1 week Ago By Aditya Ranjan, Forbes Councils Member
Aditya Ranjan is Co-founder & COO, Cardinal Robotics . Commercial robots, once confined to science fiction, are now a tangible reality, poised to revolutionize industries from hospitality and healthcare to food service and logistics. The global commercial robotics market, worth $46.
11 billion in 2024 , is projected to grow to $73.01 billion by 2030. Similarly, within the United States, the adoption of commercial robots is accelerating, driven by factors such as labor shortages, rising operational costs and the pursuit of operational efficiency.
Why Enterprises Should Consider Investing In Robots The imperative for commercial robot adoption is driven by a confluence of economic and operational pressures. Addressing Labor Shortages A persistent labor shortage across industries has driven the adoption of commercial robots to fill critical roles. For instance, the food service industry faces a worker shortage, with up to 45% of restaurant operators looking to hire more labor to meet rising demand, making automation indispensable.
Further, the food service industry is facing margin pressures, with 98% of the operators reporting higher labor costs as the main issue. Enhancing Productivity And Efficiency Robots excel at repetitive, labor-intensive tasks, freeing human workers to focus on higher-value activities. Within service industries, robots are seen to assist humans in undertaking physical, strenuous and rudimentary tasks, elevating employee satisfaction as well as efficiency in operations.
Mitigating Workplace Risks Commercial robots can perform hazardous tasks, reducing the risk of workplace injuries. Industries such as manufacturing and cleaning benefit significantly from this safety advantage. Data Collection And Analysis Many commercial robots are equipped with sensors and data collection capabilities, providing valuable insights for operational optimization and decision-making.
According to CMM : "A survey of almost 400 facilities in the United States conducted by Tennant Co. compared traditional measures of cleaning standards against data-driven standards. The results showed that data-driven fleets achieved 23% greater productivity and a 20% higher ranking for cleanliness and appearance.
" Why Enterprises Shy Away From Robots Despite advancements in robotics technology, widespread adoption remains hindered by several factors. Initially, concerns over reliability, performance and user-friendliness hampered progress. However, advancements in AI and sensor technology have significantly enhanced robot capabilities, making them more dependable and easier to operate.
A McKinsey study highlights the challenges of automation across various industries. The primary obstacles to adoption include the high capital cost of robots and a general lack of experience with automation within companies. Although firms expect production and reliability gains through automation, these expectations are tempered by concerns that such advancements will eliminate jobs and impact existing contracts.
Many companies currently operate with a mix of legacy technologies and foresee difficulties in implementing a unified set of solutions supported by integrated and interoperable programming and platforms for robotics and automation. In response to these issues, companies are increasingly forming partnerships with legacy system integrators and robotics startups that offer cutting-edge innovations. However, concerns remain about integrating robotics into existing spaces and the potential inability of machines to interface with products.
Safety and the threat of cyberattacks also emerge as potential areas of risk. Despite substantial capital investments, many companies struggle to turn their intentions for robotics and automation into action, with challenges related to knowledge and return on investment being particularly formidable hurdles. The challenges industries face present a significant opportunity for robotics and automation providers to help build the capabilities required for large-scale automation or to offer support for this effort.
However, these vendors must provide convincing answers to their customers' questions and work hard to differentiate themselves from their competitors. Customers seek differentiation primarily in price, scale and innovation. Other critical factors include the quality of the product build, the ability to offer an integrated solution, and the provision of reference cases demonstrating successful rollouts.
One reliable route to differentiation is enhancing software and hardware sales with full-service models. These models would not only offer installation and integration but also provide maintenance and support throughout the product's life cycle. Automation providers that can transition toward robotics-as-a-service (RaaS) and act as a single point of contact for both hardware and software maintenance will create a distinctive competitive advantage.
Additionally, common preferences include working with OEMs for hardware, integrators for software, and contracting with a local third party for all maintenance needs. Challenges With RaaS While RaaS offers an ideal solution for customers, original equipment manufacturers (OEMs) face several challenges: 1. High Initial Costs: Developing advanced robotic systems and building robust service infrastructure requires substantial investments.
Unlike traditional models, RaaS generates revenue over time through subscriptions, which is challenging for smaller manufacturers or startups. 2. Complex Integration: Integrating RaaS offerings with customers' mixed legacy and modern systems requires significant customization and expertise.
3. Maintenance And Support: RaaS providers must establish a responsive support network, involving significant costs and logistical challenges. OEMs often find it optimal to outsource operations and maintenance to specialized third-party networks.
4. Reliability And Downtime: RaaS requires OEMs to maintain standby robots, monitor fleet performance and minimize downtime. Any interruptions can lead to financial losses for customers, affecting trust and continued use of RaaS solutions.
Potential Solutions For RaaS Adoption Several approaches can address RaaS adoption challenges: 1. Venture Capital Or Public Markets: While accessible, this raises the cost of capital significantly. 2.
Debt Capital: This option may be insufficient and burdensome for manufacturers. 3. Cash Flow Discounting: This is an emerging method where financial institutions assume the lease, making upfront payments to manufacturers based on the present value of future cash flows, and recovering monthly payments from end customers.
This new financial model could potentially alleviate the initial cost burden for OEMs while providing a steady revenue stream, making RaaS more viable for both providers and customers. Forbes Technology Council is an invitation-only community for world-class CIOs, CTOs and technology executives. Do I qualify?.
