̽��ֱ�� of Cambridge - Duncan McFarlane

Robots cause company profits to fall – at least at first

sc604 — Thu, 03 Aug 2023 10:05:12 +0000

̽��ֱ��researchers, from the ̽��ֱ�� of Cambridge, studied industry data from the UK and 24 other European countries between 1995 and 2017, and found that at low levels of adoption, robots have a negative effect on profit margins. But at higher levels of adoption, robots can help increase profits.

According to the researchers, this U-shaped phenomenon is due to the relationship between reducing costs, developing new processes and innovating new products. While many companies first adopt robotic technologies to decrease costs, this ‘process innovation’ can be easily copied by competitors, so at low levels of robot adoption, companies are focused on their competitors rather than on developing new products. However, as levels of adoption increase and robots are fully integrated into a company’s processes, the technologies can be used to increase revenue by innovating new products.

In other words, firms using robots are likely to focus initially on streamlining their processes before shifting their emphasis to product innovation, which gives them greater market power via the ability to differentiate from their competitors. ̽��ֱ��results are reported in the journal IEEE Transactions on Engineering Management.

Robots have been widely used in industry since the 1980s, especially in sectors where they can carry out physically demanding, repetitive tasks, such as automotive assembly. In the decades since, the rate of robot adoption has increased dramatically and consistently worldwide, and the development of precise, electrically controlled robots makes them particularly useful for high-value manufacturing applications requiring greater precision, such as electronics.

While robots have been shown to reliably raise labour productivity at an industry or country level, what has been less studied is how robots affect profit margins at a similar macro scale.

“If you look at how the introduction of computers affected productivity, you actually see a slowdown in productivity growth in the 1970s and early 1980s, before productivity starts to rise again, which it did until the financial crisis of 2008,” said co-author Professor Chander Velu from Cambridge’s Institute for Manufacturing. “It’s interesting that a tool meant to increase productivity had the opposite effect, at least at first. We wanted to know whether there is a similar pattern with robotics.”

“We wanted to know whether companies were using robots to improve processes within the firm, rather than improve the whole business model,” said co-author Dr Philip Chen. “Profit margin can be a useful way to analyse this.”

̽��ֱ��researchers examined industry-level data for 25 EU countries (including the UK, which was a member at the time) between 1995 and 2017. While the data did not drill down to the level of individual companies, the researchers were able to look at whole sectors, primarily in manufacturing where robots are commonly used.

̽��ֱ��researchers then obtained robotics data from the International Federation of Robotics (IFR) database. By comparing the two sets of data, they were able to analyse the effect of robotics on profit margins at a country level.

“Intuitively, we thought that more robotic technologies would lead to higher profit margins, but the fact that we see this U-shaped curve instead was surprising,” said Chen.

“Initially, firms are adopting robots to create a competitive advantage by lowering costs,” said Velu. “But process innovation is cheap to copy, and competitors will also adopt robots if it helps them make their products more cheaply. This then starts to squeeze margins and reduce profit margin.”

̽��ֱ��researchers then carried out a series of interviews with an American medical equipment manufacturer to study their experiences with robot adoption.

“We found that it’s not easy to adopt robotics into a business – it costs a lot of money to streamline and automate processes,” said Chen.

“When you start bringing more and more robots into your process, eventually you reach a point where your whole process needs to be redesigned from the bottom up,” said Velu. “It’s important that companies develop new processes at the same time as they’re incorporating robots, otherwise they will reach this same pinch point.”

̽��ֱ��researchers say that if companies want to reach the profitable side of the U-shaped curve more quickly, it’s important that the business model is adapted concurrently with robot adoption. Only after robots are fully integrated into the business model can companies fully use the power of robotics to develop new products, driving profits.

A related piece of work being led by the Institute for Manufacturing is a community programme to help small- and medium-sized enterprises (SMEEs) to adopt digital technologies including robotics in a low-cost, low-risk way. “Incremental and step changes in this area enable SMEs to get the benefits of cost reduction as well as margin improvements from new products,” said co-author Professor Duncan McFarlane.

