Industry 4.0 - smart manufacturing propelled by AI technology, IoT, the cloud, and cognitive science - has been with us for almost a decade. Yet it seems that AI-based robots and connected technology have yet to deliver on their promise: despite their tremendous potential to increase output and quality, decrease costs and improve worker wellbeing, very few manufacturing plants in most verticals have gone beyond pilots. In fact, 84% have ended at the pilot stage.
One issue is the big cultural divide between the High-Tech mentality of companies developing the new advanced technologies (such as AI, machine learning and IoT) and manufacturing corporations.
High-Tech companies and particularly startups don’t speak the “Dinosaur” language of manufacturing and do not understand the concerns of manufacturers: their processes and production flows, decision making, work relations, and the upheaval caused to these elements by the introduction of new technologies.
Another reason is that manufacturing legacy systems aren’t built with Industry 4.0 in mind and are prohibitively expensive to replace. So industry 4.0 deployment models are investment heavy, often requiring to design and build a new factory system from scratch.
Advanced AI robotic solutions are also complex to install and support, often requiring long cycles of testing and calibration before smooth operation can be resumed. Robots are disruptive - it’s in their nature. Workers need to accommodate them and learn to work with them, production flow needs to change, and the plant layout.
Another drawback is manufacturing finances. The stark reality of a manufacturing company is a very high cost of money. Upfront payment for any equipment – let alone advanced AI robotic systems - is normally not an option for cash flow reasons and because of the uncertainty embedded in new technologies.
Technological change happens fast. It’s understandable that companies are reluctant to commit to investments only to find themselves owning obsolete machinery in a couple of years. This may go down in the mobile phone market - not so in a factory.
To secure that investment you need to answer a few critical questions: is the technology mature enough? Will it really improve our output and quality to cover the cost of capital? How do we know it won’t be obsolete in five years – just exactly when we finished deducting depreciation and can start showing profits?
And let’s not forget employee resistance to robotics. Even though it is our strong opinion that advanced robots will not replace jobs, it is a widely held conception. Management will need to contend with sometimes strong objections from workers and unions.
Leasing a robot removes the financial barriers: leasing instead of buying it is a fully tax-deductible operational expense, so if robots increase output even marginally that first year, the bottom line will increase.
Operational expenses do not require the same decision making as capital expenses. Buying industrial robots is a strategic decision made at the corporate level. It takes a long time and lowers the odds of approval. Leasing robots? A decision that can be left to the regional manager, even the factory supervisor.
Anyone who’s worked in factories part of international corporations knows this makes a huge difference: often cutting the process from years to months, and sometimes to weeks.
With leasing, other uncertainties such as implementation, operations, maintenance, and worker objections are much easier to deal with. Qualms, doubts, reservations? Let’s try this for six months, what’s the worst that can happen? And just like when leasing other machines, here too you get a full deployment and maintenance package.
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