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Is the automation industry changing its focus from CAPEX to OPEX? And how is this influencing purchasing decisions?

CAPEX OPEX Industrial AutomationAs a business leader, these are two questions I have been considering recently. 

I suppose the first thing to think about is that until quite recently we have been living in an economy that was growing. There was abundant capital available and debt was scarce. These conditions drove a certain level of growth – and businesses were meeting their capacity levels and successfully capturing the available market opportunities. 

But that was then. What are we facing now? 

Debt has become high, particularly at the governmental level, and less money is available for public investment. Companies are facing a volatile economic environment and they are hesitating to invest in such uncertain conditions. 

What does this add up to? 

I’d say it adds up to less capital investment across the board. 

Businesses in this environment are also quite sensitive about generating cash. Remember that wretched bottom line…  

Taking all these factors into consideration, I think any business will be highly concerned about its operational performance. And this, to my mind, is the key to answering my initial questions: improving operational performance and optimizing operational expenditures are driving purchasing decisions. 

Where to look to make operational performance improvements

I see two concerns in the industrial automation market. First, making the most of any new investments – making new equipment, factories, plants etc. operate as efficiently as possible from the beginning. Second, and perhaps most important, looking at existing assets –  equipment, factories, plants etc. –  that are already in operation, and thinking about how you can improve the performance of what is already installed. 

Possible roadblocks

It is true that all companies have different assets that are at various stages in their lifecycles. Some have new technology and some have old technology (or, most likely, a combination of both) which can cause some issues when trying to optimize, but when looking at optimization in a holistic way rather than each of the parts improvements can surely be made.  

What about recent installations? Can they still be improved? 

Of course they can! We are lucky that in the industrial automation market we inhabit a technical world that is dynamic and in a state of constant evolution and improvement. What you can do today is better than want you could do three years ago, and what you will be able to do in three years will be better than what you can do today. 

Then what about the “if it’s not broken, don’t fix it” school of thought? To that I would say industrial companies are familiar with continuous improvement, and the effect it has on quality management. We have learned over the years, as I am sure many other companies have too, that what is not improving is only getting worse. No system is stable and if you are not moving it forward then it is actually going backwards. 

What about energy?

I am from Schneider Electric after all! All companies face challenges related to energy –because energy is an important part of their operational expenditure, or because they have to follow certain regulations, or because sustainability is part of their corporate values – and in some cases, it is for all three of these reasons. When we speak about energy, of course, we have to reconcile energy management initiatives with operational performance, but I will leave you with one last thought – you can’t be energy efficient without being efficient.

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