̽��ֱ��research was supported by the Engineering and Physical Sciences Research Council (EPSRC) and the Economic and Social Research Council (ESRC), which are both part of UK Research and Innovation (UKRI). Chander Velu is a Fellow of Selwyn College, Cambridge. Duncan McFarlane is a Fellow of St John's College, Cambridge.

Reference:
Yifeng P Chen, Chander Velu, Duncan McFarlane. ‘ ̽��ֱ��Effect of Robot Adoption on Profit Margins.’ IEEE Transactions on Engineering Management (2023). DOI: 10.1109/TEM.2023.3260734

Researchers have found that robots can have a ‘U-shaped’ effect on profits: causing profit margins to fall at first, before eventually rising again.

It’s important that companies develop new processes at the same time as they’re incorporating robots, otherwise they will reach this same pinch point

Chander Velu

kynny via Getty Images

Robots on a manufacturing line

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̽��ֱ��future of flying

skbf2 — Thu, 16 Feb 2023 14:46:49 +0000

Cambridge and Boeing have been working together for 20 years. Today they are combining their research strengths and industry know-how to speed aviation towards a carbon-neutral future.

Partnering with local hospitals during COVID-19

lw355 — Tue, 13 Dec 2022 09:20:13 +0000

From developing intensive care equipment to tackling supplies of PPE and oxygen, here's how a group of Cambridge researchers refocused and partnered with local hospitals during COVID-19.

Digital manufacturing on a shoestring

lw355 — Thu, 24 Feb 2022 08:30:57 +0000

How approaches to low-cost digitalisation pioneered by Cambridge researchers are helping smaller UK manufacturers to go digital and reap the rewards of the Fourth Industrial Revolution.

Safety screens

cjb250 — Wed, 03 Feb 2021 10:52:24 +0000

Since the start of October, a dedicated team drawn from across the ̽��ֱ�� and its Colleges has been running an innovate programme to screen its students for COVID-19. Getting it up and running in time may have been a Herculean task, but its success has been remarkable.

Cambridge engineers recognised with awards for pandemic service

sc604 — Mon, 17 Aug 2020 09:30:22 +0000

̽��ֱ��engineers, from the Institute of Manufacturing and the Whittle Laboratory, are among the 19 winners announced today for exceptional engineering achievements in tackling COVID-19 in the UK. In addition, two Cambridge alumni, Dr Ravi Solanki and Raymond Siems, were recognised for their work with the HEROES charity. In less than two days, their team turned an idea into a platform with genuine impact: a secure website through which more than 543,000 items of much-needed support have been provided to NHS workers, from sustainable PPE to counselling services and child care.

̽��ֱ��awards have been made to teams, organisations, individuals, collaborations and projects across all technical specialities, disciplines and career stages within the UK engineering community who have contributed to addressing the challenges of the COVID-19 pandemic.

Open Ventilator System Initiative

̽��ֱ��team behind the Open Ventilator System Initiative was recognised for their development of a high-performance ventilator for manufacture in low and middle-income countries that became the first intensive care quality ventilator to be manufactured in Africa.

In March 2020, as Covid-19 infection rates were rising dramatically in Europe, the number of infections in many low- and medium-income countries remained low. However, it was predicted that towards the summer these rates would start to increase. This was especially worrying due to the low number of ventilators available in the developing world.

In response to these fears, a team at the ̽��ֱ�� of Cambridge and a number of companies within the Cambridge cluster designed a high-performance intensive care ventilator for manufacture in low and middle-income countries. ̽��ֱ��aim was to develop a ventilator with a price point that was a factor of 10 lower than what was currently available, which could be manufactured from readily available components and which could be manufactured in-country. ̽��ֱ��result was the first clinical grade ventilator to be manufactured in Africa.

An engineering team led by Dr Tashiv Ramsander at Cambridge Aerothermal Ltd was quickly assembled at the Whittle Laboratory, and comprised people from several departments at the ̽��ֱ�� of Cambridge and a range of local companies including Cambridge Aerothermal, Beko R&D, Cambridge Instrumentation and Interneuron.

