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Automation Strategies - Requirements on the Strategy Process

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Automation Strategies
– Requirements on the Strategy Process

M. Winroth1*, K. Säfsten1, J. Stahre2


*
Corresponding Author
1
Department of Industrial Engineering and Management
School of Engineering, Jönköping University, Sweden
2
Department of Product and Production Development
Chalmers University of Technology, Gothenburg, Sweden

Abstract
Automation is a way to improve competitiveness. Previous studies have shown that best results of automation
decisions are reached if decisions are integrated in the company’s manufacturing strategy. Automation deci-
sions comprise much more than just the very choice to automate and many aspects need to be taken into ac-
count. In this article, we describe new demands that are raised on the strategy process when automation is in-
tegrated in the manufacturing strategy. Furthermore, the implementation of automation strategies calls for a
number of issues to take into consideration.

Keywords:
Automation strategies, manufacturing strategies, process

1 INTRODUCTION picture. Within the DYNAMO 1 -project, we have described


Automation is often regarded as the main solution to im- the possibility to choose the most suitable level of automa-
prove efficiency in manufacturing and consequently to im- tion, LoA, which however calls for an improved decision
prove companies’ competitiveness. This has become im- support model.
portant due to prevailing trends of outsourcing and reloca- In this article, we show that there is a need for a more
tion to low-cost countries. In order to support the achieve- profound view on automation in order to achieve high effi-
ment of a company’s overall objectives, the decisions on ciency in manufacturing and we propose a further devel-
automation need to be in congruence with these objectives. opment of the manufacturing strategy theory in order to
The fulfillment of objectives is supported by formulation and better cover automation tasks. Furthermore, planning and
implementation of strategies decomposed at different levels implementation of automation should start in the traditional
within a company. In this paper, focus is on decisions and manufacturing strategy field in order to cover all the impor-
strategies that determine if, and how, automation should be tant issues that need to be taken into account.
adopted by a company, i.e. the automation strategies. 2 METHODOLOGY
Within the manufacturing area, a number of important as- The results presented in this article are based on theoretical
pects concerning automation are handled. Decisions are and empirical studies. A literature review was performed,
however generally made in absence of more developed surveying to what extent automation strategies are de-
automation strategies. Automation strategies are used in scribed and applied in different areas.
terms of guidelines for implementation, rather than long-
term plans for appropriate use of automation. Furthermore, The empirical material was collected through multiple case
automation strategies are often treated as human factors’ studies at a number of companies as well as through a
engineering problems, with focus on the human perspective Delphi study [6]. The case studies consisted of a series of
of automation, such as task allocation [1]. On the other interviews at companies from different industrial sectors,
hand, when automation is treated within Advanced Manu- such as automotive industry, covering systems integrators
facturing Technology (AMT) literature, focus is mainly on as well as suppliers, furniture industry, metal machining
the technical solutions without considering the human as- subcontractors, and suppliers of automated manufacturing
pects [2]. systems. The interviewees were people involved in devel-
opment of the production process, such as managing direc-
Based on previous results, we argue that decisions con- tors, production managers, industrial engineers, and main-
cerning automation should be treated as one of several tenance personnel.
decisions in a manufacturing strategy, i.e. the automation
strategy is part of the functional manufacturing strategy [3]. The Delphi study was carried out by a questionnaire pub-
A manufacturing strategy is a functional strategy, together lished on the Internet. The respondents represented man-
with for example marketing, R&D, and accounting strate- aging directors, production managers, and managers of
gies. The functional strategies, in co-operation, support the engineering departments and the company sizes were
business strategy of a company [4]. Manufacturing strategy normally between 100 and 500 employees. The companies
can be divided into strategy content and strategy process represented different sectors of the manufacturing industry.
