indicators that are often not readily available. And of course, there are other ways to increase operational efficiency and productivity, especially for companies with a low baseline.

On the other hand, less automation and more labor means more exposure to external risks. Will there be enough workers to hire when we need them? What if labor or income tax laws change affecting flexibility and bottom line? What if competitors are already taking up collaborative robots?

And sometimes, throwing more people into the fray simply doesn’t work. Research shows that employee turnover rate rises with the size of the warehousing operations. And replacing a worker has substantial costs in administration hours, agency fees, overtime for remaining workers, training, etc. An oft repeated ratio for the US is that the cost of replacing a warehouse worker can reach up to 25% of annual salary.

Substituting employees with collaborative robots

In the foreseeable future, it will likely not be possible to rely on collaborative robots entirely. And it certainly wouldn’t be operationally efficient – even if possible.

Even with great strides in technological advancements some complex and/or non-repetitive tasks will be difficult to automate, and with high cost. Other than complex tasks, employees will still take care of maintenance, planning, managing and quality control. Thus, increased operational efficiency will require co-bots working alongside employees.

Collaborative robots working alongside your employees

An Optimal labor-automation mix leads to increased levels of efficiency, as repetitive and simple tasks can be outsourced to collaborative robots.

Collaborative robots can take over mundane tasks, so humans can focus on higher-value and strategic efforts that are unlikely to be automated. Collaborative robots are likely to perform their mundane tasks faster, with less errors and returns and in environments inaccessible or dangerous for humans.
Finding the right balance to increase operational efficiency, however, requires that investments are focused on removing bottlenecks and achieving end-to-end supply chain efficiency, productivity and risk reduction (Deloitte). This is a complex undertaking that requires a strategic approach to decision-making.

 

If the right labor-automation mix is found, this does not necessarily mean cutting your workforce – with a smartly deployed fleet of collaborative robots assisting your existing employees output growth could be achieved more easily.