Article by Mark Fioretto, Area VP and Managing Director Australia and NZ, UiPath
Australia’s ability to make more world-class products is one step closer to a resurgence with the House Standing Committee on Industry, Science and Resources last month announcing an inquiry into developing a local advanced manufacturing industry, with submissions closing on 30 March.
Powered by artificially intelligent automation, advanced manufacturing will boost Australia’s global competitiveness because it will help solve the nation’s supply chain issues and skills shortage while creating jobs and supporting Australian industry.
It will also be at the forefront of advancing new industries for Australia, such as semiconductor manufacturing and bio-manufacturing, and expanding the country’s capability in areas such as the production of components for the defence and renewables industries.
There are five ways that advanced manufacturing powered by automation will change the game for manufacturing in Australia.
Enabling immediate scalability
Ongoing global market volatility makes it nearly impossible for manufacturers to keep pace with constant spikes and dips in customer activity. Historically, manufacturers could hire staff, even on a casual basis, to meet short-term spikes in activity. However, in the digital economy, the market changes virtually daily, so it’s difficult to plan and keep pace.
Advanced manufacturing enabled through automation, directly addresses the need for instant scalability because it lets manufacturers immediately adjust parameters to suit current order needs, without increasing labour costs.
MAS Holdings, South Asia’s leading apparel and textile manufacturer, is a case in point. The $2 billion company operates 53 manufacturing facilities across 16 countries, with more than 99,000 employees.
As a fast-progressing global conglomerate, MAS Holdings wanted to achieve compound growth across its operations, which required streamlined efficiencies across all processes so that it could scale as needed across any market. This manufacturer embraced digital transformation with automation at its core to improve efficiencies and the company’s overall competitiveness.
By automating 52 processes in its intimate apparel business unit, the company saved 14,000 work days annually. Going forward, MAS Holdings expects these savings to grow exponentially as more processes are automated across additional business units.
Creating innovation hubs
The Australian government wants Australia to make more things locally. The challenge is the cost, time and ingenuity involved, especially when the nation and the world are at the precipice of a global recession. Australia is up against manufacturing giants such as China, the US, Japan and Europe that have been able to continuously innovate while sustaining production efficiencies and keeping a lid on production costs. The reason they are so successful is because of innovation hubs that constantly find more efficient ways to manufacture components and close skills gaps.
Now, through automation, Australia equally has the capability to create innovation hubs that will improve production efficiencies and bridge the nation’s skills gaps in fields such as data science.
For example, German-based global home appliance manufacturer BSH has used automation to consolidate all of its artificial intelligence initiatives under a single umbrella. This helps their data scientists to share knowledge while, at the same time, training new data scientists.
As a result, the company has 20 data science use cases up and running, 400 data scientists across the enterprise developing new models, and 100 automations in production. BSH is also using automation to create centres of excellence around quality management.
Australia could easily use automation to achieve this same capability. Not only within manufacturing companies themselves, but across the entire ecosystem, particularly where manufacturing intersects national research innovation.
Achieving new levels of production efficiency
In Australia, new industries such as electric vehicle manufacturing are beginning to emerge, while opportunities in existing industries such as defence manufacturing and renewables continue to grow. For manufacturers, energy efficiency and diversification will be a key focus moving forward to keep pace with market changes.
This must be achieved in an environment where production costs can be managed and the time to production is minimised. Advanced manufacturing comes to the fore in this case because, at the heart of every manufacturing automation, is the intent to gain efficiencies and reduce the total cost of production.
A good example of where automation is driving change on the production line is one of the world’s largest producers of commercial vehicles based in North America, which is saving an average US$480,000 in shop call expenditures, 1200 working hours and US$175,000 in cost avoidance measures per year.
Automation was initially introduced by this manufacturer to solve the problem of faulty electronic control units (ECUs) making their way into the truck assembly process. The solution was found in hyper-automation technology that has historically been used to improve employee productivity but was also found to have an application on the production line itself. In addition to the significant production cost and time savings achieved through hyper-automation, the manufacturer dramatically improved quality control, with a 100% increase in the number of ECUs tested.
Improving supply chain efficiencies
Supply chains were severely disrupted during the COVID-19 pandemic and continue to be challenged with global economic instability. Advanced manufacturing can resolve supply chain issues by using automation to speed up flows between suppliers, distribution centres and manufacturing sites.
This means the system can automatically trigger when specific material stocks are getting low, and well in advance to allow for delays with supply or transport to ensure a continued seamless flow from the supplier to the manufacturer.
Through automation, French company Schneider Electric is one manufacturer that has improved economies of scale in its supply chain and reduced its order processing time from four hours to two minutes through automating the supply chain.
We can expect to see more manufacturers adopting automation in their supply chains. By the end of 2023, industry analysts anticipate that chronic workforce shortages will prompt 60% of supply chain organisations across Asia Pacific and Japan to prioritise automation investments, which will result in productivity improvements of 20%.
Accelerating sustainability
Environmental, social and governance (ESG) requirements mean that Australian manufacturers are under more pressure to operate environmentally and socially sustainable business models with the aim to achieve net zero. As the world’s largest lithium producer, Australia has an opportunity to set the benchmark for what should be manufactured, and how it should be manufactured, in the future.
Key to this is ensuring ESG compliance throughout the production process and ensuring reporting meets the government’s ESG requirements.
Automation helps manufacturers deliver ESG initiatives and avoid greenwashing by capturing and recording data at every stage from the supply to production and transport of materials. This includes the capture of third-party data associated with the production process. It can also ensure continued refinement in the manufacturing process itself to achieve more sustainable outcomes.
This is crucial for the manufacturing industry considering that, by 2024, 40% of major Asia Pacific and Japan organisations will have environmental sustainability parameters firmly embedded in their business KPIs.
Australia already has the automated manufacturing solutions, ingenuity, natural resources and skills base to put the nation at the cutting edge of advanced manufacturing globally. We also have the support of advanced research facilities and a government that is laser-focused on reinvigorating local manufacturing.
The challenge now remains for manufacturers themselves in how quickly they can adopt new automated technologies that will enable them to sustainably deliver value and remain competitive in a constantly evolving global manufacturing sector.
The sooner that advanced manufacturing can be fully realised, the sooner Australia will be able to develop and grow new industries, create more jobs, advance national research and innovation, and ultimately become more competitive as a nation.