[5]. Both these areas have been thoroughly investigated in 85 respondents were contacted and they also indicated that
the manufacturing strategy literature. they were willing to participate in the study. The question-
Within manufacturing strategy theory, automation deci-
1
sions are very briefly described and the choice is automa- DYNAMO – Dynamic Levels of Automation, project fi-
tion or not automation. This is however a very simplified nanced by the Swedish Foundation for Strategic Research
naire was published on the Internet and an e-mail was sent 2003 they had about 400 employees and an annual turn-
to the 85 respondents all around Sweden asking them to over of just over 570 MSEK (2005 figures: 450 employees
log into the website and answer the questionnaire. 62 peo- and 600 MSEK). The annual growth has been around 15
ple responded to the survey. Questions asked were about % for the past ten years. The present plant is fairly new
the view on automation, where are the decisions made and since the old one was destroyed by fire in year 1996. The
which facts are they based upon, the use of a special rebuilding of the plant is described in [10]. The main key to
automation strategy, and also a number of questions deal- success, according to their own opinion, has been a com-
ing with the usefulness of dynamic levels of automation. bination of good industrial engineering and business de-
Some questions had response alternatives and others were velopment. Important success factors are considered to be
open. The responses were collected through SPSS Dimen- in-house product development and good control of the
sion. The survey was run twice and 44 responded the sec- manufacturing process, which includes tool manufacturing
ond time. Some new questions were added, but a few ques- and methods planning. Their competitive priorities are
tions were regarded as Delphi questions with the aim to short development time, flexibility, and reliable deliveries.
reach consensus. In the case of Delphi questions, the an- The start of the new factory was in fact an opportunity to
swers from the previous round were fed back to the re- create something really well-planned. The analysis work in
spondents, asking them if they wanted to stick with their connection with the planning of the new plant included
previous answers or if they wanted to revise them. areas such as:
3 VIEW ON AUTOMATION • Customer segment, qualifiers and winners
3.1 Level of automation • Product mix, processing position
Automation is often regarded as either an ‘on or off’- • Technical resources and their main characteris-
decision, i.e. the system is either considered to be entirely tics
manual or fully automated. However, in the DYNAMO- • Product-position/-profile
project a more conscious view on automation has been
developed, where the level of automation, LoA, is a matter • Production flow analysis
of task allocation between the human being and the equip- • Decision management
ment [7]. The tasks are separated into two categories, The product range was categorized and a product profiling
information & control tasks and mechanical tasks. Some was performed, where products and markets, manufactur-
companies talk about semi-automation, which often is ing, and different possible process choices were matched
referred to the humans performing some tasks, such as against each other. The result was that the plant was or-
changing work piece or pushing the button to start each ganized in four different production flows, which are well-
operation. The LoA-scale gives however a less rigid de- suited for each category of products. The delivery precision
scription of the issue. Finding the right LoA is very impor- and reliability have improved considerably compared with
tant, since an increase in LoA initially gives positive effects the old plant. Other consequences are reduced lead time,
and improved productivity, but gradually the limit of the from four to five weeks to ten days, the productivity has
company’s capability is reached in different aspects, thus more than tripled, the capacity doubled, and the production
reducing the system availability. area has been reduced to half.
A pan-European Delphi study has been carried out by the The Lesjöfors case is an example when the automation
ManVis project [8]. This survey indicates that experts want decisions were linked to the manufacturing strategies,
to adopt a less rigid approach to automation, as a contrast which in this case led to a successful outcome.
to the often prevailing view that it is a matter of either full
automation or totally manual manufacturing. 4 MANUFACTURING STRATEGIES
The barriers “technical feasibility”, “education and qualifica- 4.1 General on manufacturing strategies
tion”, and “economic viability” doubled between the first Hill [11] put manufacturing as one of five functional strate-
and second rounds. Two thirds of the experts had financial gies, equally important: research & development, market-
doubts about the realization of this approach. After the ing, manufacturing, accounting & finance, and human
second round the experts were still skeptic, however resources. Manufacturing strategy is formulated as:
somewhat less than the first round. The interpretation from
the ManVis researchers was that the experts are aware ‘The way the company uses the manufacturing resources
about the tough prize competition, but on the other hand to gain competition advantages over its competitors’.
