Rise of the machines: Using robotics to maximise productivity

November 14, 2016

The robot revolution may have arrived, but many Australian businesses are yet to take advantage of their productivity benefits. Fortunately, it is still possible for businesses to join the so-called “fourth industrial revolution” by maximising their capital structure.

Robotics and automation have been a mainstay of the manufacturing and transport industries for more than 50 years, but their wider adoption has been limited by their cost, and by performance limitations.

However, that may be set to change. Significant improvements have been made on both counts in recent years, driven by global investment in robotics that doubled from 2014 to 2015, led by China and Japan.

This investment surge is seeing companies scramble to be at the cutting edge of a technology that is improving at a blistering pace, particularly in industries where technological, productivity and cost efficiencies drive competition.

According to the latest Alleasing Equipment Demand Index, one in four corporates are considering investment in IT/big data, followed by services automation (19.8 per cent), artificial intelligence (AI, 11.8 per cent) and product assembly automation (6.5 per cent).

The Index found that media and telecommunications, government, mining and resources, and agricultural firms are the most interested in investing in robotic processes.

However, segment wide, 51.4% of businesses say they have not considered and are not interested in investing in robotic processes. These businesses are missing out on potentially large productivity gains. McKinsey & Co found that 45 per cent of the work performed by individuals can be automated by currently available technology.

Higher-level work

Robots can perform work more quickly, with less potential for error and at a fraction of the cost of human labour. However, even greater productivity gains are in the higher-level work employees can instead focus on performing, supported by robots.

These are not the large, expensive, clunky industrial machines generally associated with industrial robotics. Drones are a leading disruptor in the robotics space, with PwC estimating that $US127 billion worth of business and labour could be replaced by currently available drone technology solutions.

The infrastructure sector is seen as a major winner from drones. This is due to their ability to perform hazardous work in the construction phase of infrastructure projects, in addition to performing detailed 3D surveying and data collection at each stage of the construction process, and asset inspections.

Agribusiness is also poised to benefit in a big way, and Australia appears set to play a major role in the creation and deployment of ‘agbots’. In April 2016, Australian agribusiness giant Elders announced a partnership with SwarmFarm Robotics to develop cropping robots, which are expected to improve productivity, lower costs, increase yields, and reduce environmental impacts.

Other sectors with potential for drone disruption include mining, security, media and entertainment, transport, insurance, and telecommunications.

NZ businesses more eager

Across the Tasman, businesses are apparently more eager than their Australian rivals to join the fourth industrial revolution. According to the latest Alleasing New Zealand Equipment Demand Index, four in 10 New Zealand firms are interested in investing in robotic processes and automation within the next year, compared to 36.7 per cent in Australia.

Product assembly and service automation is a key investment priority for New Zealand firms, particularly in sectors such as manufacturing, construction and retail, where repetitive tasks are common. Big data and AI are also attractive, the Index found.

Nevertheless, a perception problem remains concerning the cost of such technologies according to the Index. This is despite the initial outlay required on robotics continuing to decline.

A simplified automation installation can cost as little as $5,000, with complex systems unlikely to surpass $20,000. The chairman of Bosch Australia, Gavin Smith, believes agribusinesses can take a “pay-per-use approach” to circumvent large capital outlays.

The concept of pay-per-use is similar to that of operating leases already utilised by many businesses worldwide, who often desperately need asset upgrades but do not necessarily have the cash flow available for a significant initial outlay.

And as awareness of the benefits of robotic processes increases, more businesses are expected to invest in this area, leaving ‘late adapters’ in their wake. The possibilities are enormous, as seen by the first successful robotic kidney transplant surgery in Australia in September 2016, robotic brick housing construction or driverless tractors, for example.

Alternative capital solutions will be key to unlocking the potential for robotics in the workplace to a wide range of businesses and government agencies and unleashing the productivity gains – get in touch with us today to learn more.

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