Why are UK Businesses Still Holding Back on Vital Automation Investments?

Business Insights
03/08/2022

The pandemic’s impact on supply chain disruption encouraged many logistics and manufacturing businesses to make bold claims about accelerating their digital transformation journeys. In 2021, a survey by Guidance Automation revealed a growing commitment to intralogistics automation. But a year on, progress has stalled: the level of process automation has remained unchanged, as results found in the 2022 survey.


On the plus side, awareness of the power of automation to deliver change has improved. Companies are more sophisticated, focusing on supply chain digitisation and reviewing supply chain processes. However, if the two-thirds of organisations that expect to be fully automated within three years are to achieve this, it is vital to embark upon automation projects sooner rather than later.


With automation now recognised as both vital and valuable – Dr Paul Rivers, Managing Director, Guidance Automation, explains why vendors need to step up, offering free trials to overcome businesses' misplaced fears regarding cost and disruption, and prove the tangible value of automation technologies such as Autonomous Mobile Robots (AMRs).


One Year On

In April 2021, Guidance Automation commissioned Sapio Research to undertake research to understand the importance of intralogistics automation. The survey revealed a strong commitment to automation, with a third of businesses saying intralogistics automation is critical to business success.


A year on, and while the language suggests businesses are more aware of the value of automation, implementation progress is slow. Guidance Automation’s 2022 survey reveals significant improvements in business knowledge – digitisation of the supply chain is the first thing that comes to mind when asked about intralogistics automation – a step forward from the 2021 focus on simple software systems. In addition, 40% of respondents are continuously reviewing their warehouse, fulfilment, production and distribution centre processes, an increase of 17%.


40% now think intralogistics automation is critical for business success – up from 33% in 2021, confirming that automation is increasingly perceived to be a fundamental part of business growth. This is a positive shift, indicating a far greater level of intralogistics automation understanding within UK businesses. Yet, the actual change is negligible: the overall proportion of automated processes remains at 39%.


Business Pressures

Staff shortages, raging inflation and continuous supply chain disruption have affected business confidence and compromised planning. While e-commerce boomed during the pandemic, recent price rises have changed consumer expectations, leading to a reduction in online sales. At the same time, profitability of e-commerce channels is under threat due to the increase in delivery costs.


Efficiency has become ever more important. Not only is improving efficiency one of the top three business goals, but achieving low operational costs (35%) and increased productivity and efficiency (31%) remain the most desired benefits of automating material movement.


Given the increasing need for an understanding of intralogistics automation, what is holding companies back from achieving tangible change? The largest barrier to implementing automation for 2022 is the extent of the downtime needed to upgrade – in contrast to 2021 when companies were concerned about the skills shortage in maintaining automated systems. Budget constraints are still the main element preventing automation, having increased from 69% to 76%, reflecting the challenging global economy that has emerged over the past year.


Achieving Change

Education and understanding have improved, but organisations need more support to achieve change. When two-thirds of respondents predict implementing AMRs will bring financial value to their business that exceeds the initial investment, the barrier is not technology confidence.


The onus is on vendors to address incorrect perceptions regarding the level of disruption and investment associated with automation projects. The ability to trial technologies such as Autonomous Mobile Robot Technologies provides companies with a simple, effective way to understand where and how technologies can be deployed, and where cost savings and efficiencies can be achieved.


Labour shortages are set to continue and the economic outlook remains uncertain. These issues should be accelerating automation plans, yet companies are making assumptions about the cost of investment and disruption – ultimately delaying change. But disruption is not a given; investment is not punitive. Indeed, flexible investment models, including rental, are making innovative technologies more accessible.


Conclusion

Two-thirds of these businesses plan to be fully automated within three years. If this goal is to be achieved, if businesses are to put in place the intralogistics automation required to improve efficiency, reduce costs and become more responsive, they need to evolve swiftly from education to implementation. It will be essential to see far more progress in the next Guidance Automation survey in 2023.