Automation for SMEs: Too expensive? Too complicated? Robots in crafts and logistics? Think again!

Staying innovative: Automation as the key to competitiveness

The automation of business processes and production workflows is increasingly seen as key to increasing efficiency and securing competitiveness in the modern economy. Despite the growing availability of innovative technologies, many small and medium-sized enterprises (SMEs) are hesitant to implement them. Often, deeply ingrained myths and misunderstandings prevent companies from integrating automation solutions into their operations. However, these assumptions are frequently based on outdated ideas or misinformation. This report debunks common myths, highlights concrete benefits, and offers practical recommendations for SMEs looking to invest in automation.

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Myth 1: Automation is only profitable for large companies

Scalable and flexible solutions for SMEs

Many business owners believe that automation is only profitable for large industrial companies with massive production lines. However, this assumption is based on outdated models. Today's technology is modular and offers even small businesses the opportunity to invest in automation gradually. For example, companies can start with individual collaborative robots (cobots) that can be flexibly integrated into existing production processes. Later, additional components can be added to gradually expand automation.

Profitability through new financing models

Another argument against automation is the supposedly high initial investment. However, thanks to innovative financing models such as leasing, pay-per-use, or Robotics as a Service (RaaS), SMEs can implement automation in a solution-oriented manner without tying up large amounts of capital. Many technologies pay for themselves within two to three years through increased efficiency and lower operating costs.

Myth 2: Automation leads to job losses

Automation creates new opportunities

The fear of job losses due to automation is deeply rooted. But instead of destroying jobs, automation transforms workflows. Repetitive and physically demanding tasks such as material handling or simple quality checks can be automated, allowing employees to dedicate themselves to more value-adding and creative tasks.

Further education and training

Automation increases the demand for skilled workers who can handle the new technologies. This opens up new development opportunities for employees. Many companies are already investing in training programs to educate their workforce in areas such as robotics control, data analysis, and process optimization. This not only increases employee satisfaction but also the company's innovative capacity.

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Myth 3: Implementation is too complex and expensive

Simplified integration through modern software solutions

Previously, implementing automation required extensive IT resources and highly specialized personnel. Today, intuitive low-code and no-code platforms enable SMEs to leverage automation even without extensive IT expertise. Cloud-based systems also offer easy scalability and minimize maintenance costs.

Faster amortization through increased efficiency

Many companies fear high costs when implementing automation solutions. However, practical examples show that the investments often pay for themselves within one to two years. Automated accounting systems reduce error rates by up to 90%, allowing companies to save significant rework costs. In manufacturing, cobots can optimize material consumption and thus lower production costs.

Use government funding programs

Many governments now offer funding programs for SMEs that want to introduce automation. In Germany, for example, the "Digital Now" program provides financial support of up to 50% of the implementation costs.

Myth 4: Automation impairs product quality

Precision and consistency as a competitive advantage

Automated systems operate with high precision and consistent quality. Machines can detect even the slightest deviations and make corrections in real time, whereas human error often leads to product defects. Companies in the food and pharmaceutical industries particularly benefit from automated testing systems, as they can guarantee the highest quality standards.

Flexibility and individualization

Another argument against automation is its perceived inflexibility. However, modern cobots and AI-controlled production systems are capable of quickly adapting to new requirements. This allows SMEs to efficiently produce even small batches or customized products.

Myth 5: Automation stifles creativity and innovation

More freedom for innovative processes

Automation not only facilitates increased efficiency but also creates space for creative processes. Employees spend less time on monotonous tasks and can concentrate on strategic or creative work. In product development, automated simulation programs can help optimize prototypes more quickly and bring innovative ideas to market faster.

AI as an engine of innovation

Artificial intelligence can help companies predict trends and develop new products in a targeted manner. Startups and SMEs are increasingly relying on AI-supported market analyses to make their strategies more agile and innovative.

Automation as an opportunity for SMEs

These myths are often based on outdated assumptions and prevent SMEs from fully realizing the potential of modern automation. Today's technology is more flexible, cost-effective, and user-friendly than ever before. Companies that embrace automation benefit from increased competitiveness, improved quality, and new growth opportunities.

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Recommendations for SMEs

1. Start small: Take the first steps with modular and scalable solutions.
2. Involve employees: Offer training and further education early on.
3. View automation as an investment: Consider long-term efficiency gains.
4. Utilize funding: Obtain government support for implementation and development.
5. Maintain flexibility: Choose technologies that can be easily adapted to changing conditions.
6. Companies that invest in automation now will secure long-term competitive advantages in an increasingly digitized market.