Together, this multidisciplinary team was able to solve problems such as the design of a pressure relief valve, inspired by the mixing nozzles on the Rolls-Royce Trent 1000 aircraft engine. ̽��ֱ��design removed flow instabilities, resulting in a more stable operation than any commercially available valve.

̽��ֱ��clinically driven design was developed with the help of two senior intensive care clinicians with experience of treating COVID-19. They argued that a design for developing countries needed to be more versatile than the UK government specification and the final design can operate in non-invasive, mandatory or patient-triggered ventilation modes.

For more than eight years the Whittle Laboratory has been developing a rapid technology development process for the aerospace and power generation sectors. During the pandemic this process was switched to develop a clinical grade ventilator within a week and allowing a rapid response to design changes driven by the pandemic, cost reduction and clinical demand.

̽��ֱ��final Open Ventilator design can be manufactured mostly from standard parts, anywhere in the world that it is needed.

̽��ֱ��reach and impact of COVID-19 in developing countries is not yet known, but this new design - the first intensive care quality ventilator to be manufactured in Africa - could prove to be a gamechanger when it comes to a host of conditions including pneumonia, as well as COVID-19. Childhood pneumonia killed 162,000 children in Nigeria alone in 2018.

There are very few ventilators in Africa, due to their high cost, inability to operate in harsh environments and a lack of local maintenance expertise. ̽��ֱ��team realised these problems could be solved by manufacturing the equipment in Africa. ̽��ֱ��Cambridge engineering team assembled a wider manufacturing team that includes Defy and Denel Land Systems in South Africa, Beko R&D and Prodrive in the UK and Arçelik in Turkey. This team delivered the first 20 preproduction ventilators in South Africa in June.

“ ̽��ֱ��result is a design that will save countless lives in the developing world where ventilators are scarce and many that exist cannot achieve the quality of performance that the Open Ventilator offers,” said Professor Richard Prager, head of the Department of Engineering. “It is a scalable solution. ̽��ֱ��high-performance open-source design will enable companies across the world to make systems wherever they are needed, and at a price that is compatible with the local healthcare systems.”

Institute for Manufacturing

̽��ֱ��IfM team helped local hospitals to make the best use of their resources, streamlining logistics for sourcing and storing vital PPE, informing decision-making on emergency demand, and developing a ventilator sharing system to be used in emergencies.

As hospitals scrambled to make the necessary operational changes needed to accommodate COVID-19 patients, a team of staff and students from the Institute for Manufacturing (IfM) at the ̽��ֱ�� of Cambridge was there to help. Working with clinicians and senior healthcare managers to assess the immediate and emerging operational challenges facing local hospitals, they identified where these could be addressed through the application of engineering capabilities and coordinated the roll-out of solutions.

̽��ֱ��IfM team addressed three groups of tasks between March and May in the areas of hospital logistics, personal protective equipment (PPE) delivery and intensive care unit (ICU) equipment development.

In the hospital logistics area, the team applied industrial engineering approaches to COVID-related challenges including modelling in-hospital patient flows, redesigning COVID-19 testing procedures and managing oxygen supplies to the wards.

Understanding oxygen flow through the local hospital involved examining pipes and their layout, then analysing usage by ventilator type and patient need, as well as modelling supply and demand. ̽��ֱ��in-depth work of the IfM team enabled the hospital’s clinical and estates teams to identify and address various bottlenecks and improve operational efficiency.

̽��ֱ��team also looked at the design, setup and management of a temporary logistics hub for coordinating the delivery of millions of items of donated PPE and assessed the production capabilities of local manufacturers to increase flexibility of PPE supplies for local hospitals.

In conjunction with anaesthetists at Royal Papworth Hospital, they also devised an active ventilator sharing system in case there were not enough ventilators available during the COVID-19 outbreak. This involved the accelerated design, prototyping and in-hospital testing of an active ventilator sharing system in just four weeks.

Duncan McFarlane, Professor of Industrial Information Engineering at the IfM, led the team as they engaged with senior clinical and management teams within local hospitals to understand their needs and implement effective and collaborative ways of working. This involved joining the hospital's regular operations planning meetings and running daily project reviews with key hospital personnel during the peak COVID-19 surge, as well as working directly with clinicians in areas such as COVID-19 test processes, ward oxygen supply, and equipment design.