they do not consider automation as the most successful Platts et al [12] used another definition of manufacturing
solution to all companies in all situations. The final conclu- strategy:
sion on this part of the study is that employment will de- ‘Manufacturing strategy is defined by a pattern of deci-
crease as an outcome of the realization of this statement. sions, both structural and infrastructural, which determine
3.2 Part of manufacturing strategy the capability of a manufacturing system and specify how it
Winroth et al [9] studied the decision making process at will operate, in order to meet a set of manufacturing objec-
manufacturing companies and the result shows that the tives which are consistent with the overall business objec-
most important issue is not who makes the decision on tives’.
automation but why and the importance of that the decision A manufacturing strategy should include not only issues
is based on a solid ground of facts about the company’s regarding process choice, such as the make-or-buy deci-
manufacturing capabilities. Thus, automation is a part of sion, process choice, and capacity. Manufacturing strategy
manufacturing strategies and as such it has implications for formulation should also embrace infrastructure decisions,
all the decision categories. such as work organization, quality assurance, and manu-
The best result of automation efforts is achieved if the facturing planning and control.
decision is well supported at all levels concerned and that According to Hill [11], manufacturing managers also should
it is in line with the company’s overall objectives. One good stop being so reactive and take a more active part in the
example is the Swedish spring manufacturer, Lesjöfors, strategic debate. A sign of the attitude towards manufactur-
who had a green-field opportunity a few years ago. Les- ing, which was described by Skinner [13], was that the
jöfors AB, Sweden, is one of Europe’s leading manufactur- manufacturing department was not represented in the
ers of springs. Their product areas are industrial springs, board of directors.
strip springs, automotive springs, and gas springs. In year
Manufacturing strategy is a plan that describes the activi- • Color range
ties that are necessary for manufacturing to take in order to
• Product range
achieve the company aims that have been made. This plan
should comprise both the content of the strategy as well as • Design
the process of formulating and implementing the strategy, • Brand name
see fig 1 [10].
• Technical support
• After-sales
Manufacturing strategies should make it possible for the
company to reach these objectives. Manufacturing strategy
decisions comprise both structural and infrastructural deci-
sions. The structural issues are:
• Choice of alternative processes
• Trade-offs embodied in the process choice
• Role of inventory in the process configuration
Figure 1: Manufacturing strategy: content and process [10].
• Vertical integration
The existing manufacturing strategy is dominated by the
seminal work by Skinner [14]. He identified seven perform- • Make or buy decision
ance objectives that constitute the guide for making deci- • Capacity planning
sions on manufacturing: Infrastructural factors comprise:
• Cost, efficiency, productivity • Function support
• Delivery lead-times • Manufacturing planning and control systems
• Quality • Quality assurance and control
• Service, reliability • Manufacturing systems engineering
• Flexibility for product change • Clerical procedures
• Flexibility for volume change • Compensation agreements
• The investment required in the production system • Work structuring
These objectives emanate from the expectancies of the • Organizational structure
customers, and are included in the content of manufactur-
ing strategy. The formulation and implementation of these strategies is
called manufacturing strategy process, which is further
4.2 Manufacturing strategy content described in the next section.
Manufacturing strategy content can be described as con- 4.3 Manufacturing strategy process
sisting of two main parts, competitive factors and decision
categories, see table 1 [10]. Competitive factors indicate Often people of today talk about being world-class in their
on what aspects the company competes on the market. manufacturing performance, which in fact means perform-
Some of these factors can be categorized as order winners ing in accordance with best practice in the field of action.
or order qualifiers. The winners indicate why customers Roth et. al. [15] declared: ‘World-class competitors have
would choose us as suppliers, while the qualifiers are nec- clearly thought out and defined manufacturing strategies
essary to meet in order to be considered as supplier. The and plans. Their strategies are congruent with the overall
decision categories, on the other hand, outgo from the business goals and objectives and are enough to adapt to
company itself and describe how the company performs in change. However, the real winners are those best in strat-
these aspects. egy implementation.’
