The Manufacturing Executive
The Manufacturing Executive

Episode 86 · 7 months ago

The New ROI of Automation w/ Scot Lindemann


Too often, we’re having the wrong conversation about automation ROI.

In a time when simply finding labor is the biggest challenge many manufacturers face, the ROI conversation around automation is now about much more than replacing labor costs.

So says today’s guest, Scot Lindemann, CEO at Mission Design & Automation, who joins the show to explain how to make the conversation around automation a more fruitful one for everybody.

Join us as we discuss:

- The unseen returns of automation

- Why automation is a journey of continuous improvement, not a destination

- Scot’s take on labor on the current state of labor in manufacturing 

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Where they do it. Five asses, free peas whatever system you have in place. That's up to you. I don't have a preferred source there, but the fact that you're doing those and approaching it as a continuous improvement journey, and automation and improvements in your processes are part of that. That's the successful recipe for a business. Welcome to the manufacturing executive podcast, where we explore the strategies and experiences that are driving midsize manufacturers forward. Here you'll discover new insights from passionate manufacturing leaders who have compelling stories to share about their successes and struggles, and you'll learn from B tob sales and marketing experts about how to apply actionable business development strategies inside your business. Let's get into the show. Welcome to another episode of the Manufacturing Executive podcast. I'm Joe Sullivan, your host and a CO founder of the Industrial Marketing Agency guerrilla seventy six. I've spoken with a variety of manufacturing automation experts over the past few years, and a common theme that they all seem to touch on is the misperception that automation is an all or nothing investment. Sure this may have been true at one time, but the technology is changed and continues to change so rapidly today. Starting small is absolutely an option. I guess today packs a variety of insights into a great conversation about treating automation as a process of continuous improvement, how to think about Roy in the context of automation and a lot more. Let me introduce him. Scott Lindeman, CEO of mission design and automation, has thirty plus years of leadership in automation and robotics. Scott field a variety of leadership roles at JR automation and was instrumental and helping them achieve record growth until he left in two thousand and sixteen as its co CEO. Scott then took the role of president at BACCA systems, a stone robotics fabrication equipment provider in Southeast Michigan, from two thousand and seventeen to two thousand and twenty. Beyond his time working on the Industrial Automation Integrator Front, Scott has been active and first robotics. Has Been a member and director for the Robotic Industries Association area and is one of a limited number of recipients of fanic robotics president's Circle Award. Scott has also served on the Lake Superior State University Board of Directors and as a board member and chairman of the Board for Lake Shore Advantage, a West Michigan nonprofit focused on economic development. Scott, welcome to the show. Yeah, thanks, Joe. Thanks for having me. Great Will Scott. Last summer I moderated a panel discussion with you and your colleague Ryan Lillibridge, from mission, along with Luf and Azzo from fanic and Eric Nieva's and Brent Barsi from p one robotics, and the topic, which was a really great conversation, was the new Roi of automation, and one of the major themes from this discussion how the Rli conversation around automation needs to be about much more than just replacing labor costs right and especially during a time when Labor can even be found for many. So how can you even, you know, compare it? So I just want to open it up to you here. Can you talk about what are alive automation means from your perspective? Yeah, thanks to we did have a rock star Panem back then and as many layers. So you know, I first I would back up and say every business, you know, we're speaking with business owners of all the time. They all have limited amounts of a few things right in, one of them being capital and or redeployed profits, and how they choose to invest that and where they want to invest their money starts with the discussion about how much and why and where will you invest your money as your company, whether it's sharing profits, whether it's reinvesting in capital equipment and automation, or whether it's buying real estate or whether it's just investing in ongoing concerns. So the first thing you have to realize is there is a limited amount of capital in most businesses and that first decision owner or manufacturing organization has to make is how much capital and...

