Automation explained - definition, examples and benefits

Jan Schäfer

According to tradition, the first automation already existed in the first century after Christ. At that time, the mathematician and engineer Heron of Alexandria invented the first vending machine for holy water. This dripped from a valve after customers inserted a coin and this set a lever in motion. In 1913, the next step was taken: Henry Ford introduced the assembly line.

Today, extensive automation and digitization ensure that companies no longer have to tackle more and more processes manually. It is therefore no wonder that by 2022, companies worldwide will have automated more than 50 percent of their work processes.

We explain in an understandable way what automation means, how companies benefit from it, and where and how automation makes processes more efficient.

The most Important in a Nutshell

  • The reasons for automation in companies can be manifold, such as a shortage of skilled workers, more efficient capacity utilization and regulatory compliance.
  • The key benefits of automation are lower costs, greater efficiency and higher customer satisfaction.
  • Automation is widespread in areas such as production, administration and logistics.
  • The challenges of automation include the cost of implementation, the complexity of the applications and compliance with regulatory requirements.
  • With Konfuzio, you can automate comprehensive document processes and make the processing of invoices, orders and forms more efficient. Talk to one of our experts now and find out how Konfuzio can optimize your processes!

Automation definition

automation definition

Automation simply explained: Automation is a central concept in modern industry and technology. It involves the transfer of tasks from people to machines and systems. These carry out processes automatically without the need for employees to intervene. They merely monitor the process.

Mechanization vs. automation

Companies that use true automation are very different from companies that rely on mechanization - also called industrial automation. Automation and mechanization are two different approaches to increasing productivity, each with their own strengths and weaknesses.

Mechanization in companies

Mechanization involves companies using machines and tools to support and supplement human labor without completely replacing the human operation. This approach still requires significant human input in the form of supervision, control and maintenance. 

An example of a mechanized office activity is the use of a calculator for mathematical calculations.

The calculator makes the task easier and increases accuracy, but requires the employee to enter data and interpret the results. The machine serves here as a tool that supports and improves the human process, but does not replace it.

Automation in companies

Companies that implement automation typically use technologies such as artificial intelligence, robotics and advanced algorithms to eliminate or minimize manual steps. These companies are typically able to achieve higher production volumes with fewer errors and less time spent. Automation also enables them to perform complex tasks that are beyond human capability. An example of such companies are semiconductor chip manufacturers that use complex automation processes to increase the accuracy and speed of their production.

Excursus - Effectiveness vs. efficiency

Automation can increase efficiency by performing processes faster and with fewer errors than human workers. This leads to higher productivity and, in many cases, cost reduction because less time and resources are needed to perform the tasks.

Effectiveness, on the other hand, refers to the ability to achieve a specific goal or result. While automation can improve the efficiency of a process, it is not necessarily able to improve its effectiveness. This is because effectiveness depends heavily on the quality of decision making and strategy, which often require human judgment and creative problem solving - qualities that automation technologies often cannot yet replicate.

For example, by automating its production line, a company might be able to produce products faster and with fewer defects. But if these products do not meet the needs and desires of the customers, then the production is not effective despite its efficiency.

Furthermore, if not implemented properly, automation can actually reduce effectiveness. For example, poorly designed automation could cause important information to be lost or introduce errors into the process that affect the quality of the final product.

In short, while automation can increase efficiency, its impact on effectiveness is less clear and depends heavily on the quality of implementation and the organization's strategy.

Automation example 

An example of an automated office activity is the use of a AI-powered email sorting software. This can automatically sort incoming e-mails according to predefined criteria, for example by moving spam mails to a special folder, marking important messages or even sending simple answers to frequently asked questions. In contrast to the mechanized task, the entire process is handled by the software here, greatly reducing the need for human intervention. The person's task here is limited to monitoring the process and adjusting the settings if necessary.

Automation as a goal, but only partial reality

In practical reality, many digital companies still use only mechanization and no automation - even though they dream of fully automated operations. While they use advanced technologies to support and improve workflows, their reliance on human creativity, decision-making and control in key areas such as content creation, design and strategic planning speaks volumes. Technology does ease the workload and speed up some processes. Ultimately, however, humans are still the conductors of this technological orchestra. A complete elimination of human intervention in these areas is therefore still a long way off.

Reasons for automation

Depending on the industry and specific function, companies have different reasons for automation:

Skills shortage

In many parts of the world, and especially in Germany, there is a shortage of qualified people in various fields of work. To prevent this shortage of skilled workers, companies are automating more and more processes. 

Business process optimization

Many companies are looking to automation to optimize and streamline their business processes. This can increase efficiency, improve productivity and ultimately increase profitability.

Capacity utilization

Companies want to use their capacities as comprehensively as possible. To do this, they need to deploy their resources effectively. Automation helps them to do this. 

Scaling requirements

Companies planning rapid expansion or growth see automation as a way to scale their operations. It allows them to ramp up their processes more efficiently and with fewer additional resources.

Competitive pressure

In many industries, the pressure to keep up with or overtake the competition is great. Companies are therefore using automation to improve service quality, shorten delivery times or offer innovative new services and products.

Customer requirements

Sometimes the drive to automate can come from customers. When they demand faster service times, higher quality, or around-the-clock service, automation can help meet those demands.

Regulatory compliance

In some industries, regulatory requirements may force companies to automate certain processes. This may be particularly the case in highly regulated industries such as financial services or healthcare.

automation advantages

4 decisive advantages of automation

Business process automation brings these benefits to companies:

1. More Efficiency

Automation makes it possible to design business processes more efficiently. In practice, this means that if employees no longer have to devote themselves to routine tasks, they can concentrate on complex tasks that classic automations cannot (yet) take on. The time saved by companies in the process makes important areas such as development, production and marketing more efficient.

