SMEs must keep pace with automation

Date : 27th February 2022

Researcher : Yip Wai Fong

A study by McKinsey projected that the annual installation of industrial robots will increase to 600,000 this year. Business Wire forecasted that the global warehouse automation market will register a 12.5% CAGR between 2021 and 2026. Businesses’ demands for automation are projected to grow despite hurdles not only due to labour costs and scarcity, but they are also increasingly driven to outperform the competition.

Despite the fact that the COVID pandemic has advanced automation, major obstacles still exist between large and small businesses. Companies with the scale and volume of goods, financial resources, and the ability to forego some operational flexibility in exchange for higher output benefit the most from automation.

A highly automated warehouse, for example, involves a drastic reconfiguration of the warehouse space to delineate zones for the automated flow of goods. If AMR or AGVs are being used, special attention must be paid to the warehouse flooring to make sure it won’t affect the smooth functioning of AMRs and AGVs.

Digitalizing operations, such as deploying WMS or ERP, has a significant upfront cost and necessitates personnel training. A WMS suite can cost up to RM1 million, and depending on the skill level of the staff, training can take several months. Large organisations, who are in a better position to train and retain their staff, are also more ready for digitalization.

However, because the supply chain is made up of a complex network of stakeholders of all sizes, a bottleneck at any point has an impact on the entire network, necessitating the automation of the entire chain. As a result, the next barrier in automation will be expanding access to small and medium businesses.

Small and medium businesses, for example, might adopt automation at a lesser cost through OEM licencing, business models such as robots-for-hire, or perhaps "retraining" existing equipment, a service offered by Micropsi, or through careful planning to optimize resources.

Therefore, it is critical for small and medium businesses to identify their automation goals and build an automation strategy and plan. The next stage will be to find the best technology partners and consultants to assist them in putting their plans into action. Automation, which is already defining the businesses of the future, should not be ignored by small and medium firms.