Question

As a factory transform their production to automated production, will the direct materials costs increase or decrease? Why?

Answer 1

HI ,

Here is my View on the topic asked above.

Accordingly, when the production is transformed to Automated production sysytem then the Direct Material Cost will Decrease gradually.

Automated production :   

It Is a process in the development of mechanized production in which the control and monitoring functions previously performed by humans are transferred to instruments and automatic devices. Automation of production is the basis of the development of modern industry and a general trend in technical progress. Its goal is to improve the efficiency of labor and the quality of manufactured products and to create conditions for the optimum utilization of all production resources. Partial, integrated, and total automation of production are distinguished.

Reasons for Decrease in Direct Material Cost :

Total cost of production consists of costs of raw material, labour, energy consumed, and wastage. This has not changed with time. However, today we are also aware, in a competitive market, the cost of not reaching market in time, of lost cost of not meeting at the latest consumer demand, and cost of regulatory compliance, cost of maintaining consistent high quality.

  Many manufacturing companies have implemented modern automation technologies to improve manufacturing processes, but adoption to a complete utilisation of the technology benefits has been slow because introducing new technologies has resistances in the mindset of the operators.” Throwing light on why has this situation arisen, he feels that the very nature of an ‘innovative approach’ means there is a limited knowledge and experiential base that results in lack of openness in familiarising with the new technology and how it fits it in within the overall quality and performance approaches.

How factory automation clearly delivers value by reducing the total cost of production.
• Improving overall equipment effectiveness (OEE) that combines operations, maintenance, and quality measurements in a single key performance indicator
• Optimising critical energy consumption by putting energy intelligence to work
• Making functional safety an integrated part of machine and process automation to reduce downtime that causes significant losses, apart from penalties, legal costs, etc
• Adopting Smart Manufacturing through capitalizing on Industrial Internet of Things for real-time access to plant data for faster, accurate and actionable decision making
• Enabling remote monitoring for easy access and monitoring machine data with fully automated and integrated systems resulting in reduced operational costs.

The commonly attributed to automation include higher production rates and increased productivity, more efficient use of materials, better product quality, improved safety, shorter workweeks for labour, and reduced factory lead times. Higher output and increased productivity have been two of the biggest reasons in justifying the use of automation. Despite the claims of high quality from good workmanship by humans, automated systems typically perform the manufacturing process with less variability than human workers, resulting in greater control and consistency of product quality. Also, increased process control makes more efficient use of materials, resulting in less scrap.

  Storage facilities are tailored to the needs of accessibility, security, and climate. Refrigerated space must be carefully designed, and heated areas must also be efficiently planned. In all storage facilities, fireproof materials such as concrete and steel are preferable. These materials lend themselves readily to prefabrication and have good insulating and acoustic properties.

Warehousing, the dynamic aspect of storage, is largely an automated process, designed to facilitate stock rotation by means of a combination of equipment such as stacker cranes built into the storage area, remote-controlled forklift trucks for vertical and horizontal movement of goods, and gravity flow racks, in which pallets are automatically replaced in a line. Many warehouses are computer-controlled from dispatching towers.