...where are we going to deploy it? And I think what's changed in the basis of that is that our eyes for automation equipment, or even just for caring of capital equipment in general has gotten more exact, less risky easier to implement over time than it has been historically. was always a big lead to get started, and we'll hit on that later on sure, but fundamentally that or my calculation starts with even what are we wanting to invest in as a company and why? So automation can be done for many, many reasons. So you start with why I want to invest, what I want to invest, and then you get to the row I of what am I trying to accomplish? Right, and that's where our discussion went. Is it just replacing a person? There's a mathematically equation there. It rarely is, though. Right. It's really that there's quite often many more important things to consider in your organization. We talked about a lot of them. Right, whether it's a quality improvement, whether it's I can get people and how much is that going to cost me, a lost opportunity, those kind of items. It's also the quality of life for your employees in your team and associate members in your company. And do you want them to do in those dirty doll dangerous jobs and repetitive things all day, or would it improve your company to have a better work environment? And then there's another issue also, when your employees and outside people you're trying to recruit see that you're investing in the future of the company by buying equipment and spending money on automation, they enjoy working there and other people enjoy coming to work. Also, it's can be recruiting tool. As you look at where you spend your capital and how you spend your money, I think it's much more than a simple equation on the return on investment on this exact item. I think successful businesses consider all of those things and way them out accordingly. They don't go in a nice spreadsheet so well, but they're actually very important to your investment decisions and also how and when you get going on your automation journey, how far down the past you are and how much money you do on invest matters, of course, but how you factor that in and the ry equation is not so simple anymore and it shouldn't be. Yeah, I think you bring up a lot of good points and a lot of this stuff. You know, if you just stop and think about it for a minute, it's kind of common sense. Not Everything you do that is an improvement to your business is going to show up on the PNL this month or maybe even this year. That you know there are decisions you're making for the long term viability of your company. And you brought up a coup of couple really good ones. I mean the you know, the idea of having happy people and retaining them, especially in a time when when that's probably the biggest challenge a lot of companies are facing, and so I just think it's I also can't help drop parallels to my world as a guy running a marketing agency. I can't tell you how many times I watch companies pull the plug on a marketing program after six or nine months because they don't have a, you know, a four x Roy and you know, the reality is you're investing in your brand and you're, you know, in the perception of your brand and your establishing trust and awareness in your market. So it's just it's something that kind of hit it hits home to me because they you know, it's just not everything you're going to see right away. So it depends on the kind of business here enemies it. Again, understand them value drivers in your business and in different departments with in your company. Even as a manufacturer, you know your need an engineer that and the engineer loves to get new computers and a faster Internet service and there's a value to that. Is there direct Roi caval equipment is very tangible and automation becomes even more tangible. So you can hopefully measure the exact impact fairly readily, but the point about the Roi and having more to it is some of those other factors can be even more important than the exact payback calculation. Of course it must be there and you have to do your measurements and you have to measure...

...your Rolign your paybacks. What we will talking about and we want to keep bringing up to business owners as there's a lot more to it and they are very intangible, but they can be very important to the future of Your Business, for sure. It's got a common theme that I've heard from other experts in the automation world. Eric neevis comes to mind actually, from plus one, who I know you know very well when I had him on the show. You know, he kind of talked about this idea that it doesn't have to be all or nothing, and it's almost a perception that's it's just kind of misunderstood perception here that you either have to go all in and make some two million dollar investment out of the gate or you can't do anything. And I know from from talking to you and others that this is not often not the case. So how can you treat automation as a continuous improvement process and start to ease into it. Yeah, I know you hit the nail on the head with those last few words about it being a continuous improvement process for your company. It's a journey. It never ends. Of course it comes and chunks when you make purchasing decisions, because there's going to be a payback. Okay, but along the way it started with again just saying we want to improve our company, starting on the initiative to talk about where can we improve, how can we improve, and through those discussions it's the actually the most valuable part of the whole thing is having your group of people together that know your processes, asking them where can they improve. Some of it can be very simple jigs, fixtures tools, some can be process improvements that they can implement themselves, and then, of course, it gets into automation US. So being able to start in automation is again about a journey. It's not a onetime thing and it shouldn't be. It should be a continuous effort and it should start with again, your people, and then you need to find out how am I going to partner? Who Am we're going to partner with? Again, it comes back to a little bit understanding the current value proposition your company does, but also the future of where you want to be as a company. So you have to start out saying hey, we want to improve, we're going to improve, set some directions and then have these conversations. And then along the way you find out what are who are good partners. You find out which people on your team are wired and want to continuously improve and you give those people some more leeway and pretty soon they're coming up with their own ideas. Some, again, can be implemented themselves and then some you need an automation partner with of some kind. So then you reach out locally, you find some people that are doing similar things, and now you find your partners and you start down this journey. It can be small dollars to get started and get comfortable, or can be big equipment, big decisions, buying new equipment or going to a new building. There's all kind of scale that comes in on investments in your company. But when we focus on automation, I think there is it's big and it's risky and I heard another one of my friends in another business who did a big project and was unsuccessful and it took him a year and a half and it never worked and there's this fear out there. So what you want to do again is get started, set the goals, have a good agenda for a long term plan and then take bite size pieces and then when it's right, you can take bigger chunks. It should present itself very naturally in the continues to improve in process. Whether you do in fives, is three piece, whatever system you have in place, that's up to you. I don't have a preferred source there, but the fact that you're doing those and approaching it as a continuous improvement journey and automation and improvements in your processes are part of that. That's the successful recipe for a business and it can be very simple, as you said, and never ending. You don't want it to be a onetime deal. You want it to go on and on and on con perpetuity. Yeah, that's great. You know, I think it always helps when you can illustrate with maybe an example or two, and I'd love to hear you know just from your many experiences in this world. Now there are there some cases you can the strait where someone came in and it's maybe started small and figured out how to start that continuous improvement journey. Oh Yeah, we have...

