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PROCESS AUTOMATION THE TRUE VALUE OF SPECIALIST FINANCIERS
James Hardie, business development manger, Siemens Financial Services, UK, explores the benefits of specialist finance as we prepare for post- pandemic recovery
manufacturing industry could not have anticipated the impact of Covid-19 and its economic aftermath. The business implications of the pandemic, including the disruptions resulting from factory shutdowns, workforce and product shortages have been particularly difficult on companies in advanced industries given their global reach and the complexity of their multi-tiered supply chains.2 To deal with supply chain disruptions or
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lowered production capacity, many manufacturers have had to pivot their processes to meet fluctuating levels of demand. Under these conditions, manufacturers with higher levels of automation had a clear advantage compared to their counterparts when the crisis hit. More automation has reduced the impact of lockdown conditions on staff shortages, for instance. Furthermore, through the use of ‘digital twins’, fully automated manufacturers have been able to simulate coronavirus impact scenarios and react quickly and effectively to volatile situations. Investing in new equipment is a necessity to
accommodate new packaging needs in line with fast-changing patterns of distribution and consumption. Agile automated packing lines which can ensure the safety of food handling are increasingly being deployed by
hile a natural decline in demand for equipment was expected following the industry peak of 2018-191
, the
By using flexible financing, manufacturers and their customers have the opportunity to benefit from the investment in
equipment and technology straight away
rather than delaying their acquisition, and through that timely investment, gain an important competitive advantage
innovative businesses in order to keep pace. It is widely agreed among global analysts3
that maintaining levels of investment in new technologies is critical even in times of economic hardship. Increased agility, productivity and lower energy consumption are among the benefits. Transitioning towards automated and digitalised equipment can better position businesses hoping to bounce back from the crisis and minimise future disruptions to their processes. While some cautious companies may look to the current economic outlook and consider deferring investments, this goes against historical evidence of successful business strategies during previous crises. In fact, previous research from Siemens Financial Services (SFS) has shown that manufacturers can stand to gain an additional 6.3 – 9.8% of their annual revenues from bringing digitalisation into their manufacturing operations.4 The pandemic has, however, impacted
profits and liquidity for many manufacturing firms therefore inhibiting investment. Improving cash flow wherever possible is a must. This is why many firms are increasingly turning to specialist private finance in order to invest in new equipment and technology without using up their own valuable capital. Outcomes finance is an effective alternative method of funding equipment and technology investments and upgrades. Such financing techniques spread the cost of technology over an agreed financing period, whereby the customer’s monthly finance payments can be aligned with expected benefits gained over time from new/retrofitted equipment, such as improved productivity, operating cost savings, energy efficiency and access to new markets. This removes the need for a large initial outlay and leaves existing funds available for other expenditures. Financing arrangements can also
20 APRIL 2022 | PROCESS & CONTROL
cover other costs such as installation. Specialist financiers active in the
manufacturing arena are able to understand the technology, its potential future value and its practical application. This enables them to determine appropriate and tailored financing solutions that meet the manufacturer’s specific needs. In the case of equipment manufacturers,
such finance arrangements can serve them both as end-users when seeking to upgrade their own equipment, but also as a sales aid vendor financing solution for their customers. Many equipment manufacturers may be focused on the technical side of business operations, but there is a dual potential to be drawn from integrated finance arrangements. Being under pressure not simply to offer high performance digitalised technology, it can be their customer value proposition that makes it easy and commercially sustainable for them to upgrade their equipment and systems. Having used asset finance to secure their own equipment, they can personally promote integrated finance to their customers. Such an offering can streamline business interactions
and act as an enabler of sales activity. 1
https://www.mckinsey.com/industries/advanced- electronics/our-insights/coronavirus-a-response-fr
n-equipment-production/ 2
amework-for-advanced-industries-companies 3
Strategies to Take the Lead, 16 May 2019 4
See Bain & Co., Beyond the Downturn: Recession Siemens Financial Services, The Digitalisation
Productivity Bonus in the UK, What value does digitalisation offer Food & Beverage manufacturers, 2017
Siemens Financial Services
new.siemens.com
https://industryeurope.com/sectors/construction- engineering/corona-crisis-to-wipe-4-off-constructio
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