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Why automation is easier for small businesses than you think

In today's rapidly changing economic landscape, small and medium-sized enterprises (SMEs) face the constant challenge of securing and expanding their competitiveness. A crucial factor that has emerged as a strategic advantage for SMEs is the integration of automation technologies. Automation is no longer just a topic for large corporations; it has become an essential tool for SMEs to optimize operational processes, increase economic efficiency, and maintain their long-term market position.

This report highlights the numerous benefits that SMEs can realize by automating their business and production processes. We will examine how automation fosters operational excellence, enables cost savings, creates strategic competitive advantages, improves quality assurance, supports employee development, and strengthens resilience to market risks. In doing so, we will refute the common misconception that automation requires complex and prohibitive investments and demonstrate how SMEs can achieve significant improvements through the targeted application of automation solutions.

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Increasing operational efficiency through automation

Operational efficiency is the backbone of any successful company, and automation plays a key role in optimizing business processes. For SMEs, which often operate with limited resources and personnel structures, automating routine tasks and complex processes can make a huge difference.

Reducing manual routine tasks: Freeing up time and resources

A significant portion of working time in SMEs is still spent on repetitive, manual tasks. These include, for example, data entry, invoicing, inventory management, handling customer inquiries, and conducting routine checks. Studies have shown that in some SMEs, up to 30 percent of working time is spent on such activities. These tasks are not only time-consuming and prone to human error, but they also tie up valuable employee resources that could be used for more strategic and value-adding activities.

This is where automation comes in. By using technologies such as Robotic Process Automation (RPA), workflow automation systems, or specialized software solutions, repetitive tasks can be automated. A practical example is accounting: Cloud-based accounting systems are able to automatically generate payment reminders, post incoming payments via interfaces, and even perform simple reconciliations. Processes that previously took hours or even days a week to complete manually can thus be reduced to just a few minutes. In manufacturing, collaborative robots, so-called cobots, can take over monotonous assembly work. A company like Weber was able to reduce throughput times by up to 40 percent by using cobots in production. These examples illustrate how automation can eliminate routine tasks and free up valuable working time.

Optimized resource utilization through intelligent systems

Besides reducing manual tasks, automation also contributes to optimized resource utilization. Modern automation systems are often equipped with artificial intelligence (AI) and real-time data analytics. These technologies enable SMEs to gain deeper insights into their operational processes and use resources more efficiently.

AI systems can, for example, identify bottlenecks in supply chains or machine utilization in real time. By analyzing sensor data from production facilities, logistics processes, or sales channels, companies can react to problems early and take preventative measures. The food company Cleca was able to increase its broth production by 15 percent by analyzing sensor data from six production stations and synchronizing process times. By optimizing production processes based on real-time data, the company was able to maximize the utilization of its facilities and minimize waste.

Automation also offers significant potential for resource efficiency in warehouse management. Automated warehouse management systems (WMS) enable precise inventory tracking, optimize storage space utilization, and reduce search times through automatic inventory recording. One SME in the logistics sector was able to reduce its picking times from an average of 45 minutes to just 12 minutes per order by implementing a WMS. This time saving not only leads to faster order processing but also to a reduction in the number of personnel required and optimized use of warehouse space.

Economic benefits and cost reduction through automation

The operational efficiency gains achieved through automation translate directly into economic advantages and cost reductions for SMEs. These advantages can be divided into direct and indirect economic effects.

Direct cost savings through automation

One of the most obvious economic benefits of automation is the direct cost savings. By automating workflows, SMEs can significantly reduce personnel costs for routine tasks. Case studies in sales show that automated sales processes can reduce personnel costs for administrative activities by up to 35 percent. Fewer staff for repetitive tasks not only means lower wage costs, but also savings on social security contributions, payroll taxes, and administrative expenses.

Another area for direct cost savings is the reduction of error costs. Manual processes are inherently more prone to human error, which can lead to costly rework, material waste, or even customer dissatisfaction. Automated systems, on the other hand, operate more precisely and consistently. In accounting, for example, the introduction of automated plausibility checks can drastically reduce the error rate in data entry and processing. Some companies have been able to reduce their accounting error rate from 8 percent to below 0.5 percent through automation.

Automation technologies such as cobots or precision manufacturing systems can also enable material savings in production. The higher precision and repeatability of automated processes result in less material waste and a reduced scrap rate. Automotive supplier India Dreusicke was able to reduce its production costs by 22 percent through the use of cobot manufacturing, primarily due to material savings and a reduction in production scrap.

Indirect economic effects and faster ROI

In addition to direct cost savings, automation also generates indirect economic effects that positively impact the profitability of SMEs. These include, for example, increased productivity, faster time-to-market for new products and services, improved customer satisfaction, and enhanced innovation.

