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Is Cost Reduction without Automation Possible in China?

March 3, 2017

 by Renaud Anjoran

Last week I explained why automation is one of the 2 reasons why the China manufacturing price can go down*.

But is it possible to do without automation? The short answer is: yes, no, AND it depends!!


Yes, cost reduction without automation is possible
 cost reduction without automation

 

We listed a few alternatives to full automation before:

  • Re-engineer your processes for higher productivity – productivity gains can derive from better material flow, better tooling, training of operators, mistake-proofing devices, and so on.
  • Go for high-mix, low-volume orders – you will only compete with other companies that have not gone down the road of full automation.
  • Find an automated factory and subcontract certain orders to them – in some industries (e.g. printing), highly-automated factories are a commodity. Don’t invest if that’s the case, or you might get a pretty low (or even negative) ROI. 

How CMC gained a cost reduction in a China factory without automation Case study

 

No, avoiding any form of automation is not the way forward

jobs replaced by automation

Unskilled logistics and assembly jobs are meant to be replaced by machines. That’s been the trend since the industrial revolution started in England. And, in the end, it is in everybody’s interest.

People think of a sophisticated robot or an integrated piece of machinery when they hear “automation”. But it is often possible to reap 80% of the benefits while paying only 10% or 20% of the amount… by following the route of gradual semi-automation.

Here is a great illustration of what I mean. There is a logical order.

Automated operationsThe RIGHT type of automation corresponds to the factory’s competencies

auto manufacturing

As Steve Dickinson wrote in the China Law Blog, Chinese factory owners hold the following beliefs:

  • Training on new equipment is not necessary
  • Proper equipment setup is not necessary
  • After sale support and maintenance is not required

And what is the result of this? A set of challenges that we see over and over in the factories we visit:

  • A long time to get a machine to operate properly (and sometimes it never actually works);
  • Serious down time due to reactive maintenance (‘let’s fix it when it breaks’);
  • Sabotage from an employee who is losing power in the organization, or is about to lose his/her job, due to a new piece of equipment.

And the result invariably is… Costs go up!

All these challenges can be avoided if you develop your internal competencies through semi-automation. As the equipment gets more complex, your maintenance technicians and your process engineers will learn how to work with automation. It takes time. Don’t take shortcuts.

 

Do you agree with this? Have you seen Chinese factories do a great job of programming and maintaining highly automated equipment? If so, what can we learn from their approach?

Feel free to leave a comment below and we’ll make sure to respond.


*(The other reason why Chinese manufacturing costs can fall being the application of lean manufacturing techniques coupled with high staff engagement). 

 


How CMC gained a cost reduction in a China factory without automation Case study

Topics: Cost Reduction, Management/Turnaround, Automation

Renaud Anjoran

Renaud Anjoran

15 years experience in China.
Partner, China Manufacturing Consultants.
Worked with hundreds of factories in China.
Certifications: ASQ CQE & CRE; ISO 9001 & 14001 lead auditor.
Author of well-read blog, Quality Inspection Tips.

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