You see a demonstration of equipment that you believe should be part of your company’s automated manufacturing strategy to achieve high throughput with greater quality. The value seems obvious and you believe the long-term benefits far outweigh the initial costs to purchase, install, and train.
But you’re not the one who writes the purchase checks and there are other needs around the plant. You know the arguments that will surface. What if the technology becomes obsolete in a few years? Isn’t the current equipment we have doing well? Sales might slip.
Read how to formulate a decision-making framework to understand the Total Cost of Acquisition (TCA) versus the Total Cost of Ownership (TCO).
Present the Savings
Sales may not be your profession, but making the case to spend money on a new equipment purchase requires you to convince others. Start with a simple explanation of the benefits. Use case studies that are specific to your requests like this one from the article Making the Case for Total Cost of Operations on the website Motioncontrolonline.org:
“A beverage customer added networked safety on one line. The first year, they achieved productivity improvements amounting to almost $1 million. A different customer that’s still committed to lockout, tag out hardwired safety will have an entire line shut down every time somebody hits an e-stop button.”
Your purchase has to solve a business problem like the networked safety example. This is one of the principles to follow if making the case to improve your automated manufacturing.
There’s not an exact equation to determine how the cost of owning equipment will play out over its production lifetime since each company’s needs is different.
Project the Return on Investment (ROI)
The cost of initial outlay may make a budget-conscious company pause. However, industrial machines are built to last for decades and the on-going costs of operational savings can greatly exceed the initial purchase cost.
This topic was covered on A3automate.org in the article Uncovering Your Return on Investment in Automation. There were six areas covered that are useful for planning ROI:
- Long Term Planning—the benefit of automation occurs over the course of several years.
- Operational Costs—industrial automation can operate for about 75 cents an hour. Factor that in the ROI if the purchase reduces direct labor costs.
- Training Costs—there will be some downtime as workers learn the new equipment’s operational and safety procedures.
- Performance—the performance benefits may include error-free production runs and greater savings in resources like energy.
- Ease of Use—if the purchase is easy to use then this is a plus since specialized programming skills won’t be needed thanks to today’s software systems.
- Competitive Growth—another area to consider is that an investment in automation may allow the company to compete in new product lines and new markets.
A purchase made today can operate long into the future. This may convey the value to others on your team.
Align Decision Makers
There are several roles or positions within many companies that are impacted differently by a decision to automate for the first time or upgrade to new equipment. Speak the language of the people in those positions like purchasing managers.
They want to make the best financial decision for the company so a low TCA is appealing. Show them the bigger picture – that a slightly higher capital expenditure will improve the overall operation and productivity of the factory while reducing TCO over the course of a decade or more.
Dig into the Value
There’s a reason why automated manufacturing saves money over traditional manufacturing. The machines are “smarter” with features like autotuning, energy-saving functionality and predictive maintenance.
In the case of robotics, one purchase may have multiple benefits. The article Small Assembly Robots with Big Gains highlights the benefits of flexible robots that may be initially purchased for a specific task and then re-programmed to handle a completely different task in the future.
This can reduce TCO, increase uptime and provide rapid return on investment.
Industrial machines are built to make high quality parts for decades. The ongoing low costs of operation far outweigh the initial costs. Smart machines equipped with the latest sensors are becoming better at capturing data to adjust their own performance.
Management is better able to monitor factors like energy usage and make changes to address costs like moving energy-intensive operations to the night shift to get lower utility rates.
Robots and other types of automated equipment must be seen as an investment that offers the short-term benefits of improved production and quality control with productivity and profitability factored for the long haul.
Get the input you need on industrial automation with the resources available through A3automate.org.