How Amazon, Uber, Foxconn and Even Countries Are Deploying Robots To Become Competitve

Companies & countries are focusing on improving their performance to gain competitive advantage by squeezing out wastage from their current operations.

A partial list of companies & countries pursuing this strategy includes Amazon, Foxconn – world’s largest contact manufacturer, Uber & countries like China & Japan.

A common theme that runs across these illustrious companies & countries is ‘automation’ – designing system & process, which can operate with reduced, minimal, or nil human intervention.

To achieve automation, the strategy pursued by them include, depending upon:
*Software & algorithm to take decision instead of humans
*Robotics – automated machines that can take the place of humans, to carry out activities.

Let us take the companies & countries that are pursuing these strategies:
1) Amazon: It is deploying software & algorithm to take decisions as well as deploying robotics technology. All these 3 initiatives improved its operational efficiencies, which has resulted in a surprise 2nd quarter profit, sending its share price of soaring.

2) Foxconn: It is being rumoured that it will be deploying 1 million robots in its plants. This robot army of Foxconn, affectionately called Foxbots, have the power of assisting Foxconn surmount the negative publicity that has plagued it – use of child labor, sweatshop operation, in-human living conditions for its workers while reducing the threat perceptions it had from its army of human workers –of strike & demand for higher wage, better working conditions.

3) Uber: This poster child of ‘Sharing / On Demand’ economy must have done an analysis & realised that the one source of embarrassment to it are due to human element – molestation charges levelled against its driver & drivers threatening to go on strike. Solution – go in for driverless car. Both these issues will be eliminated from the root. The driverless car will never misbehave with its ‘users’ nor will it ever threaten to go on a strike! On the other hand it can be on ‘Call’, 24*7 & work without a break & without demanding neither wage hike nor improvement in working conditions.

4) China – It has earned the sobriquet of being the factory of the world. To continue to wear this crown, it has to continue to remain competitive on pricing front. The process of automation can help it achieve this objective. Therefore China has adopted ‘automation’ in its manufacturing plants. This strategy has trickled down to customers facing business too. Take hotels. Now China has ‘themed’ hotels – Space themed, which are being managed by Robots – they double up as stewards, carrying your baggage to your rooms, serving you welcome drink.

5) Japan: As its population ages & working populations shrinks, Japan has embraced automation in a big way. In Supermarkets have Humanoids – human like robots, greeting shoppers. Mind you they greet every shopper in honorific Japanese & yes display emotions – they smile.

Bottom Line: As completion intensifies, companies & countries are exploring paths to squeeze out wastage from their system to boost productivity & eventually their bottom line.

If you too wish too improve your operating margins & bottom line but cannot, as yet, go in for automations of the kind I have shared in this post, then you can get similar result if you view your cost through a ‘new’ lens.

 

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rajesh-srivastava-insideiim

 

In this series, Rajesh Srivastava, Business Strategist and Visiting Faculty at IIM Indore gives you a regular dose of strategy case studies to help you think and keep you one step ahead as a professional as compared to your peers. Rajesh is an alumnus of IIM Bangalore and IIT Kanpur and has over 2 decades of experience in the FMCG industry. All previous Strategy with RS posts can be found here

Comments

4 comments

ramji yahoo

good article , but I have been hearing/reading this sentence that “Robot replaces humans” since 1995 but I have not seen that physically yet in India. Also how far the positive work atmosphere, live emotions filled office environment will be there when 4 out of 5 my next cabins are seated by Robots. (i am not a leftist or union leader). I wish we could have robots in construction works, traffic control police works,, vip escorts….

Rajesh Srivastava

Ramji the pace of adoption has increased in recent times. The benefits of ‘automation’ are
1. To increase productivity which will eventually lead to improvement of bottom line & also increase in customer satisfaction. Some of the areas you have mentioned will gradually come under the orbit of ‘automation’…

Sajal Singh

Great article sir. Thanks for sharing. On the question of robotics, wouldnt buying robots (assuming they arent developed in house) maintaining them and running them over a period of time incur costs? (TCO).
Second, as an asset they would depreciate over time, which means they ll need to be replenished every 10-15 years maybe. Humans on the other hand are supposed to become better with age professionally.
My hunch is the robotics makes sense in companies that have reinvestment capital, rely traditionally on manual repititive jobs, and can develop these robotics on their own vs buying them from outside. What do you think?

TCS has come out with a new AI Product called IGNIO, that aims to automate any manual heavy, redundant operations environment with complex processes by learning work and understanding context and promises a 25-30% cost savings.

Rajesh Srivastava

Sajal appreciate your feedback.
My response:
1. Cost of ownership: Of course it would require maintenance repair & everything else that a machine requires. But the benefits that it accords are significantly higher – precision, high quality workmanship etc…
2. Depreciation: It is beneficial for companies because it acts as a ‘Tax Shield’. Other than tax shield – the money that is ‘saved’ over the useful life of the machine can be deployed to buy new robots.
3. Humans getting better with age: This may be true for jobs which require 2 functions – workmanship & craftsmanship. But not left brained activities.
4. Automation including Robotics will in due course take over all ‘left brained jobs’ – repetitive jobs being just 1 trait.
5. Make v/s buy: Automations / robotics is a specialised skill .. they cannot be cultivated in-house.
6. Reinvest Capital: I am unable to understand your point & hence cannot reply..
7. IGNIO- is taking over Left brained jobs.
8. Automation / Robotics will lead to increase in productivity. Infosys has vowed to increase its employee’s productivity using these very tools.