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Fanuc robots at work on a Honda automobile. | Supply: Fanuc

A gaggle of researchers on the College of Cambridge discovered that robots can lower productiveness within the brief time period however can improve it in the long run. This U-shaped phenomenon is because of the relationship between decreasing prices, growing new processes and innovating new merchandise. 

The researchers studied trade knowledge from the UK and 24 different European international locations between 1995 and 2017 compiled by the European Union (EU). Whereas robots have been proven to boost labor productiveness at an trade or nation stage reliably, it hasn’t been studied how robots have an effect on revenue margins at an analogous macro scale. 

Whereas the information didn’t enable the researchers to look at developments on the stage of particular person corporations, they have been in a position to take a look at complete sectors, primarily in manufacturing the place robots are generally used. Combining the EU knowledge with robotics knowledge from the Worldwide Federation of Robotics (IFR) database. 

Evaluating these two units of information, the workforce was capable of analyze the impact of robotics on revenue margins at a rustic stage. The researchers then carried out a collection of interviews with an American medical gear producer to check their experiences with robotic adoption. In all, the workforce discovered that at low ranges of adoption, robots have a unfavorable impact on revenue margins, however, at increased ranges of adoption, robots can improve income. 

“Initially, corporations are adopting robots to create a aggressive benefit by decreasing prices,” co-author of the research Chander Velu from Cambridge’s Institute for Manufacturing mentioned. “However course of innovation is reasonable to repeat, and rivals may also undertake robots if it helps them make their merchandise extra cheaply. This then begins to squeeze margins and cut back revenue margin.”

Based on the researchers, many corporations undertake robotic know-how as a result of they wish to lower prices. This ‘course of innovation’ could be simply copied by rivals, reducing prices throughout the trade and creating smaller margins for everybody. As soon as these corporations shift their focus from streamlining their processes to product innovation, which may give them better market energy and the flexibility to distinguish from rivals, income improve. 

“Whenever you begin bringing increasingly robots into your course of, ultimately you attain a degree the place your complete course of must be redesigned from the underside up,” mentioned Velu. “It’s vital that corporations develop new processes similtaneously they’re incorporating robots, in any other case they may attain this similar pinch level.”

The analysis workforce mentioned that if corporations wish to attain the worthwhile aspect of the U-shaped curve extra shortly, then they need to concentrate on adapting their enterprise mannequin concurrently with robotic adoption. Corporations can solely use the ability of robotics to develop new merchandise and drive income after robots are totally built-in into the enterprise mannequin.

This analysis was printed within the journal IEEE Transactions on Engineering Administration. It was supported by the Engineering and Bodily Sciences Analysis Council (EPSRC) and the Financial and Social Analysis Council (ESRC), that are each a part of UK Analysis and Innovation (UKRI). Chander Velu is a Fellow of Selwyn School, Cambridge. Duncan McFarlane, one other co-author on the research, is a Fellow of St John’s School, Cambridge.