2. Lower costs

Companies save costs for employees as well as for the production of items. After all, automating processes makes it possible to deploy fewer employees and manufacture products more efficiently and thus in less time.

3. Higher customer satisfaction

Higher manufacturing precision and sophisticated quality control are two important benefits of automation. With fewer sources of error, companies achieve consistently high quality in their products. This leads to higher customer satisfaction.

4. More flexibility

Automation makes companies more flexible in developing new items and business models. This is because automation technologies are adaptable and scalable. Companies can therefore test and develop new ideas efficiently. And they can react to changes in demand in the process.

automation use cases

9 practical examples of automation

The practical areas of application of automation are diverse and include almost all industries and business areas. Automated processes are widespread in the following 7 areas, among others:

1. Automation in manufacturing

Automation in manufacturing can help to speed up production processes and at the same time improve the quality of the items produced. Robots, conveyor belts and specialized machines - so-called automation technology - play a particularly decisive role in industry. With these, companies can keep their production flexible, scale it efficiently and respond to new market requirements.

2. Automation in accounting

Automation in accounting digitizes the processing of incoming and outgoing invoices and receipts. Companies can thus professionalize their document management. For example, the use of artificial intelligence in the form of an autonomously learning OCR software ensures that relevant information on an invoice is recognized immediately after digitization and that the contents can be checked automatically or semi-automatically and correctly assigned to the order or delivery bill.

3. Automation in logistics

For intelligent automation in logistics, companies can introduce sorting and distribution systems as well as autonomous vehicles that enable them to transport goods faster and more efficiently. This reduces operating costs and increases customer satisfaction.

4. Automation in administration

With automation in administration, companies can, for example, manage payroll or employee data as well as the document archiving more efficiently. With this form of digitization, you save time and resources and can focus on more important tasks, such as developing new business strategies and promoting employee satisfaction.

5. Automation in marketing and sales

With automation in marketing and sales, companies can use data analysis tools, among other things, to develop and implement targeted marketing strategies that automatically integrate social media platforms and other digital channels. In this way, they can place personalized advertising, for example. This increases the reach of their products and services and promotes customer loyalty.

6. Automation in healthcare

In healthcare, automated processes such as medical diagnostic procedures and patient data recording help improve the accuracy and speed of patient care.

7. Automation in education

Customized solutions in education improve the learning process. For example, as part of digitization, institutions can use automated assessment mechanisms and digital tools and platforms to make teaching more efficient and better aligned with students.

8. Automation in IT

With the current rapid development of AI, companies can use more and more automation in IT. One example of this is the use of machine learning and AI to automate processes. Companies can use machine learning algorithms to analyze data and identify patterns that human analysts might miss. AI can also be used to create chatbots and virtual assistants that can answer customer queries automatically.

Another example is software for automation. Companies can, for example Low-code tools to create applications quickly and easily. These tools allow developers to create applications without having to write a lot of code. This saves time and money and enables companies to respond quickly to changing business needs.

9. Automation through robots 

Robotic Process Automation (RPA) enables companies to automate manual processes by using software robots that can perform tasks automatically. RPA can be used to automate repetitive tasks such as data entry and invoice generation.

Automation challenges

Automated processes undoubtedly bring numerous benefits to companies to create better products in less time for more satisfied customers. As they introduce and implement them, they face these challenges:

High cost

The introduction of automation solutions for digital transformation can be expensive and time-consuming. Companies often have to make considerable investments to convert and modernize their production processes. Once introduced, it can then be difficult to use the new solutions effectively and profitably. Especially at the beginning, companies often need time to position and align the new technologies in such a way that they meet the desired objectives.

Application complexity

Many new technologies cannot be understood and used without extensive training. Often, companies do not have the necessary resources or expertise to effectively implement, manage and maintain complex automation solutions.

Impact on employees

Companies have ethical concerns about automating workflows. With the rapid spread of tuned technologies, the question arises as to how society can deal with job losses in the long term.

Effects on the corporate culture

Some companies and organizations may not be ready to convert existing, manual processes to automated solutions. A change in corporate culture and overcoming prejudices and fears can therefore be a challenge.

Threat to safety

Automation and digitization can jeopardize security and privacy if the solutions are not properly implemented or maintained. Cyberattacks on networked automation systems can cause both financial and physical damage and expose sensitive information.

Compliance

It can be a challenge for companies to comply with specifications and regulations for automated systems. Depending on the industry, there are different regulations and legal obligations that are not always easy to understand and implement. 

Software for automation for processes in companies

Automation simplifies many work processes in almost all industries: from assembly and manufacturing to mechanical engineering and logistics to marketing and administration. In administration, AI in particular is determining the current development. Customized solutions for property and materials management, accounting and business organization reduce the effort required for numerous tasks. In this way, companies can automate repetitive processes in particular and thus deploy their employees for more complex tasks.

Companies automate complex document management processes with Konfuzio, optimizing manual, error-prone workflows.

Talk to one of our experts now and find out how Konfuzio can support your company!

    FAQ

    What does automation mean?

    Automation means that machines and systems take over manual tasks and processes in companies in such a way that they function without the intervention of employees. Today, the term automation is primarily associated with modern industry and technology.

    Why do companies choose to automate processes?

    Companies are choosing to automate processes to achieve efficiency gains, cost savings and improved productivity. Automation allows repetitive tasks to be performed automatically, freeing up time and resources and reducing human error. This leads to increased competitiveness and better business results.

    What is automation technology?

    Automation technology refers to the use of technologies and systems to automate the production process and increase efficiency. It encompasses the integration of machines, software and control systems to streamline and improve industrial processes.

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