Automation 702
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Automation refers to the use of computers and other automated machinery for the execution of business-related tasks. Automated machinery may range from simple sensing devices to robots and other sophisticated equipment. Automation of operations may encompass the automation of a single operation or the automation of an entire factory.

There are many different reasons to automate. Increased productivity is normally the major reason for many companies desiring a competitive advantage. Automation also offers low operational variability. Variability is directly related to quality and productivity. Other reasons to automate include the presence of a hazardous working environment and the high cost of human labor. Some businesses automate processes in order to reduce production time, increase manufacturing flexibility, reduce costs, eliminate human error, or make up for a labor shortage. Decisions associated with automation are usually concerned with some or all of these economic and social considerations.

For small business owners, weighing the pros and cons of automation can be a daunting task. But consultants contend that it is an issue that should not be put off. "We are creating a new ball game," wrote Perry Pascarella in Industry Week. "Failure to take a strategic look at where the organization wants to go and then capitalizing on the new technologies available will hand death-dealing advantages to competitors—traditional and unexpected ones."


Although automation can play a major role in increasing productivity and reducing costs in service industries—as in the example of a retail store that installs bar code scanners in its checkout lanes—automation is most prevalent in manufacturing industries. In recent years, the manufacturing field has witnessed the development of major automation alternatives. Some of these types of automation include:

Information technology (IT) encompasses a broad spectrum of computer technologies used to create, store, retrieve, and disseminate information.

Computer-aided manufacturing (CAM) refers to the use of computers in the different functions of production planning and control. CAM includes the use of numerically controlled machines, robots, and other automated systems for the manufacture of products. Computer-aided manufacturing also includes computer-aided process planning (CAPP), group technology (GT), production scheduling, and manufacturing flow analysis. Computer-aided process planning (CAPP) means the use of computers to generate process plans for the manufacture of different products. Group technology (GT) is a manufacturing philosophy that aims at grouping different products and creating different manufacturing cells for the manufacture of each group.

Numerically controlled (NC) machines are programmed versions of machine tools that execute operations in sequence on parts or products. Individual machines may have their own computers for that purpose; such tools are commonly referred to as computerized numerical controlled (CNC) machines. In other cases, many machines may share the same computer; these are called direct numerical controlled machines.

Robots are a type of automated equipment that may execute different tasks that are normally handled by a human operator. In manufacturing, robots are used to handle a wide range of tasks, including assembly, welding, painting, loading and unloading of heavy or hazardous materials, inspection and testing, and finishing operations.

Flexible manufacturing systems (FMS) are comprehensive systems that may include numerically controlled machine tools, robots, and automated material handling systems in the manufacture of similar products or components using different routings among the machines.

A computer-integrated manufacturing (CIM) system is one in which many manufacturing functions are linked through an integrated computer network. These manufacturing or manufacturing-related functions include production planning and control, shop floor control, quality control, computer-aided manufacturing, computer-aided design, purchasing, marketing, and other functions. The objective of a computer-integrated manufacturing system is to allow changes in product design, to reduce costs, and to optimize production requirements.


Understanding and making use of automation-oriented strategic alternatives is essential for manufacturing firms of all shapes and sizes. It is particularly important for smaller companies, which often enjoy inherent advantages in terms of operational nimbleness. But experts note that whatever your company's size, automation of production processes is no longer sufficient in many industries.

"The computer, in its hardened and non-hardened forms, has made it possible to control manufacturing more precisely and to assemble more quickly, factors which have increased competition and forced companies to move faster in today's market," wrote Leslie C. Jasany in Automation. "But now, with the aid of the computer, companies will have to move to the next logical step in automation—the automatic analysis of data into information which empowers employees to immediately use that information to control and run the factory as if they were running their own business." Indeed, industry analyst Scott Flaig proclaimed to Jasany that "automation of information is clearly where the opportunity is, not in automation of labor. The work that is being done now in advanced manufacturing is work to manage and control the process, not the automation of the added-value aspect of the process."

Small business owners face challenges in several distinct areas as they prepare their enterprises for the technology-oriented environment in which the vast majority of them will operate. Three primary issues are employee training, management philosophy, and financial issues.

EMPLOYEE TRAINING Many business owners and managers operate under the assumption that acquisition of fancy automated production equipment or data processing systems will instantaneously bring about measurable improvements in company performance. But as countless consultants and industry experts have noted, even if these systems eliminate work previously done by employees, they ultimately function in accordance with the instructions and guidance of other employees. Therefore, if those latter workers receive inadequate training in system operation, the business will not be successful. All too often, wrote Lura K. Romei in Modern Office Technology, "the information specialists who designed the software and installed the systems say that the employees are either unfamiliar with technology or unwilling to learn. The employees' side is that they were not instructed in how to use the system, or that the system is so sophisticated that it is unsuited to the tasks at hand. All the managers see are systems that are not doing the job, and senior management wonders why all that money was spent for systems that are not being used."

