Manufacture

Automation trends in component manufacturing

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Discover in-depth insights and begin your journey toward a transformative manufacturing future.


In brief
  • A significant majority (80%) of component manufacturers plan to improve their level of automation by the end of this decade.
  • While AI holds promise, it isn’t a top priority yet as companies need to reach a certain level of automation before they can benefit from advanced tools.

In the world of component manufacturing, the drive toward automation and digitalization is transforming how companies operate. But what does this shift really look like, and how can manufacturers harness it to stay competitive?

In a recent study, Sandvik Manufacturing Solutions, in collaboration with EY-Parthenon teams, surveyed 341 component manufacturers across North America and Europe to explore their largest challenges and their journey toward automation.

The study explored the automation journey and key challenges faced by component manufacturers, utilizing a framework adapted from autonomous driving to assess and advance manufacturing maturity. This approach enables manufacturers to recognize their current position and strategize their next steps, as outlined in the first report derived from the study.

As we present these findings, we invite you to consider the broader narrative of automation in manufacturing. From the details of the shop floor to the decisions in the boardroom, these reports offer a window into the ongoing evolution of an industry at the crossroads of gradual automation improvements and disruptive technology change.

Access the full report here

Six levels of automation in component manufacturing

Component manufacturers are confronted with two pressing challenges that they must navigate to remain competitive: a landscape of complex customer demands and a diminishing skilled workforce due to post-COVID-19 retirements. In this critical moment, the key to their success lies in strategic automation and a commitment to upskilling employees. This approach will determine which companies will thrive, shaping the future of production in terms of efficiency and cost-effectiveness, particularly within the US and EU markets.

To tackle this, EY-Parthenon teams [AM1] and Sandvik Manufacturing Solutions developed a model based on the six levels of autonomous driving, detailed in a report inspired by the study Six levels of component manufacturing automation[AM2] . Borrowing from the Society of Automotive Engineers (SAE), this framework served as the basis for analysis to understand where component manufacturers currently stand in terms of automation maturity and to explore their ambitions for advancing toward a more automated and data-driven future.

In the report, we outline six levels of manufacturing automation, each representing a stage of technological integration:

  • Level 1 represents companies that lean heavily on manual processes, with basic system support for their human workforce.
  • Level 2 introduces assisted systems, where automation begins to support production, albeit at a limited cell level.
  • Level 3 moves to semi-automated operations, with manufacturing software aiding in resource planning and optimization while operators maintain control.
  • Level 4 represents highly automated processes, where automation extends across multiple cells, and digital twins provide optimization insights.
  • Level 5 sees the widespread adoption of robotics, offering a fully automated and integrated system that adapts in real time.
  • Level 6 envisions “lights-out” production, a fully autonomous factory environment driven by digital components that require no human presence on the production floor.

Where do manufacturers currently stand?

In the survey, manufacturers were asked to self-assess their production sites. The results show an industry in transition, with a significant number identifying with Levels 2 and 3 — signifying a move toward more automated systems, yet with many still on the cusp of deeper integration. Interestingly, a notable portion are at Level 3, where semi-automation is in place but full connectivity across production cells remains the next ambition

The graph showcases the current levels of automation at the respondents’ manufacturing sites. Source: Six levels of component manufacturing automation
" hyperlink to the report "

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Size appears to play a role in automation maturity, with larger companies generally reporting higher levels of automation. As companies progress through the automation levels, the complexity of customer requirements emerges as a growing challenge, underscoring the need for robust data connectivity and system integration to enhance efficiency and cost-effectiveness.

For those approaching the most advanced automation levels, sustainability emerges as a concern, suggesting that a strong foundation in data connectivity and systems is necessary to tackle such sophisticated challenges effectively. It is important to recognize that these self-assessments may reflect a degree of optimism, as some companies might base their evaluations on their most advanced production lines rather than the average across their operations. 

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    Enablers to increase the level of automation

    An overwhelming 80% of manufacturers are ready to take their operations to the next level. The goal? To move one level further on the automation ladder, with many setting their sights on even more ambitious advancements. The roadmap to this progression is underpinned by crucial enablers: state-of-the-art equipment, precise data collection and skilled staff trained to navigate the evolving landscape of manufacturing technology.

    For those just beginning their automation journey, the emphasis is on acquiring the right shop floor equipment and investing in employee training. As manufacturers climb toward higher levels, the emphasis shifts to sophisticated data and software capabilities, with artificial intelligence (AI) emerging as a transformative force, particularly for those nearing the scope of fully autonomous operations — though only a handful of respondents reported reaching Level 6 of automation.

    Automation is a marathon, not a sprint. Strategic, incremental investments in automation are essential for manufacturers to meet changing customer needs and stay ahead in the long run.

    The future of component manufacturing

    After exploring the current levels of automation and the integral role of software, what is next for component manufacturing? Companies are facing a pivotal moment where the need for innovation meets the practicalities of production. They are navigating through a complex interplay of customer demands and a scarcity of skilled labor — a challenge that is consistently reshaping the industry regardless of company size or current automation level.

    The push toward greater automation is supported by a strategic approach to data utilization, cost management and the integration of advanced technologies on the shop floor.

    The main things that help companies automate are shop floor equipment like robots, training for employees and collecting data. These are crucial for taking the first steps in automation. Training is particularly important due to the lack of skilled workers and the need to operate increasingly complex machines. Data collection is also vital because it helps companies analyze their operations and make improvements. AI and digital twin technologies aren't a top priority yet because companies need to reach a certain level of automation before they can really benefit from these advanced tools. 

    Automation is set to transform component manufacturing, with the industry evolving across various levels of maturity, each presenting its own set of challenges for manufacturers. The way ahead lies in meeting the increasingly complex customer requirements and leveraging automation while upskilling the workforce to meet the demands of this evolving landscape.


    Geographically, there's a subtle distinction, with European companies more likely to consider themselves at least at Level 3 compared with their American counterparts — 75% versus 64%, respectively.


    How EY-Parthenon teams can help: enabling your future in manufacturing

    EY teams bring a wealth of knowledge in technology and innovation, along with a vast network across various sectors, to help position your business for the future. EY resources and expertise are tailored to empower decision-makers to take confident and informed steps toward growth and efficiency:

    • Gain expert insights: Utilize our diverse tools and approaches for a personalized assessment that meets your manufacturing objectives and addresses your unique challenges.
    • Strategize for automation: EY teams can help guide companies in integrating hardware capabilities with advanced software solutions, ensuring a seamless transition into the era of industrial tech. Leverage our extensive tech expertise to create strategies that position your business as a leader.

    Ready to navigate the future of manufacturing? Irrespective of where you are on your journey, we can help facilitate your evolution, blending hardware, solutions and software to redefine what's possible.

    Contact us today


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