Manufacturing strategy content Manufacturing strategy process is concerned with the
procedures that can be used to formulate the manufactur-
Competitive factors Decision categories ing strategies that should be adopted and how they should
Structural Infrastructural be implemented. The process and content must however
communicate, since the content has a direct impact on the
Cost Process Quality process of strategy formulation. The reason is that content
Quality Capacity Organization creates a number of constraints on the process and the
Delivery capability Facilities Production preferences of which content areas are regarded particu-
planning and larly important rules the exact nature of process [16].
Flexibility Vertical inte-
gration control Hill [11] presented the formulation of manufacturing strat-
egy as a process consisting of a series of sequential steps.
Table 1: Manufacturing strategy content [10]. He proposed a manufacturing strategy framework with the
Manufacturing strategy content has however been the following five stages:
subject of research for decades and somewhat differently
• Defining corporate objectives
described.
According to Hill [11], the company should make an analy- • Determining marketing strategies
sis of what the market needs and how products qualify and • Identifying how products win orders
win orders in the market place. These competitive factors • Establishing the most appropriate mode of manu-
could be: facture for the sets of products, i.e. process
• Price choice
• Conformance quality • Determining the appropriate manufacturing infra-
• Delivery speed and/or reliability structure to support production.
• Demand increases
This approach emerges from the market demands and is the operational capabilities and performance form input to
called market based. Another way of attacking the problem the formulation of the principal objectives. Platts and Greg-
is to start from the manufacturing capabilities and deter- ory [12] add this dimension to the previous models when
mine the company resources [10]. Through this resource they include a profiling and prioritization of the relative
based view it becomes clearer what the company can offer competitive performance, which indicates possible gaps for
the market. driving improvements. These different models do however
An iterative approach, where the market requirements are mainly focus on the overall performance of corporate func-
matched against the manufacturing capabilities, would be tions and not on the link between choosing a certain tech-
an ideal solution. Platts and Gregory [12] presented a nological complexity and the capability of employees and
framework for manufacturing audits, see figure 2. The organization.
manufacturing capabilities are estimated and if the profiles According to Säfsten et al [10], process choice, including
show mismatches action, plans can be formulated to take choice of technology level and automation, is one of the
corrective actions. eight strategic decision areas that are important for the
success of a manufacturing organization. All these decision
areas are however closely interlinked, consequently leading
WHAT THE HOW THE to trade-offs, i.e. it is impossible to achieve the highest
MARKET SYSTEM performance in all areas simultaneously and the optimum
WANTS PERFORMS could be a reduction of the performance in some of the
Features Features areas. Since the areas are interlinked, e.g. the choice of a
Quality Quality certain level of automation calls for an identified skill level of
personnel, the component supply needs to be carried out in
Delivery Delivery
a certain manner, and quality management needs to be
Flexibility Flexibility considered etc.
Price Cost In the next section, the implementation of automation strat-
egy is discussed.
OPPORTUNITIES
AND 5.2 Implementation
THREATS Implementation of automation strategies concerns imple-
mentation of automation according to the level of automa-
tion and improvement of detected capabilities. It is how-
THE EXISTING MANUFACTURING SYSTEM ever important that the company, during the implementa-
Facilities tion phase, always keeps in mind the objectives that drive
the automation. Once again we emphasize the need for a
Capacity
continuous loop between corporate objectives and opera-
Span of Process tional performance.
Processes A technological approach focused on the manufacturing
Human Resources processes is adopted by Groover [19], who describes the
Quality USA-principle which indicates the importance of studying
the manufacturing processes prior to implementing auto-
Control Policies mation:
Suppliers 1. Understand the existing process.
New Products 2. Simplify the process.
3. Automate the process.
WHAT DO WE NEED TO DO TO Often the result after the simplification phase is that auto-
IMPROVE ? mation is unnecessary since the manufacturing operation
THE REVISED MANUFACTURING is better or cheaper performed manually.
