This article was first published in Harvard Business Review and is available via subscription.
A few prominent efforts to create fully automated factories have cast doubt on the viability of this transformation. But BCG’s Daniel Kuepper, Leonid Zhukov, Namrata Rajagopal, and Yannick Bastubbe contend it would be a mistake for companies to abandon this playbook. Mature economies are experiencing near-stagnant growth in manufacturing output per hour worked. Companies need automation to improve productivity.
In this article, the authors discuss the most common financial and technical challenges that manufacturers face when transforming an existing facility into a fully automated factory—and how one company addressed them. The authors also explore how the entry barriers that hindered earlier efforts are expected to rapidly fall in the next few years. Robots are becoming more capable, flexible, and cost-effective, and embodied agents are bringing the power of GenAI into the factory environment. Manufacturers that embrace automation and rethink their operational strategies will be best positioned for the future.