An essential key to automation success for small business owners, then, is to establish a quality education program for employees, and to set up a framework in which workers can provide input on the positive and negative aspects of new automation technology. As John Hawley commented in Quality Progress, the applications of automation technology may be growing, but the human factor still remains paramount in determining organizational effectiveness.

MANAGEMENT PHILOSOPHY Many productive business automation systems, whether in the realm of manufacturing or data processing, call for a high degree of decision-making responsibility on the part of those who operate the systems. As both processes and equipment become more automatically controlled, claimed Jasany, "employees will be watching them to make sure they stay in control, and fine tune the process as need. These enabler tools are changing the employee's job from one of adding touch labor to products to one of monitoring and supervising an entire process."

But many organizations are reluctant to empower employees to this degree, either because of legitimate concerns about worker capabilities or a simple inability to relinquish power. In the former instance, training and/or workforce additions may be necessary; in the latter, management needs to recognize that such practices ultimately hinder the effectiveness of the company. "The people aspect, the education, the training, the empowerment is now the management issue," Flaig told Jasany. "Management is confronted today with the decision as to whether or not they will give up perceived power, whether they will make knowledge workers of these employees."

FINANCIAL ISSUES It is essential for small businesses to anticipate and plan for the various ways in which new automation systems can impact on bottom-line financial figures. Factors that need to be weighed include tax laws, long-term budgeting, and current financial health.

Depreciation tax laws for software and hardware are complex, which leads many consultants to recommend that business owners use appropriate accounting assistance in investigating their impact. Budgeting for automation costs can be complex as well, but as with tax matters, business owners are encouraged to educate themselves. By doing so, wrote Best's Review's Janice L. Scites, "you can ensure that you are investing your money wisely and can bring some predictability to your financial planning. With the shortened life of most new technology, especially at the desktop, it is critical that you plan on annually reinvesting in your technology. Spikes in spending can be difficult to manage and can wreak havoc with your budgets. You'll also need to decide what is an appropriate level of spending for your company, or for yourself if it's a personal decision. Arriving at that affordable spending level requires a strategic look at your company to assess how vital a contributor technology is to the success of your business."

Scites notes that "hardware decisions are generally complex, with long-term implications" in such areas as stream of payments, maintenance costs, and additional support expenses. But she adds that business owners can reduce risks by "having a clear understanding of business plans, establishing a sound technology architecture, selecting hardware in the context of this architecture, building strong vendor alliances, and adopting standard software interfaces."

Once new automation systems are in operation, business owners and managers should closely monitor financial performance for clues about their impact on operations. "Unused technology or underused technology is a big tipoff that something is wrong," wrote Romei. "Many ideas for applications with few in actual operation is another. Watch for cost overruns on new systems, and look out when new systems are brought in predictably late."

The accelerating pace of automation in various areas of business can be dizzying. As James Pinto observed in Automation, "technology is causing ever faster movement, with cost variations and fluctuations that defy even contemporary financial tracking." It will be a challenge for small businesses to keep pace—or stay ahead—of such changes. But the forward-thinking business owner will plan ahead, both strategically and financially, to ensure that the evermore automated world of business does not leave him or her behind.


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Bradbury, Danny. "Through the Looking Glass." Computing. April 3, 1997.

Hawley, John K. "Automation Doesn't Automatically Solve Problems." Quality Progress. May 1996.

Jasany, Leslie C. "Knowledge (and Power) to the People." Automation. July 1990.

Moore, Walt. "Working Smarter with Automation." Construction Equipment. April 1999.

Partch, Ken. "The Coming Impact of Information Technology." Supermarket Business. February 1997.

Pedone, Rose-Robin. "Sales Automation—Changing the Way Business Is Done." LI Business News. September 22, 1997.

Pascarella, Perry. "Unlearn the 'Truths' about Automation." Industry Week. May 26, 1986.

Pinto, James J. "If It Ain't Broke—Fix It Anyway!" Automation. September 1991.

Romei, Lura K. "Take a Nice, Easy Backswing and Then Just Follow Through." Modern Office Technology. October 1987.

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Stasko, Linda. "Computers Alone Are Not Always a Solution." Machine Design. September 28, 1995.

SEE ALSO: Robotics

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