...a lot of stories to tell. So I think there's a couple different ways you can look at stories. But usually when somebody gets started, as I said, they comes out where they've identified a skipe or a process somewhere and they want to start talking to some experts in there. So what happened? Did you get some form of an RFQ or a proposal phase? And they'll somebody will reach out and say can you come look at this opportunity? So what happens is a few automation smart guys go visit a customer and then we see what's going on and will define the scope that your team has come up with. And then what quite often happens is through the Q and a time that will spend is will we'll see some other places that maybe more important automate. So I'll tell the couple stories. How we go to a company and let's just say they make football's great. So there's sewing leather, they're cutting leather, they're ten leather, they're doing all kinds of things and then, as you walk through their operation, they want to make one assembly line to make a footballs because they want to improve the how do you want to say? They want to improve the opportunity to be more consistent and how a football is made, because they're supplying footballs to college teams, professional teams, even I. So they've got their problem definition and it's a big, a big can of worms. It's going to be opened up and we're going to dig in to it. We spend a bunch of time. We said, boy, this is going to be really difficult and people are really good at this actually. So what would maybe what we should do is look up streaming, downstream, on the processes instead, where their automation can be simpler, it can bite off a couple smaller chunks and let the people do what they're really good at and reinforce them and give them some tools for they care and job can be better. But that's one really example where it started out it's going to be a couple million dollar really difficult automation project and through the Qa you said, you know, let's look at where the people should be still used, how we can help them. Then you start out with a few just mo materal handling projects, the leather cutting project. That's nice and simple some packaging equipment that just help some package and wrap the footballs better. And then in the end, and when they went back to their customers, they actually liked the handmade variation because then short of brady gay you, but you can adjust and pick the footballs that fit you. And those guys really do. They prefer a little variability because they want to pick and choose their own footballs and if they were actually perfect, maybe they weren't as Nice. So they learned something through their journey. And again it was started out as an all or nothing and they had money allocated and they're ready to go, but in the meantime let's just take some smarter automation, lower risk and get started. And it's just a good story of how automation applies in a lot of different industries. We can pick automotive and can sumer goods and medical devices forever, but I wanted to use a couple examples maybe of things that aren't normal industries and how automation is being used and how that journey can get started. In many ways. That's great. Any other stories you'd like to tell, Scott about this idea of continuous improvement or easing into automation. Yeah, sure, I get a couple more joe. But when that comes to mind, and it's a story that goes across many industries, but as an example of an injection molding company and they have people tending the molds and adding some value, but it applies to a casting company or a CNC machining company or anybody who's got a lot of funk apple into big process equipment. Right. So you have a person there now and you've you're doing well and you measure them and you're trying to improve and then someone says, you know, I think we can get a robot to do this. So we come in, we evaluate, we put a robot in place and then what happens? They start measuring the improvements and what they pick up on is the consistency. The machine continues to run all the time, every day. It actually runs eight hours a day. It doesn't take lunch breaks. You hear all these analogies, but in reality what happens to the business is all of a sudden he's got extra...