̽��ֱ��IfM team helped local hospitals make the best use of their resources and streamlined logistics for sourcing and storing vital PPE and other issues, enabling healthcare providers who were already feeling the strain to address pressing operational challenges.

In addition, the IfM provided analytical approaches for informing decision making at Cambridge ̽��ֱ�� Hospital (CUH) on emergency demand. ̽��ֱ��Trust is also using the team’s findings to forecast changes to demand for beds, equipment and staff when social distancing measures are relaxed or modified further. ̽��ֱ��hospital said the engineers brought diversity of perspective and a joint CUH–IfM panel has been initiated so that the hospitals and the IfM can continue working together for mutual benefit after the pandemic.

“ ̽��ֱ��team gave key support efficiently and skilfully when it was most needed, with no fuss and maximum impact: engineering at its best,” said Professor Prager. “ ̽��ֱ��team found a way to work with the clinicians without taking up too much clinical time. They found the problems that needed solving and got on with solving them. They stepped up when they were needed and made a real difference. For this, we should be proud of them.”

Professor Tim Minshall, Dr John C Taylor Professor of Innovation and Head of the Institute for Manufacturing, said: “It makes me so proud to see the way in which our students and staff – academic, research and administrative – were able to rapidly understand and help address the operational challenges facing the amazing teams at Addenbrooke’s and Royal Papworth during this crisis.

“We are also delighted that there is such enthusiasm from both CUH and the IfM to build upon this experience and to develop ongoing collaboration in applying industrial engineering capabilities to healthcare system needs.”

How you can support Cambridge's COVID-19 research effort

Donate to support COVID-19 research at Cambridge

Two teams of Cambridge engineers have been recognised by the Royal Academy of Engineering for their work during the COVID-19 pandemic with the President’s Special Award for Pandemic Service.

Jude Palmer/Royal Academy of Engineering

̽��ֱ��OVSI team

̽��ֱ��text in this work is licensed under a Creative Commons Attribution 4.0 International License. Images, including our videos, are Copyright © ̽��ֱ�� of Cambridge and licensors/contributors as identified. All rights reserved. We make our image and video content available in a number of ways – as here, on our main website under its Terms and conditions, and on a range of channels including social media that permit your use and sharing of our content under their respective Terms.

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Cambridge engineers use industrial modelling techniques to help Addenbrooke’s manage COVID-19 care

sb726 — Tue, 07 Apr 2020 09:13:36 +0000

̽��ֱ��work enhances the hospital’s own modelling, and provides insight into how day-to-day activities might be affected by a rise in patient numbers in the coming weeks or months.

‘Discrete event simulations’ have been worked up by a team from the ̽��ֱ��’s Department of Engineering to manage the flow of patients through hospital wards in the event of a surge in cases, and anticipate waiting times, bed availability, and equipment and staff shortages.

Lead on the simulation development, Dr Ajith Parlikad, of Cambridge’s Institute for Manufacturing, said: “It’s looking at the physical flow of patients and projecting admissions rates into the future - identifying where ‘bottlenecks’ might occur, and where the hospital might need to scale up beds, ventilators, oxygen and staff as part of their COVID-19-orientated activities.

“We started with a flow diagram of how we thought the hospital worked, then talked it through with the team at Addenbrooke’s. It was quite close to their own model, but we were able to factor in more details, such as ICU beds, ‘COVID-positive’ beds (patients with the virus who don’t require intensive care), and the initial checking and testing process when patients arrive – everything has a statistical distribution associated with it.”

As well as patient flow modelling, the Department is supporting Addenbrooke’s in a number of other ways. Industrial engineering students are volunteering their time to focus on the hospital’s oxygen supply, among other things how it might be replenished and filtered, and are also looking at how to model and optimise COVID-19 testing processes. Colleagues Tom Ridgman and Florian Urmetzer are co-ordinating the volunteer student group.

In addition, further work is beginning on modelling that will help the hospital better understand staffing level availability during disruptions such as the COVID-19 outbreak.

