3 Factors Affecting Growth of Automated Material Handling
Automated material handling systems reduce—and sometimes eliminate—the need for human intervention in industrial tasks. Plain and simple.
When “touches”—human intervention—are reduced, costs are significantly impacted. These costs are often hidden, but once removed drop directly to bottom line profitability.
It’s for this reason that increasing numbers of industrial organizations are electing to automate as a means to minimize manufacturing costs by reducing human involvement. Research, in fact, shows the North American market for automated material handling is projected to grow at a CAGR of 8.1% over the next four years to reach $7.1 billion by 2019—up from $4.8 billion in 2014.
The advantages of automation are many: Improved production quality, improved working and safety conditions, maximized floor space, increased level of profits—the list goes on.
Let’s examine some of the driving factors for growth of automated material handling in the years to come and explore what this means for manufacturing operations:
Increased automation isn’t a new. Boston Consulting Group (BCG) research shows roughly 10% of today’s manufacturing functions are fully automated—a number that’s predicted to reach 25% over the next decade, as robotic vision sensors, intelligence and gripping systems improve.
Indeed, robotics and automation have paved the way for more efficient, productive, and intelligence industrial operations in recent years. But that’s only the beginning. With such technological advancements comes the increasingly pervasive Internet of Things (IoT), which delivers increased data and sharing communication that Microsoft estimates could lead to as much as $90 billion in added value for manufacturers annually.
According to BCC Research analyst Lisa Marshall in a press release on the technological revolution in material handling, advanced technologies such as robotics, autonomous control, driverless vehicles, and wearable computing will be key drivers of automated material handling growth over the next 15–20 years.
“Robotics is in the midst of a true revolution as capabilities increase and costs decrease,” she says. “Although most industrial robots are currently found in manufacturing applications, they are becoming more viable for material handling and logistics applications in the future.”
In years past, the significant expenditure associated with automation deterred many organizations from making the investment. However, as noted in a USA Today article, automation costs are decreasing as advanced robotics becomes more and more prevalent across the U.S. and globally.
“The cost to purchase and start up an advanced robotic spot welder [for example] has plunged from $182,000 in 2005 to $133,000 in 2014, with the price forecast to drop another 22% by 2025,” reports BCG research cited in the article.
What this means for manufacturers is there is an increasing incentive to automate what has traditionally been manual operations. BCG says manufacturers tend to ratchet up their robotics investment when they realize at least a 15% cost savings compared with employing a worker, according to USA Today.
As industrial operations automate, manufacturers also have the opportunity to drive safety in the warehouse. Improving working and safety conditions is one of the primary drivers of manufacturers replacing their existing systems of material handling to automated systems, as noted in a recent MarketsandMarkets blog.
“Robots are ideal for tasks that are too dangerous for humans to undertake, and can work 24 hours a day at a lower cost than human workers,” says a World Economic Forum article.
But automating dangerous or repetitive warehouse work isn’t just about putting employees out of harm’s way; it also results in increased employee satisfaction and engagement as workers pursue more value-added positions around the warehouse. Additionally, as automation increases, new jobs are created that need additional workers with specialized skills sets in programming and maintenance—particularly in light of the technological advancements on the horizon.
Automated material handling isn’t the wave of the future—it’s here now. As noted above, there are several factors fueling growth of automated industrial operations, including advanced technologies, reduced costs, and safely, to name a few.
The question to ask is: As this growth continues in the years to come, how will your company prepare itself?