Country difference in global automation roadmap

When strategizing Industry 4.0 and automation road-map, we need justified benefit and reasonable ROI in business case, may it be customer satisfaction increase which drives the top line, or operation cost reduction which improves the bottom line. Big return comes with scalability, to deploy similar solution to different sites and different countries.

How to consider country difference in global automation solution design and implementation roadmap?

It’s a complex question without easy answer.  We have to look into industry trend, government incentive, cost structure, union impact, talent capability, efficiency level to draw patterns and make decisions. 

Let me give you an example in warehouse automation from my own study.

Warehouse automation has a big spectrum of technologies and solutions; you may have seen conventional ASRS (automatic storage and retrieval system) solution with cranes conveyor belt; you may also have heard of Kiva in Amazon warehouse(link).

2 major cost components for warehouse operation is rental and manpower. Normally, automation implementation will reduce manpower (even at different levels); but they may not be the same in terms of space requirement. Some could be high-demanding for space, for example, we have to leave space for conveyor belt and AGV’s path. Some could be less, for example, Autostore (link)stacks bin next to each other to maximize space usage.

I compare 6 logistics hub’s rental cost and manpower cost. Clearly, we see 3 different patterns here.

WH rental and manpower cost comparing

Low rental cost and high manpower cost. Such logistics hub may consider automate as much as possible; space may not be a major constraint.

Rental cost and manpower cost are on similar level. Such logistics hub needs to balance between space and manpower requirements when deploying automation solution.

High rental cost and low manpower cost. Manpower may not be the main driver to deploy automation; however, efficiency gain, space reduction, standardization may come to the picture.

I understand there are much more factors to consider in country difference for global road-map and even for automation implementation, we need to consider other factors like existing efficiency level, construction cost and warehouse size.However, I hope my simplified study can help you understand where I am coming from.

It may be cliché, there is no one-solution-for-all; but one has to understand the driving considerations for strategic plan.

Why I choose the 6 countries:

From International Federation of Robotics 2016 report, 74% of 2016 global robot sales in five countries: China, South Korea, Japan, the United States, and Germany; and top 3 highest robot density countries are all in Asia, South Korea, Singapore, Japan. (Robot density = robots installed per 10,000 employees in the manufacturing industry in 2016)

How I calculate warehouse manpower and rental cost

For Singapore, it’s assumed salary of one warehouse employee is equal to half of the medium household income in 2016. Data source, Channel News Asia

For China-Shanghai, assume salary of a typical warehouse employee is 80% of average wage. Data source, ChinaDaily

For all other countries, refer to average wage from OECD in 2016; for US, considering its high income-inequality, it’s assumed that a typical warehouse employee’ salary is only 80% of average wage. Data source, OECE

Warehouse rental cost reference: SCdigest





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