Duncan McFarlane, Professor in Industrial Information Engineering, said: “Two weeks ago we knew very little about hospital operations, but with close input from the hospital we’ve been able to pick from a series of industrial techniques and apply the most useful ones to this new setting. Instead of production lines we’re now looking at hospital wards, and rather than products or raw materials we are examining the flow of patients and supplies.

“ ̽��ֱ��support from the hospital has been extraordinary - especially given the level of pressure it has been operating under."

Dr Ewen Cameron, Director of Improvement and Transformation at Cambridge ̽��ֱ�� Hospitals, added: “At this time of unprecedented change for the NHS, our teams are working around the clock to set up innovative ways of working to best care for patients and protect our staff.

“ ̽��ֱ��hospital looks very different now to a few weeks ago, and we remain open to additional ideas on how to manage this crisis as best we can. New challenges require new ways of thinking, and we are hugely grateful to the Institute for Manufacturing for offering their expertise to help us beat the virus.”

How you can support Cambridge's COVID-19 research effort

Donate to support COVID-19 research at Cambridge

Modelling tools originally designed to improve the efficiency of factories are being used by Cambridge engineers to help Addenbrooke’s Hospital manage the COVID-19 emergency.

Instead of production lines we’re now looking at hospital wards, and rather than products or raw materials we are examining the flow of patients and supplies.

Duncan McFarlane, Professor in Industrial Information Engineering

Sir Cam

Addenbrooke's Hospital site

Yes

Skilling up, smart

sc604 — Mon, 04 Mar 2019 07:58:59 +0000

Five years ago, 3D printing was hailed as a technology that would fundamentally transform the way that most things are made: the hype cycle was in full gear. Breathless columns were written about a world where Star Trek-style replicators would be in every home, and no less a figure than former US President Barack Obama claimed that 3D printing would change manufacturing forever.

Fast-forward a few years and, while 3D printing has advanced rapidly, many companies still aren’t sure whether they should use it, how they should use it and what skills they need to use it effectively.

Tim Minshall, the Dr John C Taylor Professor of Innovation and Head of Cambridge’s Institute for Manufacturing (IfM), likes to use the example of 3D printing to illustrate the challenge that the East of England – and the UK at large – has with skills. With funding from the Engineering and Physical Sciences Research Council (EPSRC) and the Economic and Social Research Council (ESRC), he has been studying the potential impact of 3D printing on companies of all sizes, including some in the local region.

When a new technology is developed, among the first questions often asked are: how many jobs will it create as new business opportunities are realised, and how many people need to be trained to capture these opportunities? But according to Minshall, when it comes to acquiring the right skills to best exploit new technologies, those are the wrong questions.

“New technologies come along and we think we need new skills to be developed to use them when the truth is, it’s knowledge about these technologies that needs to be developed – and that’s a more difficult problem,” he says.

“If you’re a small manufacturing firm, and you’ve been doing business in a broadly similar way for decades, and then someone comes along and tells you that you need to get on board with this new technology or you’ll be left behind, how do you know whether that’s actually true? Should you buy the new solution that’s being offered to you, and if you do, do you need to retrain all your staff, or even recruit new staff, to make sure you’ve got the skills to be able to use it?”

According to Minshall, companies need to be asking who needs to know about the technology, and what they need to know.

“If a company invests in a new technology but hasn’t thought about these issues, it could be a disaster for their business,” says Minshall. “We run research projects that aim to help companies of all shapes and sizes, but in particular smaller ones, to develop the skills and capabilities they need to adapt to these technologies.”

Minshall’s colleague Professor Duncan McFarlane is working on such a project. Also funded by the EPSRC and in collaboration with the ̽��ֱ�� of Nottingham, the three-year Digital Manufacturing on a Shoestring project is looking to help small and medium-sized enterprises (SMEs) use digital information to enhance their manufacturing operations.

“In Cambridge and the surrounding area, there are two fundamentally different types of SMEs: the small manufacturers who make things and the solution providers. ̽��ֱ��programme aims to support both of these types of SMEs.”

