The manufacturing sector has long been at the forefront of innovation, with the cost of production a primary driver of profit margins. Ford Motor Co.’s assembly-line model was one the most significant advances in manufacturing over 100 years ago, making it possible for nearly every American family to afford a car. Today, manufacturing in the U.S. and abroad continues to sprint to keep up with new and more efficient technologies, implementing enhancements around the globe.
China, having surpassed the U.S. as the world’s number-one manufacturer in 2010, has seen astonishing growth in the deployment of such essentials as low-cost labor, investments in transportation, high-quality engineering and strong technical talent. With the help of those assets, China has been able to deliver the high productivity and low costs that have attracted foreign companies by the millions. Its industries continues to transform, as wages rise and demand for more specialized goods brings production costs up, opening the door to the next major innovation for manufacturing: factory automation.
“Lights Out” on Old Manufacturing Strategies
In 2016, a Chinese mobile phone factory, Changying Precision Technology Company, deployed a factory workforce that was 90-percent robots. The term “lights-out manufacturing” refers to the use of robotics in fully automated factories where materials and products are produced with little or no human workforce present. While not quite “lights out,” Changying still saw productivity increase by 250 percent.
One of the most well-known lights-out manufacturing facility actually produces the robots that enable lights-out manufacturing for other companies. FANUC’s robots produce other robots in Japan for automated factories all over the world, including Apple and Tesla Motors in the U.S.
Many believe that lights-out manufacturing is game-changing innovation for manufacturing that will set a new bar for productivity, but there are other benefits to automated factories. Throughput and quality increase, labor costs become more consistent, and energy requirements decrease. Additionally, robots are objective, relying on programing to dictate what is “right” and “wrong.” This is extremely important on the manufacturing line, especially if the robots are supplying a non-biased inspection.
With robots, device inspection is streamlined, helping to avoid a scenario whereby a refurbished phone isn’t rated correctly. Automation allows objectivity and improves consistency for grading devices. It’s especially helpful in the second-hand and refurbished devices market. If a robot grades a device as the highest possible rating, consumers can be assured they’re buying the product that fits the package description.
The loss of jobs with automation gets a lot of attention, as it should. At the same time, automation can enhance the jobs of factory workers by leaving the repetitive work for the robots, allowing humans to enjoy the benefits of consistently higher product quality and output. Moreover, 2 million manufacturing jobs will likely go unfilled due to a projected skills gap in the labor market. Robotics can help manufacturers fill those positions and keep the lights on for everyone. Furthermore, small hardware automation systems can aid in maintaining jobs in existing factories, as opposed to moving jobs offshore because of labor costs.
Lights-out manufacturing can be expensive to implement, and doesn’t happen overnight. Automation comes in three phases: Do it better, do it more, and do it for less. The “do-it-better” phase limits human touch, reducing risk of error and shifting resources to strategic initiatives.
Although large-scale manufacturing and forward logistics have enjoyed the fruits of hardware automation for close to t30 years, the cost, variables, and complexities within the reverse logistics segment have prevented truly successful automation within these environments until recently. Small automation enables any third-party logistics (3PL) providers to invest in smaller increments, and begin to see returns in a much shorter time than traditional large-scale hardware automation. Modularity and scalability are what will drive automation into the future.
Bringing Value to Device Trade-In
To a finance and operations professionals, labor costs are a critical factor in low-margin markets, such as mobile device trade-in. Automation can help trim those costs to preserve margins, even in areas of high commoditization.
Industries that support product trade-ins or upgrades, such as used smartphones or even used cars, are built on the capitalization of realizing residual value. The used-smartphone market intentionally discounts residual value against devices because of the variances between similarly graded devices caused by operator subjectivity. Standard practices apply a 15-percent discount right off the top because of those expected variances. Through the automation of testing and visual inspection, carriers and wholesalers can increase auction prices while ensuring consistent, objective results. Considering the $1bn size of the used smartphone market, that’s a significant value.
A Bright Future
Lights-out manufacturing presents an exciting future for manufacturing. Henry Ford’s traditional assembly-line workers have moved on to other manufacturing, technical and service positions, but the need for manufactured goods continues to grow as developing countries and regions with large populations begin to build a new middle class.
Automation can enhance and fill labor gaps, lower processing and production costs, and raise quality, all of which opens opportunities for U.S. companies. As the industry moves towards lights-out manufacturing, the future of American automation has never looked brighter.
Angel Anderson is product solutions manager for FutureDial, a provider of mobile device-processing technology.