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The Key to Higher Productivity and Profitability

Automation and robotics offer a compelling solution for SMEs in today’s highly competitive, dynamic business environment.


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Published by SPRING Singapore
on 13 Jul 2016

The Key to Higher Productivity and Profitability

Imagine walking into a hotel staffed by humanoid robots capable of greeting guests, carrying luggage and cleaning rooms. Or imagine having your hair styled by a 24-fingered hair-washing machine. While these might sound like scenes from a sci-fi
movie, they could soon be a reality in Singapore.

Recently, Mr Teo Ser Luck, Minister of State for Manpower, went on a Lean Enterprise Development (LED) study mission to Japan. He was joined by representatives from the Restaurant Association of Singapore, Singapore Productivity Centre and SPRING Singapore, and delegates from local food and beverage companies.

Japan is considered a world leader in adopting automation solutions and robotics to boost productivity and reduce manpower needs. Restaurants throughout the country have rolled out a number of innovative technologies to ensure quicker service, including laser-scanning meat machines, conveyor fryers, and edible ink and image printers.

Singapore now aims to emulate these concepts and successes in local industries. “The government is keen to support manpower-lean growth through the LED Scheme – be it in the form of grant support, consultancy or temporary manpower flexibility – to help SMEs reinvent their current workflow processes,” says Mr Teo.

The government has put in place a range of support programmes to help local companies enhance their technology innovation capabilities. These include SPRING’s Innovation & Capability Voucher which helps SMEs upgrade their capabilities, and the Capability Development Grant (CDG) – a grant assistance programme that helps enterprises upgrade their capabilities across 10 key areas by covering up to 70% of project costs, including consultancy, manpower, training and certification.

Although this strong government support alleviates some of the financial pressures SMEs face when adopting new technologies, the challenge now is to accelerate adoption throughout entire industries. Doing so will enable automation solutions to really move the needle on Singapore’s productivity and economic performance.

Automation
Automation can be used to perform dedicated functions, such as inserting specific components in assemblies, or multiple tasks like tagging, tracking and checking items as they come off the production line. The biggest benefit of automation is that it enables businesses to produce
more with less labour, less waste andless time. In other words, it allows businesses to increase their capacity without increasing costs. Other immediate gains cannot be tangibly measured. SMEs in the finance sector that use automated software canchart asset allocation plans more efficiently. Small accounting firms can move away from bookkeeping and become business consultants.

In 2014, Foodgnostic, a local supplier of baked goods, decided to semi-automate its core production processes to reduce manpower requirements, improve workflow and boost productivity.

This strategy has helped Foodgnostic decrease staffing costs by up to 70% and reduce production wastage to nearly zero. In September 2015, it reported a double-digit net profit margin – something even large companies in the food and beverage industry struggle to achieve.

Such benefits are the reason this year’s Singapore Budget included a strong push for automation. It introduced a new automation support package to cover up to 50% of project automation costs, meaning there is no better time for SMEs to shift away from manpower-led growth to productivity-driven growth.

Robotics
Robotics can be a viable path to profitability for SMEs – especially those in the food and services industries – because robots can be easily reprogrammed to adapt to realworld variability and imperfections. Fragrance Foodstuff Pte Ltd, a local family-owned provider of traditional Chinese food products such as bak kwa and mooncakes, is a robotics champion. In 2014, using SPRING’s CDG, it installed robotic arms in its product assembly line. The robot’s job may be simple – to pick, pack and label food products – but the company has since seen a 50% increase in productivity.

“Previously, it used to take two staff members to produce only 100 kilograms of packed bak kwa products,” says Mr CK Tan, the company’s Senior Manager. “Now, using the same number of staff members, we can produce up to three times the amount of such products.”

Recently, the Singapore government identified the healthcare, construction, manufacturing and logistics sectors as potential candidates for robotics and automation applications. In addition, the government has set aside more than S$450 million to drive robotics development in these industries, and to create packaged solutions at a reasonable price for SMEs.

“What we want is to find ways for SMEs to adopt this technology, but SME owners have to first understand its potential, then ‘cross the Rubicon’ and try it,” said Mr S Iswaran, Minister
for Trade and Industry (Industry), during his March visit to a local start-up, Aitech Robotics & Automation Pte Ltd.

If implemented correctly, robots can work safely with humans and help companies improve productivity and profitability, paving the way for a new era of business.

Conventional or robotic automation?
The choice between conventional automation or robotic automation, and the extent to which the choice is implemented, depends on a business’s unique needs.

For SMEs that require a more ‘adaptive’ solution, robotics is the answer. According to Mr Hui Wing Feh, Application Engineer at Kurve Automation – a local developer of automation and robotics solutions for SMEs – the need for flexibility is a basic reason for choosing robotics. “Conventional automation solutions will suit businesses that need sustained high-rate production capabilities with reduced human labour,” he explains.

However, Mr Hui says there are situations where robotics and automation are both required to maintain product quality. “For delicate processes and materials, or for production processes that involve hazardous materials and must be performed in unstaffed, remote locations, both robotics and automation may be needed.”

At the same time, it is impossible to automate business processes or implement robotics unless a company has a handle on how jobs flow and how much labour and raw materials are consumed in the process. “First, assess what is causing the most pain in terms of labour, errors and waste,” Mr Hui advises. “Then, SMEs need to prioritise three to five core areas that align with their business goals, and automate or robotise those processes.”

A boon for SMEs
Across Singapore, SMEs outnumber large corporations. Collectively, they employ more people and form the backbone of Singapore’s economy. However, many small businesses have yet to realise the advantages of implementing automation and robotics – like attracting and retaining highskilled workers.

Singapore company Ugene Laboratory Services has designed and built a robot that can process food samples and conduct tests for contaminants, additives and bacteria. The company now attracts professionals looking for meaningful learning experiences rather than just pay cheques.

“Robots and automation tools are not only workforce multipliers; they lead to workforce satisfaction,” says Ms Eunice Ng, Technical Director of Ugene Laboratory Services. “These applications are cool and they attract highly inquisitive, talented people.”

Two years ago, Ugene Laboratory Services faced the same challenges as most SMEs: rising labour costs, tight competition, quality concerns, a shortage of skilled workers and limited resources. The difference? It was not afraid of change. In fact, the company embraced it.

Ms Ng puts it this way: “Adopting automation and robotics was the single biggest driver in the change to our business. Had it not been for these, we would be significantly smaller and have less of an impact and competitive edge in the testing, inspection and certification market.”

The recurring theme among successful businesses seems to be that automation and robotic solutions help boost productivity, profitability and business growth. This provides all the more reason for SMEs to adopt these new technologies and ensure long-term competitiveness and sustainability.

Last Modified Date: 10 Apr 2017



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