...capacity on his really expensive bit of equipment because he had sold it and it was two and a half shifts worth of production. But he couldn't feel the other half. But but the automated all of a sudden he ends up picking up enough capacity to add some more production into his machine. He picks up a new customer and he runs it on third shift now because he's got the capacity because the automation has made his equipment more consistent. So it's didn't replace the person. The persons they're adding the value, but the automation is letting the big capital equipment become more consistent and then allows you to pick up some additional customers without the funk capital cost. So, as a business owner, a small investment in automation to keep your expensive capital running more consistently and more contributing more every hour freeze up some time, all of a sudden you have capacity that you didn't even know was in your process, and I think that's another one of those hidden values. You get started on the automation journey, you take one little bite of it, all of a sudden you realize a bunch of extra value that you didn't know was there. And those stories go on and on across a lot of industries and I think that's again the value of automation can come into play in many ways. You the ones you expect and you measure and then there's these unexpected benefits. It can have big impact on your business. I love that one. I mean just getting more out of what you've already invested in is you know, it's not all about bringing in new stuff right like it's going to be. Let's optimize what we've got and get more out of they get more capacity. It's a great example. So, Scott, let's let's get your perspective on what's going on with Labor in the manufacturing sector right now. Yeah, for sure. So we heard every day. We just had two customers yesterday. They come in, they can get people and how to get the people. And again, it's above created an environment where people want to come to work, but it's also about making the task that are in front of them as feasible as possible in the as enjoyable as possible. They can get people. We we used to use forty five to Fiftyzeros a person as the cost of a person. They said literally they're up to ninety FIVEZERO dollars a year right now as their cost and they factored in a different R lie numbers. We spoke earlier because they're considering that they have lost opportunity costs in there when they don't get people, and those people don't come in every work every day, but they're going to be tolerant of them. They have thicknesses, they have outages right now where people have to stay home for quarantine. So they've factored more things in. That's not the pure value of the person, but it's the amount of money that it takes the company to replace that person if they're not there, and that's why much money they've allocated now. So it's definitely a trend where it's harder to find the people's definitely a trend where the cost to have people and have them be an integral part of your process. Your process depends on people in different ways and there's a cost associated with getting those people. Are having the wrong person or not having a person at all. They're the training of the people. So the Labor markets tight for manufacturers for sure. How urgently and how quickly you can change your mindset and make your manufacturing process is less reliant on people is right now the main topic of discussion. Right it's not replacing a person here or there for money. It's about reevaluating your internal processes and how can we make our process is less dependent on having the one per student who knows how to do this job be critical to our company? Right? This is a it's a fragile way to run your company. So again, when you start on this journey, look at your processes, you identify those as risk places and then you will try to put some numbers to him. You'll realize really fast how critical labor is to what parts of your manufacturing process and how can you reevaluate and move that around? And ideally you want less variability, counting on the people now, because it's harder to get than ever. That's a good take. So, Scott, for any manufacturing leaders are listening right now thinking, you know, Jeez, I know I need to...

...start this automation journey, but feeling pretty intimidated. I don't know a lot about this. I'm not sure what to like, where to start. What advice can you offer them? Yeah, I think one of my best things is again just to get started and it's it's an easy thing to say, but it's actually easy to do. Also right. So reach out to some other people in your industry. Reach out to some other people outside your industry. Right, I think most of the value comes from your own industry. You can benchmark yourself and you get started. You see how other people have already done and you you come and you'd say, Hey, we already can do this because of the street. They're doing this and I saw it and it's nice. So you get started by reaching out and going and seeing some people and then, as I just said, going outside your industry and seeing what some other people in different industries are doing, and then how can that adapt to you? It will not be wasted time, right. It will be very valuable time and spend to educate yourself and to educate these leaders that I talked about. You identify the people who do want to improve and have the ability and the desire, take them on a road trip, take them to another company somewhere that you know, do a walk around, ask them why they do the things they do and then how it might it applied to your business. So this is another way of questioning your own internal processes as you start the journey. In the end something will have to change. You'll buy automation, you'll do some tools, you'll outsource some things, you'll insert some things, all of those are continuous improvements in your process and automation is one piece of it. Only right. But I think again to be scared of it is wrong. So get started, keep your eyes open, go find out what you can from your industry and from others and then engage and then see where it goes. And I think there's a big risk of we we tried this before and it didn't work. So you know what's happening now is the technology is easier than ever. If we get caught up in automation systems and we talked about robots and vision systems and AI and machine learning and all of that's really fun buzz words and you can read about it forever, but in reality it's your process, it's your manufacturing people that need to make the processes work and if you drive for some improvements it will show up on your bottom line sooner than most people even believe. Right. I think it's a direct thing. When you start in trying to improve and study your processes, you'll drill into them and it will improve. So there's the main thing. Automation is a key component of that and it can be and it is easier than ever to get started. The second piece is, you know, find a partner and make it a long term journey. We we talked about this a lot as industry leaders. It's a journey. It's a journey as a journey is not just a project. And then that what that does is get you thinking longer term and it gets you to recognize that when you pick partners and when you make commitments, still will be struggles along the way and you don't want to just go oh well, we try it once, it didn't work well, let's stick with it because it's part of our long term journey. Is a hiccup in the roads here there, and our partners are with us and our people are on board, we're going to figure this out and it will work right. So that commitment it also comes with using that word about a journey and a continuous improvement process instead of just a onetime project, past or fail, and I think those are important things to step up. So get started making a journey and go figure out the right ways and don't be afraid of the automation, because the technology is getting way better every single day. Right. It's just one of those things. The analogies are all around us how things are easier and easier and easier to use every day. So what was difficult two years ago is maybe automatic right now and it just works. And that's our job to stay in touch with the technology and keep pushing it. When you're running a business, you don't need to spend time doing it. You should count on your partner. So look around and get started. Great Advice. I like it. It's Goott. Is there anything I did not ask you about that you think needs to be communicated to manufacturing leaders? Are Listening Right now? Yeah, for sure. So I think there's real value proposition and knowing your business and where your value is as...

