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Uncovering Your Return on Investment in Automation

Uncovering Your Return on Investment in Automation

You’re convinced that automation will improve your production runs and overall product quality. You hear that it will give you an edge on the competition and open new markets. But what return should you expect on your investment? That’s the last question you have before making a purchase and introducing new technologies to your entire team. Here are ways to look at robotics, motion control, and machine vision costs and returns.

USE LONG TERM PLANNING

Technology end users often say they want the equipment purchase to pay for itself within the span of two years to make their investment worthwhile. Take a longer-term view. Gauge the Return on Investment (ROI) by looking at the service life of the robotic system and cash flow over several years. That perspective comes from Ron Potter, Director of Robotics Technology for Factory Automation Systems, Inc. in Atlanta, Georgia, who is a 45-year veteran of the automation industry.

“Most manufacturing companies have traditional means of calculating ROI and they’re based on direct labor savings and short-term benefits,” said Ron, quoted in the article Calculating Your ROI for Robotic Automation: Cost vs. Cash Flow. “But the real benefit of robotics is not on the short term.”

DETERMINE COST OF OPERATION

Ron has been involved in more than 2,500 robotics applications. His calculations are based on a medium-sized robot with a payload of about 100 kg, a typical industrial robot that would be used for material handling. He accounts for power consumption and the related cost per kWh.

He estimates the average cost to operate a medium-sized robot is 75 cents an hour with the ability to work 24 hours per day. The life of the project could be from 8 years to 15 years. Compare the cost to a person who’s being paid $15 to $20 an hour.

ESTIMATE PEOPLE COSTS

Automation training is a cost that may get overlooked but should be included. Rockwell Automation provides a ROI Forecasting Tool with common manufacturing metrics related to production, quality, and service and how those are impacted by employee training.

Related expenses are time away from the job, travel, lodging and materials fees related to the training. There are benefits. The forecasting tool estimates an employee’s annual productivity can improve by as much as 8 percent to 13 percent. Other factors are improved teamwork and fewer conflicts.

CALCULATE PERFORMANCE

Automation’s appeal is not just based on hourly savings. Imagine a scenario where error free production is a reality and products are made right the first time.

There are various aspects of automation that contribute to the overall performance of a system. In the area of motion control, using servo pumps generate cost savings of up to 90 percent compared to a conventional hydraulic solution.

Servo motors, as written up in Servo Pumps Give Hydraulics End Users an Edge, have an “instant response [that] enables the actuator to operate much more quickly and deterministically, making it a good fit for applications like punch presses.” An investment of about $6,000 begins to generate returns at about two years, based on an energy price of 6.8 cents per k/Wh.

Machine vision is another area where the investment leads to lower operating costs and higher quality. A valve cover supplier to an automotive manufacturer achieves 100 percent inspection on 60,000 parts per year.  The only other way to get the same outcome would be to use a touch probe system that would cost twice as much, as noted in the article Vision System Performs 100% Inspection in High Volume Valve Cover Production.

EASE OF USE

Operating costs are kept to a minimum thanks to advanced software systems that employees can operate without having extensive programming knowledge. The outcome can be pre-determined as noted in an article on Jabez Technologies and the release of Robotmaster V6.1 which is designed to “easily exploit the full potential of each robot brand.”

Users are able to create “optimized paths” for plasma, water-jet and laser cutting with ultimate control of their robot for error-free programs. It’s possible to quickly program successful welding paths through by seeing the impact of any changes in the path, torch angle, reach or collisions.

DRAMATIC RETURNS

A typical robotic installation may cost around $250,000, according to Ron Potter. He said the robot itself is about one-third of the total installation cost in an “integrated turnkey system.”

He said after the first two years, the real benefits of low-cost labor are noticeable and during years 3 to 10 the positive cash flow is almost exponential. An investment costing a quarter-of-a-million dollars, estimates Ron, turns out to be about $1.5 million of positive cash flow.

Automation may allow your company to achieve new goals and enter new markets. Look beyond the near future to calculate the long-term returns and determine the true profit potential. Stay current on automation news and trends on A3 Automate.

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