How Manufacturing SMEs Can Afford to Innovate with Industrial Automation
“We can’t afford it. The costs are too high. The technology is too complex.”
“It’s just for the big guys.”
Does the word “automation” awaken those thoughts in you?
Industrial automation is intimidating for many small and medium-sized enterprises (SMEs) in manufacturing. But guess what? Clinging to manual, error-prone systems and slow, analog processes should be ten times scarier for people on a factory floor. It’s the equivalent of running a marathon with lead shoes every day.
In this article, we will debunk the myths surrounding automation costs and reveal how manufacturing SMEs can leverage smart financing and scalable solutions to innovate and thrive.
The time to believe automation is a financial leap you can afford starts now.
Misconceptions About Industrial Automation Costs
Misconceptions often lead to missed opportunities.
For small and midsized manufacturers, the picture is not different. The fear of massive upfront investment keeps them away from trying new tools and unlocking new possibilities. Case in point: robotics automation.
Robotics automation is often viewed as a technology that is only suitable for large enterprises with deep pockets. This false tale holds back countless manufacturing SMEs from pursuing it.
In reality, robotics isn’t a multimillion-dollar investment where you replace your entire workforce with robots overnight. The truth is, targeted automation can be incredibly cost-effective. So treating it with a single-minded approach would be like saying you need a Formula 1 race car to drive to the grocery store.
Take, for example, the growing adoption of Autonomous Mobile Robots (AMRs) in manufacturing. Companies like DHL Supply Chain implemented LocusBots in their warehouses, leading to a significant boost in productivity thanks to a quick and affordable AMR deployment without massive infrastructure changes.
A small-sized food processing plant could integrate automated sorting machines to reduce rework and improve accuracy, which will lead to significant cost savings.
You don’t need a complete factory overhaul to reap the benefits of automation.
The daily struggles of manual operations (bottlenecks, quality issues, safety risks) are the real costs. They’re silently draining your profits and hindering your growth, while targeted, affordable solutions are within reach.
Scalable Automation Solutions for Manufacturers
Automation isn’t a one-size-fits-all game. You must find the right fit for your specific needs and budget.
Small-Sized Manufacturers
For smaller manufacturers, the key is to start small and focus on high-impact areas. Think cobots for repetitive tasks like packaging and assembly or AMRs for material handling. These solutions offer quick wins and a clear ROI. Programs like the Manufacturing Extension Partnership (MEP) provide resources and guidance specifically tailored to SMEs, helping them identify and implement low cost automation solutions.
In general, for small-sized manufacturers, the upfront costs are:
➢ Entry-Level Automation: Simple systems like collaborative robots (cobots) for repetitive tasks or basic material handling automation can range from $25,000 to $100,000.
➢ Incremental Upgrades: Adding machine vision systems for quality control or automated inspection can cost between $25,000 and $250,000, depending on complexity.
Mid-Sized Manufacturers
Mid-sized manufacturers have more flexibility in their budgets and can explore comprehensive solutions, such as integrating automation across multiple production lines or warehouse operations. For example, a pharmaceutical manufacturer could adopt AMRs to transport raw materials and finished products, reducing manual handling errors and improving overall efficiency.
The approach might also involve more advanced robotic systems, integrated software solutions, and data analytics. Programs like the Small Business Administration (SBA) offer favorable terms for this kind of technology upgrades and expansion.
For medium-sized manufacturers, the upfront investment involved in industrial automation is:
➢ Comprehensive Automation: Implementing automated guided vehicles (AGVs), advanced robotics for assembly lines, or integrated process control systems can range from $100,000 to $1 million.
➢ Advanced Systems: For more sophisticated setups, such as AI-driven predictive maintenance or fully automated production lines, costs can exceed $1 million, depending on scale and customization.
Beyond the initial investment, manufacturing SMEs should budget for ongoing expenses like maintenance, software updates, and employee training. These costs typically account for 10-20% of the initial investment annually.
Factors Influencing Investment
It’s crucial to have realistic expectations regarding investment ranges for industrial automation, especially for SMEs. Here’s a breakdown that considers the scale and complexity of automation projects.
Type of Automation
● Cobots vs. traditional industrial robots.
● AMRs vs. fixed conveyor systems.
● Software and integration complexity.
Scale of Implementation
● Targeted automation of specific tasks vs. full production line automation.
● Number of units deployed.
Integration Costs
● Compatibility with existing systems.
● Customization requirements.
● Installation and training.
Other Aspects to Consider
● Phased Approach: SMEs can start with smaller, more manageable projects and gradually scale up their automation efforts.
● Leasing and Financing: Leasing equipment or utilizing financing options can help spread the cost of automation over time.
● Government Grants and Incentives: Explore available grants and tax credits to offset automation costs.
● ROI Analysis: Conduct a thorough ROI analysis to assess the long-term benefits and cost savings of automation.
● Partnering with Experts: Working with experienced automation providers can help SMEs find cost-effective solutions and avoid crushing mistakes.
Financing Options and Grants Available for Automation Projects
The financial hurdle is real, but it’s not insurmountable. Here are some viable options for funding automation projects. Manufacturing SMEs, buckle up.
Equipment Financing and Leasing
Leasing equipment or using equipment financing allows SMEs to spread the cost of automation over time, making it more manageable. Companies like DLL or Marlin Capital Solutions specialize in equipment financing for manufacturing.
Small Business Administration (SBA) Loans
The SBA offers various loan programs, such as the 7(a) Loan Program and the 504 Loan Program, designed to support small businesses in their automation initiatives. These loans provide low interest rates and flexible repayment terms, making it easier for manufacturers to invest in automation technologies.
Grants and Tax Credits
Federal and state governments offer various grants and tax credits to support manufacturing modernization.
The Rural Energy for America Program (REAP) can help with energy-efficient automation upgrades, while the Research & Development (R&D) tax credit can offset the costs of innovation.
The Manufacturing Extension Partnership (MEP) is another option worth exploring. It offers grants and technical assistance to small and midsized manufacturers looking to adopt advanced manufacturing technologies.
Partnerships and Collaborative Funding
Collaborating with technology providers or industry associations can open doors to shared funding opportunities and pilot programs. Organizations like the Advanced Robotics for Manufacturing (ARM) Institute offer collaborative projects and funding for robotics innovation. This is a splendid way to also gain access to experts that can help with funding automation projects.
Conclusion
The era of “we can’t afford it” is over. Don’t let your competitors steal your thunder.
The fear of high costs is a mirage, a distraction from the real game: staying competitive and building a sustainable future.
With scalable solutions and smart financing, manufacturing SMEs can step up to the plate and embrace industrial automation to:
➢ Transform operations.
➢ Boost efficiency.
➢ Drive profitability.
What should be your next step?
Partnering with a field expert.
Choose Verdusco Automation. We offer you:
➢ Custom AMR solutions tailored to your warehouse’s needs.
➢ End-to-end robotics integration for maximum efficiency.
➢ Industry-leading automation expertise to future-proof your operations.
Contact us today at https://www.verduscoautomation.com/contact.
Turn your manufacturing dreams into reality!