...a business and as a leader of a business. Going through that evaluation can be tough sometimes because you may think you're running a business that depends on people in a more people I get, I can scale. Okay. Well, that that's maybe been called in the question now, because you can't get endless people anymore. So what's your real value proposes? Know what's it going to be five years from now? What are you trying to create a long term vision? To Improve Your Business, to make more profits, to employ more people, to employ the people I have in better situations. Those are all real fundamental questions to ask as a business leader and automation and technology is a piece of that. So again, I think it's important to understand your business, where it is now, where you want it to be, and then consider the dynamics have play right now. This is an inflection point in manufacturing in the US and on showing and all of those macro trends that are happening are very, very real, so pay attention to them and then, yeah, just know what's going on. Read the evaluation and the conversation is the valuable part of this discussion. You'll do projects, projects will go well here there, but in the end it's all about improving your process and making your company better for you and for all of your people involved in the business. Great Scott, before we put a wrap on this, tell our audience a little bit about mission design and automation and where your expertise their list? Yeah, sure, thanks to I think you know, any good system integrator has to have a lot of what I just talked about, that desire, in the passion to go in and study someone else's processes, help them figure out where their magic is and then want to improve that and be part of that. So this is again as a general systems integrator, which is what mission design does. We're in Holland, Michigan, and we're around a hundred people and we have a nice bit of mix of experience, people that have a lot of different industrial experience in different industries. But again, the main thing is pick a partner and get involved in mission definitely looks to partner with manufacturers and study their processes, improve them for the long term and then do projects again and again and again. This is one of the main success stories for most integrators. Is Not unique to mission, but I want to highlight that as an important takeaway. People can do projects based on scipes and spects, but if you want a true partner, someone that actually add value and create value in your company, look hard for that as a passion at the card companies you pick and admission. We're definitely wired about that and it's what we pushed hard. So we can back that up. I've gotten to know a number of members of your team and have been nothing but impressed with, you know, the level of expertise and openness to discussion and share insights. So please take a moment to go check out what mission design and automation is doing in this space. They're and movers and checkers, for sure. So, Scott, tell our audience how they can get in touch with you and where they can learn more about mission. Sure, I think you can google search and find systems in the greaters everywhere. Missing designcom is where our website is, and you can go there, you can talk to people and again, will be more than happy have a phone conversation and come out and visit you and see Han faceto phase exactly what's going on and where your struggles are and where your opportunities are. And I think that's the the start of every conversation is to get to know each other, reach out and see where the path goes. But you got to again get started. It's really fundamental thing. So look up the website, give us a phone call, asked about us and I will follow up for sure and we'll see that assume perfect well, Scott, thanks for doing this all right. Thanks Jo. As for the rest of you, I hope to catch you on the next episode of the manufacturing executives. You've been listening to the manufacturing executive podcast. To ensure that you never miss an episode, subscribe to the show in your favorite podcast player. If you'd like to learn more about industrial marketing and sales strategy, you'll...

...find an ever expanding collection of articles, videos, guides and tools specifically for BTB manufacturers at Gorilla Seventy sixcom learn thank you so much for listening. Until next time.

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