Robotics versus human labor in the supply chain – how far can it go?

Robotic Palletising and PackagingThere is a really big trend at the moment in robotics in the manufacturing industry and also in the packaging and distribution industries, in their supply chains; the ripples of which are soon to be felt on society in general.

In one particular region in China a program introduced by the government has replaced factory workers with robots, and in one specific instance it has resulted in a company being able to reduce its employment numbers by an amazing 80%!

John Sandgate, who is an analyst at IDC Manufacturing Insights, is an expert in this specialist field and has recently written a series of blogs on the subject. In this short article, Supply Chain Station will highlight a few of the relevant points.

The recent surge in robotics technology is a major driver

In his first blog of this series John laid what he saw as the 4 key driving factors behind the recent surge in the use of robotics, the first of which is the acceleration in robotics technology. Together with all the excitement about the Internet of Things, the recent advances in sensor technology, and mobility, it has brought about a new world in terms of being able to communicate with machines. It’s something that could have an enormous impact on supply chains around the world.

Cost of robotics versus manual labor are leveling out

Riding alongside this explosion of new technology is the fact that the cost of new robotics technology is diving down pretty fast, making investing in robotics a lot more commercially viable than it was just a few short months ago; and this is a trend that is surely set to continue. At the same time as costs are falling in robotics technology, manual labor costs are also rising. As the two converge we are about to see a leveling off which will create a window of opportunity for investment in robotics, and a swing from manual to machine labor. Supply chains could see a mammoth boost in output as a result.

The evolution of market demands

As the use of robotics begins to become the norm, market demands are going to evolve to take advantage of the enormous potential. End users and consumers are going to want more of everything delivered in a quicker time, and are looking to manufacturers to become more flexible in the way they operate. Robotics of course will deliver this type of flexibility into supply chains, with simple programming changes, longer working hours, and because they are that much more efficient – more productive hours too.

Facility modernization

Facility modernization will also be another important driver. Without it the resources will not be put in place. But as the constantly evolving market brings more pressure to bear on manufacturers, they will naturally want to respond by installing the latest technology, which will not only work towards satisfying demand, but will also enable manufacturers to possibly increase their market share as they deliver more, faster, with potentially lower costs through their new supply chains.

China is leading the race

The pace of change has moved up a gear in China. Whereas it was traditionally places like Germany, Japan and South Korea who have been pro robotics, China is now firmly at the front of the field. Rather than just focusing on manufacturing cheap products in volume, China has now grasped hold of the fact that employing robotic labor also enhances the quality of products, and Chinese supply chains will benefit from this big time.

Also with more than 200 million workers over the age of 60, the introduction of robotics is being seen as a way of safeguarding against an increasingly aging and therefore potentially redundant workforce. Whereas democracies might have larger problems with public conception when it comes to making large numbers of people redundant to make way for robots, Communist China doesn’t have the same concern.

In the instance whereby one particular company in China reduced its workforce by 80%, from 680 down to just 60 that the company has recorded enormous benefits in terms of output quality, lesser number of rejects, and greater output per “head.”

What will become of Chinas redundant workforce?

One of John Sandgate’s recent blogs delved into the impact on the community in the Chinese province where robotics is having a big impact, and in particular the one where a company recorded an 80% drop in its manual workforce. The interesting thing is that the people who were made redundant to make way for the robots are still an active part of the community, buying consumer goods. How long this can last for is an interesting question and one which can only be answered through further research and observation.

In the meantime, the rest of the supply chain world will be looking on closely and maybe nervously.


How far so you think the impact of robotics in the supply chain will go? Will democratic countries and companies lose out to competition from communist countries as they freely exploit robot labor? Have your say at the feedback section below.

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