STRATEGY A list of ten strategies for carrying out improvements of
productivity, quality, or other measure of performance, was
presented by [19]. They are called strategies for automa-
Figure 2: A framework for manufacturing audit [12]. tion and production systems and they are useful both for
A similar framework was presented by Miltenburg [17], automation projects and for other improvement work.
where he also added the choice of manufacturing system 1. Specialization of operations. This strategy uses special-
layout. This framework was further developed and tested purpose equipment for carries out a single operation with
at small and medium sized manufacturing enterprises – high efficiency. It could also imply labor specialization in
SMMEs, by Säfsten and Winroth [18]. order to improve the productivity of manual operations.
These frameworks were applied generally on manufactur- 2. Combined operations. Many production tasks involve a
ing strategy and its linkage to design of manufacturing large number of processing operations. By combining
system. If we regard automation strategies as included in operations and making it possible to perform several op-
the manufacturing strategy, a focus on automation calls for erations in one machine, the routing problems can be
further development of the strategy process. This is further minimized. Another achievement is that the setting-up of
described in the next chapter. tools and work pieces can be kept to a minimum. The
5 REQUIREMENTS ON PROCESS OF AUTOMATION overall manufacturing lead time will be reduced as a con-
STRATEGIES sequence of this strategy.
5.1 Formulation 3. Simultaneous operations. Investigate the possibility of
performing two or more processing operations simultane-
Existing models for manufacturing strategy formulation, ex. ously on the same work part at one workstation. This will
[11] and [17], adopt an analytic approach and the starting reduce the total processing time.
point is always in the corporate and market objectives. This
is necessary, but there has to be a continuous loop where 4. Integration of operations. The possibility to link several
workstations together by using automated handling equip-
ment for transferring work pieces between different sta-
tions should be explored. This reduces the number of
separate machines through which the product must be Automated integrated
scheduled. The overall output of the system will thus be production
increased, since several parts can be processed simulta- Automated

Product demand
neously. production
5. Increased flexibility. The main purpose of this strategy is
to reduce setup time and programming time for the manu- Manual
production
facturing equipment. This is achieved by using the same
equipment for many different work pieces. This leads to
higher utilization of the equipment and is applicable when
there is a large variety of products which normally leads to
a job shop layout.
One-station One-station Connected stations
6. Improved material handling and storage. Introducing cells cells
automated material handling and storage systems is often
a good effort that can lead to reduction of work-in-process Phase 1 Phase 2 Phase 3 Time
and shortening manufacturing lead time.
Figure 3: A typical automation migration strategy, adopted
7. On-line inspection. Quality inspection after the process, from [19].
which is normally the case, leads to that the process is
already finished. Integrating inspection into the process This model suits however not all situations in manufactur-
itself enables taking corrective actions directly as the proc- ing companies. It is suitable only to manufacturing of prod-
ess is being performed. It leads to reduced scrap rate and ucts with very long product life cycles, where it is worth the
improvement of the overall product quality. effort to change the way of producing. It is also necessary
to prepare the product for automated production or other-
8. Process control and optimization. Different control wise the product has to be revised.
schemes help to operate processes and related equip-
ment. Process times are reduced and product quality im- The next chapter presents some of the empirical findings
proved. One example of a commonly used tool is statistical relevant to automation strategies.
process control, SPC. 6 EMPIRICAL FINDINGS
9. Plant operations control. Control at the plant level aims The Delphi-study that was carried out among Swedish
at managing and coordinating aggregate operations more SMEs gave various results. Most companies emphasized
efficiently. This usually implies a considerable use of com- the importance of having an automation strategy that forms
puter networking and links to enterprise resource planning the base for investing in new production equipment.
systems, ERP. The driving forces for automation are mainly productivity,
10. Computer-integrated manufacturing (CIM). If the previ- with better financial outcome as the main objective, and
ous strategy is further developed, we reach an integration ergonomic reasons. Improved competitiveness, as a con-
of factory operations and engineering design and business sequence of cost reductions, is regarded highly important.
functions. Computer applications are widely used; including Another important issue is the possibility to increase pro-
data bases and enterprise wide computer networks. duction volumes on the same premises.
