Investing in automation is not by any means a small decision. It requires a detailed understanding of the level of automation required, where automation sits within your manufacturing processes, and, most importantly, what the return on investment will be and how quickly you will see it.
However, ROI and automation must take everything into account and look at the entire financial picture, as automation can affect all areas and aspects of manufacturing.
During a period where we’re continuing to see high staff turnover and skills shortages, where manufacturers are spending more time recruiting and training than ever before, what do you need to know before investing in automation? And do you have a clear understanding of cost justifications and risks?
ROI in automation
Before making any significant business decisions, managers and boards will always require a clear understanding of ROI for any project or business investment.
Investment in automation is no exception.
ROI must be known and outlined from the beginning, looking at both short-term and long-term returns.
But what is ROI automation, and how can it be measured?
We know that automation can improve data accuracy, inventory management, employee satisfaction, and safety.
However, we also understand that integrating and implementing automation changes everything.
From how the factory uses the space and manages its footprint to how fast it can move goods through the production line, accurately and with less stock loss and damage, and how it manages equipment maintenance, labour shortages, energy use, innovations, and more – ROI in automation incorporates all elements of the business.
Automation ROI
At Innomech, we have seen through our partner work ROI show up in the first year of automation being implemented, as it is monitored, and all aspects of how automation impacts the business are considered.
World-renowned sports brand PUMA also saw quicker-than-expected results when they automated their Indiana distribution centre back in 2016, allowing them to expand their order fulfillment services and improve the customer experience.
PUMA originally set out with a 5-year ROI in mind; however, with greater operational efficiency, energy efficiency, increased customer and employee satisfaction, and flexibility, the brand saw a return on its investment in only 12 months.
Achieving strong ROI
Targeted automation is where you will see the fastest financial and operational return; i.e., the area of your operations that would benefit most from automation. Ideally, manufacturers should target high-volume, repetitive tasks.
Achieving strong ROI from automation investments comes from:
Higher throughput – operations become streamlined, workflows are faster, and as a result, output increases.
Waste reduction – with fewer errors on production lines due to the level of precision automation offers, levels of waste and unusable products are reduced. In addition, automation can also ensure full stock visibility, helping to reduce stockouts and over-ordering, reducing cost and space requirements.
Fewer errors – automation is designed to increase accuracy, which leads to less errors and more products produced and sold. Due to better data analysis, ordering accuracy also improves, so there is no waste or excess stock.
Staff retention – monotonous and repetitive tasks are removed from workers so morale increases, worker safety improves, and skills shortages are met.
Reduction in energy consumption – manufacturing lines use up a lot of energy; automation reduces this significantly. What’s more, automation systems such as predictive maintenance can also monitor equipment and machine maintenance so any dips in productivity or machine repairs can be carried out sooner, preventing equipment from using more energy by working harder.
Space savings – production lines become streamlined, and stock becomes much more manageable, saving on storage and floor space, which in plant operations can save considerable money.
Customer retention – automation allows you to fulfill more orders, strengthening your competitive position and overall performance. Improving the customer experience and client-supplier relationship.
Improved data accuracy – automation can track everything on the production line, offering precision, reducing wrong orders, costly returns, and customer dissatisfaction. Analysing significant volumes of data in minutes, manufacturers can now have instant information to allow you to make the most informed business decisions.
The real numbers behind automation ROI
When we delve further into automation investment, we can begin to see the true value of automation, from the precision and quality benefits it can provide to production to the actual financial return on investment manufacturers can receive.
When choosing the right automation partner for you, it’s important that you ask questions upfront regarding ROI, that you look at bespoke automation to suit your process requirements, and that you have a strategy in place for implementation, management, and monitoring.
Automating systems and processes is a fundamental change to any business, so it is essential that you’re fully aware of the impact it will have on your day-to-day operations as well as your investment.
Speak to a member of our team today to see how we can help support your business.
