A Strategic Approach to Determine Return on Investment

A New Way to Evaluate the Value of Automation

By Dan Anfison, Executive Director Global Accounts, FANUC America

Manufacturers who invest in automation and robotics are able to achieve much higher efficiency rates, and at the same time create a better work environment that inspires employees to be more productive. Image courtesy of FANUC

Consider this – you’re working on a plan to convince your management that robots and automation are the best way to address a production issue.  You’re sure to pique their interest when you present a quick ROI based on financial metrics and measures.  But, what else can you tell your management that would persuade them to make that initial investment?  If you’re working with the right automation supplier, you will be prepared to present both the financial advantages as well as the qualitative benefits that automation provides, such as higher product quality, enhanced flexibility and improved employee satisfaction.

The financial metrics for robotics and automation have improved significantly over the years as products have become smarter, more flexible and reliable.  However, if you’re new to automation and considering robots for the first time, it’s a good idea to take a tactical approach to ROI.  Take the time to develop an automation strategy based on the competitive advantages that automation can bring to your organization.

Typically, ROI presentations are transaction-based covering metrics and measures focused solely on the ability to reduce costs.  A new transformative-based approach to determining the ROI for robots and automation includes evaluating key benefits and opportunities such as:

  • Enhanced process quality and reliability
  • Better use of skilled workers, increased morale and employee engagement
  • Improved insights from data collection
  • Creation of a genuine transformative experience for the entire company

A tactical approach to determine return on investment involves developing an automation strategy based on the competitive advantages that automation can bring to your organization. Image courtesy of FANUC

The combination of qualitative measures with financial estimates is making it easier for corporate management to approve an investment in automation.  Why?  As the automation market evolves, executives are realizing that the quantifiable cost savings achieved through automation are just the beginning of their investment potential.

Automated systems not only help manufacturers increase capacity and meet their customer’s demands; they enhance the careers of the current workforce.  Especially in today’s tight labor market, companies that invest in workforce training increase the likelihood that skilled employees will advance in their careers and be more likely to stay with the company.

So, let’s take a closer look at several ROI measures that will make it easier to convince management to commit to an automated system.

Cost savings

Many companies begin an automation project with the intent to reduce costs and increase savings by minimizing the time employees spend on dull, dangerous and dirty tasks.  These savings come in the form of improved efficiencies, higher throughput, reduced risk of injuries, and less absenteeism due to fatigue or boredom.

The fact is manufacturers who invest in automation and robotics are able to achieve much higher efficiency rates, and at the same time create a better work environment that inspires employees to be more productive.

A Center of Excellence uses data to help the company build a common structure and process for all automation projects – from selecting the right automation partner, to how the system is designed and how it will be deployed across the company. Image courtesy of FANUC

Common solutions

Manufacturers that have similar processes at multiple locations are looking at common automation approaches to achieve a higher ROI.   Once the individual pilot system is completed and operating successfully, it’s then standardized to achieve a broader scale solution.  In simplistic terms, this is a ‘copy and paste’ concept that allows manufacturers to use the same automation solution across the company in other areas that perform the same or similar process.  This can provide an impressive benefit for large or complex organizations able to realize exponential automation ROI.  In addition, common solutions make it easier to upskill the workforce, reduce spare part inventories and speed up deployment compared to customized systems.

Improved quality

Well-designed automated systems are programmed and typically do not make mistakes. When a robot is used to do a specific task versus a person, there’s no risk for human error.  Moving the operator to the skilled position of managing the robotic work cell rather than performing the task helps improve quality, consistency, and reliability.

Improved employee satisfaction and retention

The work employees enjoy least are generally the most suitable for automation.  As mentioned in the quality section, employees who are relieved from performing the undesirable tasks are able to focus on more rewarding jobs that require human skills.

Robotic automation truly transforms the jobs of people who can go from transferring, handling or packing products, to managing the robots and automation to do those often dull, dirty or dangerous tasks.

Process audits of the data collected from a robot or other automation equipment are key drivers towards transformational change. Image courtesy of FANUC

Enhanced process insights

As part of Industry 4.0, a key advantage today is the ability to monitor and record the jobs performed by an automated system.   Process audits of the data collected from a robot or other automation equipment are key drivers towards transformational change.   Companies that have access to critical data are able to make continuous improvements, reduce costs and stay competitive.

Center of excellence

Implementing a well-designed method to manage your company’s automation systems provides significant benefits and helps reduce risks.  How? The leading approach today is to create an automation center of excellence (CoE) that becomes a guide for the company’s automation journey.

The CoE uses data to help the company build a common structure and process for all automation projects – from selecting the right automation partner, to how the system is designed and how it will be deployed across the company.  The CoE can also manage how to identify a new automation project and ensure a quality and structured process.   As a result, standardized and defined processes that include built-in control checks helps improve compliance, demonstrates capability, and produces documentation to support a variety of uses.

Using a strategic and comprehensive approach to identify important value drivers for your organization allows you to build a strong business case for automation.  Emphasizing the qualitative benefits brings increased cost savings, productivity, scalability, quality, employee satisfaction and retention, and process insights.

In the end, demonstrating how automation will help reduce costs will certainly appeal to your executive team.  However, showing how automation can drive value and enable true transformational change will get you the funding and support you need.

About the Author

Dan Anfinson is Executive Director Global Accounts for FANUC America Corporation responsible for developing global relationships with a wide range of industrial consumer hard goods manufacturers. Speak with a FANUC Automation Expert today and learn how to transform your organization with robotics and automation at www.fanucamerica.com

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