A decade ago, integrating robotics into a mid-size company’s process was far too expensive for most businesses to consider. Since then, continued innovation has made automation less costly and increasingly effective, allowing more manufacturers than ever before to leverage robots as a means of staying competitive in both national and overseas markets. However, even in a generous automation economy, most business savvy individuals would agree that moving forward with a robotic solution before calculating the ROI of your upgrade is ill-advised. Here’s how you can ensure that automation will be a profitable investment before you make any financial commitments.
Automation ROI: Start With Workflow
First and foremost, know you’re current overhead and output statistics. What are you spending on your existing workforce? How many shifts is your operation able to afford? What is the rate of productivity at your current facility? You can find your current labor expenses with this simple formula:
(operators per shift x number of shifts) x cost per operator = total labor cost
From there, calculate the projected labor costs after your process has been augmented with automation. Are you able to run your process overnight using said automation? What will be the new energy costs associated with running your robot? How much will your output increase? Can you count on better accuracy and fewer product defects? Will the shift in workforce require new training, changes in management hierarchy, or a reduction in insurance premiums due to increased workplace safety for your staff? Once you’ve considered these implications, you can calculate new labor costs and compare them with the old, and see how much you can save on a monthly or yearly basis with an automation upgrade.
Automation ROI: Robot Price Tag
The most important variable in your automation ROI, is at what rate will your robotic upgrade pay for itself. The upfront cost will cut into the projected labor cost savings, and how much it detracts from those savings dictates whether or not going robotic is the right decision for your operation.
Take the upfront price tag of your intended robotic solution, including any engineering or consulting fees attached, and divide by the monthly increase in revenue you anticipate (taking labor savings and increase in output into consideration). This will tell you how many months before you break even. Once you take the expected life of the robot into account, you’ll have a clear picture of your anticipated ROI.
That’s a lot to calculate! We also understand that not every business wants to rely on their own self-produced ROI projections before making the decision to drastically change their operation. That’s why we at CNC Solutions have our own proprietary automation ROI calculator, which allows us to include everything a potential customer would need to take into account before working with us to implement a robotic solution. Our breadth of experience in automated solutions allow us to easily help you determine your ROI, taking various factors into consideration that you may not have thought of. We want to ensure your investment is a viable and sustainable solution for your facility.
If you’re interested in learning what your business could potentially save by integrating automation with an existing operation, connect with one of our automation engineers via the chat box or through our Contact page.