As a growing manufacturer of consumer packaged goods (CPG), improving efficiency and productivity is key to accelerating your growth trajectory. How do you go about improving efficiency and productivity? Across the manufacturing sector, automation is a common approach to efficiently scaling up production.
Automation is also an important component of what’s often referred to as “smart manufacturing”. Businesses that embrace smart manufacturing implement various technology categories including Big Data, data analytics, robotics, machine learning, sensor technologies and artificial intelligence (AI).
There are two aspects to automation in manufacturing: process automation and the automation of data capture and analysis. By automating manufacturing processes, businesses can improve their efficiency as well as increasing their output. Process automation can also improve product quality and safety, often by eliminating opportunities for costly human error.
By automating data capture and analysis, CPG manufacturers improve their business intelligence, enabling things like real-time decision making, predictive analytics, trend analyses and more. So, the joint goals of smart manufacturing are to identify opportunities to automate operations and to use data analytics to improve performance.
According to McKinsey, manufacturing has lagged other industries in IT capabilities but is catching up:
[T]hanks to cheaper computational power and rapidly advancing analytics opportunities, process manufacturers can put that data to work... to uncover new ways to optimize their processes from the sourcing of raw materials to the sale of their finished products.
As automation and other aspects of smart manufacturing become increasingly common and as the traditional approaches to productivity and efficiency are exhausted, most growing manufacturers have no choice but to embrace automation.
If, like many growing CPG businesses, you’re managing with limited capital, narrow margins and a workforce that is stretched thin, the prospect of introducing or expanding automation can be daunting. You’re likely already run off your feet by the demands of day-to-day operations, and you probably struggle to find time to plan strategically; however, to thrive and grow, you must have a plan for automation. Failing to think ahead and develop a roadmap puts you at grave risk of losing ground to your competitors.
A strategic approach to automation will yield the best results. Naturally, you will want to focus on the parts of your business where you’re facing challenges due to manual processes. You should also ask yourself where in your operations you could benefit from more data to support better business decisions. But if you aren’t thinking beyond your immediate production challenges, if you aren’t considering the bigger picture of smart manufacturing, you may end up with limited, subpar results from your investments in automation.
Where in the CPG industry has manufacturing automation taken off? Let’s consider some common use cases.
Across the CPG sector and especially in the food and beverage segment, automating packaging is common — in fact, it’s far more prevalent than automating processing. This category includes product packaging and labelling, but it also encompasses tray and case packing and palletizing. Because packaging is a discrete process involving repetitive tasks that can be performed at high speeds, it’s well suited to automation. It’s quite possible that in startup and niche operations, packaging might be the first and only process to be fully automated.
Where in the CPG industry has manufacturing automation taken off? Let’s consider some common use cases.
Across the CPG sector and especially in the food and beverage segment, automating packaging is common — in fact, it’s far more prevalent than automating processing. This category includes product packaging and labelling, but it also encompasses tray and case packing and palletizing. Because packaging is a discrete process involving repetitive tasks that can be performed at high speeds, it’s well suited to automation. It’s quite possible that in startup and niche operations, packaging might be the first and only process to be fully automated.
These components are often modular in design and (especially when sourced from the same vendor) can be combined to create processing lines that are seamlessly automated end to end.
Robotics may seem out of reach for all but large-scale manufacturers. However, technology advancements and economies of scale are bringing some robotic solutions within financial reach of smaller operations. A recent Automation World article cites the Robotic Industries Association and Association for Advancing Automation when claiming that robotic systems by food and consumer goods manufacturers grew by 56% in 2020.
End-to-end manufacturing automation is where the industry is headed. It will take time to get there, but the process is already underway. To realize the promises of end-to-end automation, the solutions you deploy need to “talk” to each other. The data they generate must be available for monitoring, analysis and reporting by various control, management and planning systems. This is where things can get challenging.
