According to a recent study published by Schneider Electric, manufacturers worldwide are losing up to 7.5% of their annual income owing to inefficiencies caused by stiff, antiquated industrial automation systems.
The report, which was conducted in collaboration with research company Omdia and published on Tuesday, demonstrates how firms of all sizes are being financially stretched by downtime, restricted data insights, and communication systems that fail to function efficiently.
Levels of losses for manufacturers
Mid-sized enterprises with revenues between $500 million and $1 billion lose an estimated $11.28 million per year.
Large-scale manufacturers have much larger losses, averaging $45 million each year. Smaller manufacturers reported annual losses of around $2.87 million.
According to the study, many businesses continue to rely on closed and aged automation platforms, which add operational complexity, limit flexibility, and raise maintenance and compliance expenses.
Barbara Frei, Schneider Electric’s Executive Vice President for Industrial Automation, stated that the industry’s reliance on closed systems is now one of the primary impediments to digital transformation.
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“Closed automation limits choice, slows innovation, and puts manufacturers at a disadvantage in a highly competitive market,” Frei said.
The results are based on input from 400 top decision-makers across the Americas, Asia-Pacific, Africa, and Europe, the Punch reports.
Industries like medicines, food and drink, mining, oil and gas, and industrial equipment production were represented among the respondents.
According to Schneider Electric, switching to open automation systems may greatly improve data communication, eliminate integration bottlenecks, and open up new opportunities for cost-effectiveness and creativity.
According to Anna Ahrens, Principal Analyst at Omdia, manufacturers are under increasing pressure due to shorter product cycles, more uncertain supply chains, and a shortage of trained workers.
“In a world where product life cycles shrink, supply chains fracture, and talent gaps widen, agility and flexibility aren’t optional.
They are surviving. Every quarter a business delays addressing the cost of closed automation ecosystems is another $1m-plus in lost value,” Anna stated.