One of the aims of the Digital Manufacturing on a Shoestring project is to provide SMEs locally and across the country with the building blocks to make the right solutions for them.

“We want to get straight to the heart of the digital challenges that manufacturing SMEs are trying to overcome,” says McFarlane. “SMEs want inexpensive and easy digital manufacturing solutions: they haven’t got large specialised IT departments. There are numerous examples of companies investing into digital solutions which turn out to be no benefit at all because they haven’t been developed in line with their needs, and they haven’t got the right skills to use them effectively. And if we can engage local IT solution providers in developing these right solutions then it will be a double win!”

UK government policy is focused on improving productivity through its Industrial Strategy, which is “backing businesses to create good jobs and increase the earning power of people throughout the UK with investment in skills, industries and infrastructure.”

McFarlane says that the approach he and his team are developing could help manufacturers be more effective, which could, in turn, help productivity numbers. “We’re approaching SMEs who have productivity challenges to help them understand to what extent digital or automated solutions could help them if they can afford them, and then we are helping them piece together low-cost automation solutions,” he says. “In particular, we are making use of non-industrial digital technologies – low-cost computing, WiFi cameras, voice recognition systems – because they are cheap and getting cheaper.”

While the Digital Manufacturing on a Shoestring project is fundamentally research, McFarlane says there is also a technology transfer aspect to their work, as they try to find the best fits between the digital requirements of different types of SMEs and the low-cost solutions under development.

In 2016, in collaboration with the government’s Department for Business, Energy and Industrial Strategy, researchers from Cambridge’s Centre for Science, Technology & Innovation Policy (CSTI) in the IfM developed and ran a pilot project that also tried to match up skills and industries, but with a policy slant. Their case study for this ‘industrial-innovation system’ approach was Agri-Tech East, a membership organisation comprising farmers, growers, scientists and entrepreneurs in the East of England focused on innovation in agri-tech.

“We wanted to quantify what this region is really good at in order to drive innovation,” says Dr Carlos López-Gómez, who led the research and is currently Head of the Policy Links Unit at IfM. “In the East of England, we tend to focus on our strengths in science and assume that new industries will flow from that. But, quite often, innovations come from established industries. Our approach allows for a better alignment between distinctive regional capabilities and promising areas for future specialisation.”

According to López-Gómez, priorities for existing regional innovation strategies are too generic and don’t give enough consideration to existing regional economic and innovation structures, or are simply replicated from elsewhere.

For the pilot project involving Agri-Tech East, the researchers found that modern industries increasingly cut across sectors and technologies. By carrying out a comprehensive mapping exercise, they identified various opportunities in the East of England’s agri-tech sector. These were in the arable and horticultural crop sectors, across various stages of the value chain, and were in a combination of disciplines, in particular, plant sciences and engineering. Five ‘smart specialisation’ opportunities, including robotics, remote sensing and smart irrigation, were selected for further analysis.

“Claiming you are world class in everything will not be believed, and therefore in an emerging sector like agri-tech it is vital that we collectively agree where our real strengths lie,” says Martin Collison from regional consultancy firm Collison and Associates Limited, who participated in the pilot project. “ ̽��ֱ��Cambridge-led project brought together a wide cross-section of partners to identify where the East of England has particular strengths in agri-tech, and this will support our ability to attract companies and investment to the area.”

“At the end of the day, digital manufacturing and other emerging technologies are just another tool in the toolbox, but they do raise a lot of interesting business and policy issues,” says Minshall. “By looking at those issues, we realise that there are all sorts of problems that require regional and national-level solutions. One of the most important of these is how do we know what skills are needed by who and how they get them. Technology is moving so fast, and businesses want to find the areas where it will be of most benefit to their particular situation.”

Businesses need the skills to adapt to new technologies, such as 3D printing, but when they emerge fast and change quickly, how do workforces plan for the future? ̽��ֱ�� researchers are collaborating with small and medium-sized enterprises in the region to help find the best upskill strategies for driving innovation.

Technology is moving so fast... how do we know what skills are needed by who and how they get them?

Tim Minshall

Image by mohamed_hassan on Pixabay

Printer 3D technology

Yes