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

As demand for industrial robots surges, new analysis suggests the rewards are gradual 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 detrimental impact on revenue margins. Because the uptake will increase, nevertheless, automation drives the income increased.

This U-shaped impact was attributed to the mixing course of. At first, companies utilizing robots usually are likely to deal with streamlining operations — an costly and laborious activity. However when automation will increase and the robots are absolutely built-in, the emphasis shifts to product innovation. In consequence, firms discover new income streams and aggressive edges.

“Initially, companies are adopting robots to create a aggressive benefit by decreasing prices,” Chander Velu, a professor at Cambridge’s Institute for Manufacturing, mentioned in an announcement. “However course of innovation is reasonable to repeat, and rivals may even undertake robots if it helps them make their merchandise extra cheaply. This then begins to squeeze margins and cut back revenue margin.”

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

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To seek out out, his group 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 group requested producers for insights about the adoption course of.

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

The findings emerge amid increasing industrial automation.  Because the Nineteen Eighties, robots have been broadly used for demanding and repetitive duties, corresponding to automobile meeting. In more moderen years, nevertheless, robots have turn out to be adept at extra intricate jobs, like advanced electronics manufacturing.

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

“While you begin bringing an increasing number of robots into your course of, ultimately you attain some extent the place your complete course of must be redesigned from the underside up,” he mentioned. “It’s vital 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.