Adopting robots makes income drop earlier than they rise, examine finds

As demand for industrial robots surges, new analysis suggests the rewards are sluggish to materialise. In line with the Cambridge College examine, robots usually trigger early losses earlier than they’ll yield a payoff.

The researchers analysed {industry} information throughout 25 EU international locations between 1996 and 2017. They discovered that when adoption ranges are low, robots can have a adverse impact on revenue margins. Because the uptake will increase, nevertheless, automation drives the income larger.

This U-shaped impact was attributed to the combination course of. At first, companies utilizing robots usually are likely to give attention to streamlining operations — an costly and laborious job. However when automation will increase and the robots are totally built-in, the emphasis shifts to product innovation. Because of this, firms discover new income streams and aggressive edges.

“Initially, corporations are adopting robots to create a aggressive benefit by reducing prices,” Chander Velu, a professor at Cambridge’s Institute for Manufacturing, stated in an announcement. “However course of innovation is affordable to repeat, and opponents will even undertake robots if it helps them make their merchandise extra cheaply. This then begins to squeeze margins and scale back revenue margin.”

Velu’s analysis was impressed by the affect of computing. When computer systems first entered workplaces within the Nineteen Seventies and early Eighties, productiveness development initially slowed, earlier than rising once more. Velu wished to know whether or not robots have had related results.

To search out out, his workforce first analysed industry-level information — primarily from manufacturing, the place robots are mostly used. Subsequent, they examined robotics information from the Worldwide Federation of Robotics (IFR).

After evaluating the 2 datasets, they deduced how robots have impacted revenue margins. Lastly, the workforce requested producers for insights about the adoption course of.

“We discovered that it’s not straightforward to undertake robotics right into a enterprise – it prices some huge cash to streamline and automate processes,” examine co-author Dr Philip Chen stated.

The findings emerge amid increasing industrial automation.  Because the Eighties, robots have been broadly used for demanding and repetitive duties, equivalent to car meeting. In newer years, nevertheless, robots have turn into adept at extra intricate jobs, like advanced electronics manufacturing.

These advances are convincing extra companies to undertake robotic processes. For corporations exploring the chances, Velu has some recommendation.

“Whenever you begin bringing an increasing number of robots into your course of, finally you attain some extent the place your complete course of must be redesigned from the underside up,” he stated. “It’s essential that firms develop new processes concurrently they’re incorporating robots, in any other case they may attain this identical pinch level.”

You may learn the examine paper within the journal IEEE Transactions on Engineering Management.