Modern automation systems are often characterized by short payback periods. Many SMEs report that their investments in automation technologies pay for themselves within 18 months or even faster. One medium-sized mechanical engineering company was able to recoup the cost of its cobot deployment after just 11 months thanks to reduced rework and increased machine utilization. This rapid return on investment makes automation attractive even for SMEs with limited financial resources.

In addition to the direct and indirect economic benefits, there are also government funding programs that provide financial support to SMEs implementing automation technologies. Programs like "Digital Now" in Germany, for example, cover up to 50 percent of the implementation costs for digitization projects, including automation solutions. This funding minimizes the liquidity burden for SMEs and facilitates their entry into automation.

Strategic competitive advantages through automation

Beyond the operational and economic advantages, automation also opens up strategic competitive advantages for SMEs, which are crucial in an increasingly dynamic and globalized market environment.

Agility and market adaptability through flexible systems

In today's fast-paced economy, agility and market adaptability are crucial success factors. SMEs must be able to react quickly to changing customer needs, new market trends, or unexpected events. Automation enables SMEs to make their processes more flexible and adaptable.

Modular automation solutions based on open standards and flexible architectures enable SMEs to retool their production lines or business processes within hours or days. A textile company in Baden-Württemberg, for example, can produce custom-made items at mass-production costs using programmable sewing robots. The robots' flexibility allows the company to quickly respond to individual customer requests and adapt its product range to demand. This agility has increased the company's order fulfillment flexibility fivefold.

Cloud-based CRM systems also contribute to the agility of SMEs. Real-time analysis of customer data allows sales teams to react more quickly to market trends, create personalized offers, and dynamically adapt their sales strategies. Companies report that they can react to market trends up to 30 percent faster by using cloud-based CRM systems.

Scalability without proportional cost increase

Another strategic advantage of automation is scalability. Automated systems can typically be easily adapted to increasing order volumes or growing business requirements without costs increasing proportionally. This is particularly beneficial for SMEs that need to quickly expand their capacities during growth phases without losing cost control.

Automated sales pipelines can, for example, handle a tripling of inquiries without requiring additional staff. The company Reeply was able to scale its sales processes through automation to such an extent that it could manage a significant increase in inquiry volume without having to increase its sales staff.

In manufacturing, scalable robotic cells or flexible production systems enable SMEs to increase their capacity while maintaining the same workforce. One metal processor was able to increase its production capacity by 170 percent with the same number of employees by using scalable robotic cells. This scalability allows SMEs to benefit from economies of scale and remain competitive even with growing business volume.

Quality assurance and process optimization through automation

Quality is a crucial factor for the success of SMEs. Customers expect SMEs to provide high-quality products and services at competitive prices. Automation plays a key role in quality assurance and process optimization.

Increased precision in manufacturing and error reduction

Automated production facilities and inspection systems enable a significant increase in manufacturing precision and a reduction in errors. Vision-guided inspection systems, based on AI-based image recognition methods, can detect surface defects or production errors with an accuracy of up to 99.7 percent. In comparison, the accuracy of manual inspections is often only around 92 percent. The higher precision of automated inspection systems leads to a significant reduction in defective products and rework.

In the pharmaceutical supply industry, where the highest quality standards apply, an AI-supported packaging line has reduced defective batches from 1.2 percent to just 0.03 percent. The automation of packaging processes and integrated quality control through AI systems have led to a significant improvement in product quality and a reduction in production downtime.

Consistent process execution and compliance assurance

Automation also contributes to consistent process execution and ensures compliance. Workflow automation tools define and document process steps and ensure that these steps are always executed in the same order and according to the same rules. This is particularly important in industries with high regulatory requirements, such as medical technology or the food industry.

A medical technology SME was able to reduce its certification audits from 120 to just 40 hours because all quality assurance steps were fully documented using workflow automation tools. The complete documentation of processes and the verifiable proof of compliance with quality standards significantly reduced the effort required for audits and increased compliance assurance.

Employee development and workplace design in the context of automation

It is often feared that automation will lead to job losses and a deterioration of working conditions. However, reality shows that, when implemented correctly, automation can have a positive impact on employee development and workplace design in SMEs.

Increased job satisfaction through task transformation

Studies in automated factories show that employee satisfaction generally increases when repetitive and monotonous tasks are eliminated through automation. Employees are freed from burdensome routine tasks and can concentrate on more challenging and varied activities. This leads to higher work motivation and increased identification with the company.

At Trelleborg Sealing Solutions, the use of cobots in production not only led to increased efficiency but also freed up employee time for innovation workshops. Employees previously engaged in repetitive assembly work could now contribute their creativity and expertise to the development of new products and processes. This resulted in increased innovation within the company and greater employee satisfaction. Overall, studies in automated factories report increases in employee satisfaction of up to 28 percent.