These strategies form a checklist that can help companies The most important problems with automation were:
in their automation projects. Multiple strategies may apply • Adapting the product to automation
for most situations. The most important issue is however to
decide what level of automation is suitable depending on • The high number of different products and vari-
the existing situation and conditions. ants
Groover [19] also presents a specific automation migration • Problems to get the money back from the invest-
strategy, which describes the implementation of automa- ment
tion during the various product lifecycle phases, figure 3. • The lack of competence at shop floor level
The purpose is to shorten the time for introducing the
The respondents considered automation to be not suitable
product to the market. Thus, during the first phase the
in the following cases:
manufacturing is performed manually. The tooling and
equipment is fairly low cost. If the product is a hit on the • When ramping up manufacturing of new products
market, each cell can be transformed into automated cells • During manufacturing of a large variety of prod-
and, during the last phase, the high volume is met by con- ucts and variants in small volumes
necting the stations together into a continuous flow with
highly integrated automated cells. • If the product life cycle is very short
The advantages of the automation migration strategy of fig • If the product needs e.g. visual inspection
3 are mainly: On the question about when it would be relevant to take
• Short product introduction times. variable levels of automation into consideration, the re-
spondents answered:
• Gradual introduction of automation.
• To increase flexibility
• It allows the company to postpone high invest-
ment cost when introducing products with an un- • To facilitate ramp-ups and change-overs
certain market forecast. • To handle disturbances
• To improve system robustness
• To reduce production cost
• To improve productivity
Finally, the question about on what grounds automation
decisions should be made got the following answers:
• On financial grounds
• Based on demands for productivity improvement The conditions for automation strategy implementation
vary depending on what kind of manufacturing process the
• On quality demands
company has. We have detected major differences be-
• On working environment demands tween companies with highly advanced continuous produc-
• On production capacity demands tion lines, for a limited number of products and variants,
and companies with batch flow layouts, producing a large
In the DYNAMO-project, a large number of interviews and product variety in smaller volumes with more general pur-
case studies at the companies that are partners in the pose machines. The continuous lines need to be run in full
project have been carried out. The most striking finding is speed almost from the beginning since balancing does not
the very different opinion about automation and also the match at lower speeds. This makes simulation and off-line
use of variable or dynamic levels of automation. It seems testing very important tools. A discontinuous flow makes it
like the companies that act as subcontractors to many possible to test each cell isolated from the rest of the pro-
customers, thus having more general purpose equipment, duction, which limits the disturbances on the output.
are more willing to accept that it is possible to change the
level of automation. The companies that invest large 8 IMPLICATIONS FOR PRACTITIONERS
amounts of money into highly specialized equipment in- The results from the DYNAMO project need to be further
cluding tooling and fixtures are more reluctant to the possi- developed into useful tools for practitioners involved in
bilities. They plan for a specific level of automation from automation projects. We do, however, see a large potential
the start and everything is locked until they change product for industrial purposes if companies can adopt a less rigid
or product platform. This is mostly applicable to automation view on automation.
of the mechanical tasks. It may be more interesting to be 9 ACKNOWLEDGMENTS
able to change the level of automation of the information &
control tasks. Possibility to override the automatic control This research is funded by the Swedish Foundation for
system during ramp-up could be applicable. The compa- Strategic Research in the project DYNAMO – Dynamic
nies were, however, not aware of this view since they Level of Automation. Research partners are Chalmers
mostly discuss and think on automation as physical task University of Technology, School of Engineering at
allocation. Jönköping University, and The Swedish Institute for Indus-
trial Research – IVF. A total of eight manufacturing com-
Another opinion that was put forward was that increasing panies are partners in the project and they represent large
the level of automation is not always to prefer. If the avail- companies and SMEs as well as different industrial sectors
ability is optimum, increasing the level of automation may such as the wood and furniture industry, industrial automa-
make the system more vulnerable, thus reducing the avail- tion, metal machining, and automotive industry.
ability and up-time.
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