As you embark on or continue your automation journey, expect to encounter obstacles. Nothing worth having comes easy, as the old adage goes; however, by anticipating challenges and addressing them during the planning phase, you can mitigate their impact during the implementation phase.
Let’s consider some of the most common challenges associated with manufacturing automation.
According to the Canadian Manufacturers & Exporters (CM&E), a lack of standardization across digital technologies is a big issue. Many smart manufacturing solutions use proprietary standards instead of open-source software and open standards. Compounding this challenge is the fact that many plants are brownfield sites where investments in automation have occurred sporadically over time to solve for specific use cases. These sites can use many proprietary technologies that don’t speak to each other.
For IT departments, systems integrators and engineers, this proliferation of technology standards can present major challenges. Ideally, technology vendors would align on the use of open standards to enable seamlessly integrated smart manufacturing ecosystems. According to the CM&E, “While industry is making progress in developing and using smart manufacturing, the systemic infrastructure and capabilities needed to deliver and mobilize a knowledge-based manufacturing environment are lagging behind.”
Automated solutions come at a cost, including upfront capital expenses as well as ongoing operating expenses. You’ll need to account for the cost of hardware, software, infrastructure upgrades, integration services and more. This means your smart manufacturing initiative is likely competing with other capex and opex projects. Assuming this is the case in your business, the management team needs to know that automation will produce a strong return on investment. The business case supporting your automation initiatives must be well thought out and thoroughly pressure tested.
When companies are focused on short-term goals, such as fulfilling orders on schedule and managing inventory levels, larger strategic initiatives can pay the price — even when the strategic initiatives will help them achieve their short-term goals. Compounding the distractions of day-to-day management are the fear of change and a general tendency toward inertia. People may be tied to old ways of doing things, and they may have fears about the short-term cost of temporarily halting production processes to introduce automation. They may also have doubts about the impact of change on their workforce and how they will handle the necessary change management. For some advocates of automation, organizational resistance can be a major obstacle.
Businesses often introduce automation to address bottlenecks in their production and to resolve quality and safety issues. They research solutions for specific challenges and select the vendor they feel best meets their requirements. Over time, more production issues will be addressed with more automation solutions from more hardware and software vendors. With this ad hoc approach, businesses risk ending up with an ecosystem of point solutions that don’t speak with each other and are difficult to integrate with enterprise resource planning (ERP) and other management systems.
Faced with these and other challenges, how can you mitigate the risks associated with automation and reap its many benefits?
First and foremost, you need to quantify the ROI for each solution. For this task, think holistically rather than focusing narrowly on the immediate outcome of eliminating a manual process. As one McKinsey report puts it, “A robust business case should consider the full range of benefits expected from the project, including improvements in productivity, throughput, and quality — as well as potential impact related to health and safety, staff training costs, maintenance, and employee turnover.”
Next, you should rank automation opportunities based on the expected benefits vs. costs (including upfront costs, ongoing operating costs, opportunity costs, etc.). Your management team may have to make difficult decisions based on things like implementation time and effort and the projected timeline for the ROI. It’s important to consider your overall automation strategy holistically and schedule individual projects in a logical order.
Finally, you must ensure you have the IT infrastructure you need as the foundation for your smart manufacturing strategy. Automating your production processes and your reporting and analytics may require upgrades to your facilities, network hardware and software, servers, data storage systems and more. If you’re planning to integrate data from numerous systems — for example, connecting your order management, inventory, production and fulfilment systems — you will require a data warehouse. If your intent is to mine the masses of data you’re producing to better understand your business and your customers, you absolutely need this key piece of infrastructure.
All this to say that your technology stack cannot be an afterthought.
To help de-risk your journey to smart manufacturing, work with experts who understand the opportunities and challenges of manufacturing automation, and who will ensure your company’s strategy is implemented in a way that optimizes productivity and efficiency and maximizes the intrinsic value of all the data you will have at your disposal.
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