Automation is the art of making processes or machines self-acting or self-moving. Automation also means the technique of making a device, machine, process, or procedure more fully automatic. Automated machinery may range from simple sensing devices to autonomous robots and other sophisticated equipment. Automation of operations may encompass the automation of a single operation or the automation of an entire facility.

There are many different reasons to automate. Increased productivity is normally the major reason for many companies desiring a competitive advantage. Automation also offers low operational variability. Variability is directly related to quality and productivity. Other reasons to automate include the presence of a hazardous working environment and the high cost of human labor. Some businesses automate processes in order to reduce production time, increase manufacturing flexibility, reduce costs, eliminate human error, or make up for a labor shortage. Decisions associated with automation are usually concerned with some or all of these economic and social considerations.

For small business owners, weighing the pros and cons of automation can be a daunting task. The speed with which technology is advancing combined with a natural resistance to change makes it easy for a business owner to put off changes in the hope that by waiting he or she will be able to acquire more powerful automation equipment for less in the near future. But consultants contend that it is important not to put off implementation of new and more efficient technologies.


Although automation can play a major role in increasing productivity and reducing costs in service industries—as in the example of a retail store that installs bar code scanners in its checkout lanes—automation is most prevalent in manufacturing industries. In recent years, the manufacturing field has witnessed the development of major automation alternatives. Some of these types of automation include:

  • Information technology (IT)
  • Computer-aided manufacturing (CAM)
  • Numerically controlled (NC) equipment
  • Robots
  • Flexible manufacturing systems (FMS)
  • Computer integrated manufacturing (CIM)

Information technology (IT) encompasses a broad spectrum of computer technologies used to create, store, retrieve, and disseminate information. It is in the area of information technology where most of the more flexible and non-industry-specific advances are now being made.

Computer-aided manufacturing (CAM) refers to the use of computers in the different functions of production planning and control. CAM includes the use of numerically controlled machines, robots, and other automated systems in the manufacturing process. Computer-aided manufacturing also includes computer-aided process planning (CAPP), group technology (GT), production scheduling, and manufacturing flow analysis. Computer-aided process planning (CAPP) means the use of computers to generate process plans for the manufacture of different products. Group technology (GT) is a manufacturing philosophy that aims at grouping different products and creating different manufacturing cells for the manufacture of each group.

Numerically controlled (NC) machines are programmed versions of machine tools that execute operations in sequence on parts or products. Individual machines may have their own computers for that purpose; such tools are commonly referred to as computerized numerically controlled (CNC) machines. In other cases, many machines may share the same computer; these are called direct numerically controlled machines.

Robots are a type of automated equipment that may execute different tasks that are normally handled by a human operator. In manufacturing, robots are used to handle a wide range of tasks, including assembly, welding, painting, loading and unloading of heavy or hazardous materials, inspection and testing, and finishing operations.

Flexible manufacturing systems (FMS) are comprehensive systems that may include numerically controlled machine tools, robots, and automated material handling systems in the manufacture of similar products or components using different routings among the machines.

A computer-integrated manufacturing (CIM) system is one in which many manufacturing functions are linked through an integrated computer network. These manufacturing or manufacturing-related functions include production planning and control, shop floor control, quality control, computer-aided manufacturing, computer-aided design, purchasing, marketing, and other functions. The objective of a computer-integrated manufacturing system is to allow changes in product design, to reduce costs, and to optimize production requirements.


Understanding and making use of automation-oriented strategic alternatives is essential for manufacturing firms of all shapes and sizes. It is particularly important for smaller companies, which, due to their inherent advantage of being more flexible, are able to implement changes somewhat more quickly and thus gain competitive advantage more quickly. But experts note that whatever your company's size, automation of production processes is no longer sufficient in many industries.

The computer has made it possible to control manufacturing more precisely and to assemble more quickly. Today, with the aid of the computer, companies must move to the next logical step in automation—the automatic analysis of data into information that is useful to employees in implementing on-the-fly changes to production processes. Opportunities now lie primarily in the automation of information and not in automation of labor. The work that is being done now in advanced manufacturing is work to manage and control the process.

Small business owners face challenges in several distinct areas as they prepare their enterprises for the technology-oriented environment in which the vast majority of them will operate. Three primary issues are employee training, management philosophy, and financial issues.

Employee Training

Many business owners and managers operate under the assumption that acquisition of fancy automated production equipment or data processing systems will instantaneously bring about measurable improvements in company performance. But as countless consultants and industry experts have noted, even if these systems eliminate work previously done by employees, they ultimately function in accordance with the instructions and guidance of other employees. Therefore, if those latter workers receive inadequate training in system operation, the business will not realize the full benefits of new system put into place.

An essential key to automation success for small business owners is the establishment of a thorough education program for employees. It is also useful to set up a framework through which workers can provide input on the positive and negative aspects of new automation technology. The application of automation technology is growing but it is the human factor that remains essential in assuring the effective installation and use of these new technologies.

Management Philosophy

Many productive business automation systems, whether in the realm of manufacturing or data processing, call for a high degree of decision-making responsibility on the part of those who operate the systems. As both processes and equipment become more automatically controlled, the need for human management of these automated systems does not diminish. These new technologies—enabler tools, if you will—are changing the employee's job from one of physically laboring to one of monitoring and supervising an entire process.

But many organizations are reluctant to empower employees to this degree, either because of legitimate concerns about worker capabilities or a simple inability to relinquish power. In the former instance, training and/or workforce additions may be necessary; in the latter, management needs to recognize that such practices ultimately hinder the effectiveness of the company. Part of implementing automating systems includes the reworking of the entire process, including the roles and tasks held by all members of an organization.

Financial Issues

It is essential for small businesses to anticipate and plan for the various ways in which new automation systems can impact on bottom-line financial figures. Factors that need to be weighed include tax laws, long-term budgeting, and current financial health.

Depreciation tax laws for software and hardware are complex, which leads many consultants to recommend that business owners use appropriate accounting assistance in investigating their impact. Budgeting for automation costs can be complex as well, but as with tax matters, business owners are encouraged to educate themselves for this ongoing process. With the relatively short life of most new technology it is critical that annual reinvestments on technology become a part of all business plans. Deciding upon an affordable spending level requires a strategic look at the business to determine the role that new technologies play in the success of the business.

Once new automation systems are in operation, business owners and managers should closely monitor financial performance for clues about their impact on operations. As with any potentially cost saving or time saving process, the savings are only achieved if the process is correctly implemented. Proper monitoring of the new systems helps to identify problems with their implementation and make corrections so that the anticipated savings can be obtained.

The accelerating pace of automation in various areas of business can be dizzying. It will be a challenge for small businesses to keep pace—or stay ahead—of such changes. But the forward-thinking business owner will plan ahead, both strategically and financially, to ensure that the ever-more automated world of business does not leave him or her behind. The key is careful implementation of the proper tools, not rapid acceptance of all new technologies.


Bartholomew, Doug. "Automation Advance." Industry Week. 15 May 2000.

Burgess, Stephen. Managing Information Technology in Small Business. Idea Group Inc., 2002.

"Hot Trends in Automation." Instrumentation and Automation News. June 2005.

"Improving Productivity through Automation." Automation. May 2004.

Marks, Gene. Outfoxing the Small Business Owner. Adams Media, 2005.

Merker, Renate, and Wolfgang Schwartz. System Design Automation. Springer, 2001.