Skills development through new requirements

The introduction of automation technologies also creates new demands on employee skills. New jobs and qualification profiles are emerging, particularly in the areas of operating, maintaining, and further developing automation systems. SMEs investing in automation must also invest in the further training of their employees to ensure they can effectively use and develop these new technologies.

The introduction of AI tools, for example, increases the demand for data literacy training—the ability to understand, analyze, and use data for decision-making. Fraunhofer IML has developed specialized training modules that prepare employees for automation tasks within six months. These courses not only impart technical know-how but also foster an understanding of automated processes and the ability to collaborate with automated systems. Successful training programs can prepare up to 78 percent of employees for new automation tasks within a short period.

Resilience against market risks through automation

In a world characterized by increasing uncertainty and market risks, automation can also contribute to strengthening the resilience of SMEs. Automated processes are less susceptible to external disruptions and can help SMEs better cope with challenges such as skills shortages or crisis situations.

Addressing the skills shortage through the use of technology

The shortage of skilled workers is a growing problem for SMEs in many sectors and regions. Automation can help reduce the need for labor in certain areas and make SMEs less dependent on the labor market. Automated warehouse management systems, for example, can reduce the need for physical order pickers by up to 60 percent. Chatbots in customer service can automatically answer standard inquiries and relieve service staff of up to 70 percent of routine requests, as studies in the retail sector have shown. By using automation technologies, SMEs can mitigate the skilled worker shortage and maintain their business processes even with fewer staff.

Crisis resilience through process stability and remote capability

The COVID-19 pandemic has highlighted the importance of crisis resilience and process stability for businesses. Automated SMEs were better able to maintain their operations during the pandemic than companies with highly manual processes. Automated production facilities, for example, can continue operating without restrictions in shifts, even if employees are absent due to illness or quarantine. During the COVID-19 pandemic, automated SMEs experienced an average of 23 percent fewer production losses than their non-automated competitors.

Cloud-based systems, which constitute a large part of automation solutions, also enable a seamless transition to home office and remote work. Employees can access data, applications, and processes from anywhere in the world and perform their work remotely. Studies show that in SMEs with cloud systems, up to 89 percent of office workers were able to make a seamless transition to working from home. This remote capability increases the flexibility and resilience of SMEs in crisis situations and enables them to maintain their business operations even under difficult conditions.

Conclusions and strategic implications for SMEs

The comprehensive analysis of the benefits of automation for SMEs clearly shows that automation is not a luxury project or a future option, but a strategic necessity for SMEs that want to remain competitive in the long term. Automation is a crucial factor for operational excellence, economic efficiency, strategic agility, quality assurance, employee development, and resilience.

For SME decision-makers, these findings have the following strategic implications:

Prioritized implementation in areas with high ROI potential

SMEs should begin automating in the areas that offer the greatest potential for rapid amortization and a high return on investment (ROI). These often include areas such as warehouse logistics, invoicing, customer service, or repetitive production processes.

Choose modular system architectures

When selecting automation solutions, SMEs should look for modular system architectures that can be expanded and adapted step by step. This allows for a flexible entry into automation and a gradual expansion of automation initiatives.

Employee participation and early training

Employee involvement in the automation process is crucial for success. SMEs should inform their employees about planned automation projects early on, involve them in the selection and implementation of the systems, and offer them comprehensive training. Prototype tests and pilot projects can help build acceptance and prepare employees for the new ways of working.

Systematic use of funding programs

SMEs should systematically utilize the diverse funding programs offered by the federal and state governments to reduce investment costs for automation projects. Early information about funding opportunities and professional application preparation can significantly minimize the financial burden for SMEs.

Companies like FTAPI demonstrate that investments as low as €15,000 can enable significant leaps in efficiency. The combination of AI, robotics, and process automation creates synergies that can lead to disproportionate improvements. One machine manufacturer achieved a 210 percent increase in productivity within two years through the parallel implementation of cobots and a modern ERP system. These examples show that automation is not a question of company size, but rather a question of strategic direction.

Digital transformation, in which automation plays a central role, is becoming a critical success factor for SMEs. Companies with a clear automation strategy recorded average 14 percent higher returns on sales in 2024 than their non-automated competitors. Given the rapid pace of technological advancement and the availability of scalable and cost-effective automation solutions, there is no rational alternative for SMEs to the swift implementation of automated systems. The future belongs to agile, efficient, and resilient SMEs that consistently leverage the opportunities of automation.

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Konrad Wolfenstein

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