Differentiating ROI and Payback Period

If you’re looking to automate your production with robots and robotic equipment, you’ve got to build a solid business case if you want to know the true value of automation.

Many businesses choose to calculate ROI by calculating the payback period, which takes the cost of the robot and divides it by monthly salary of the worker. While this gives you a concrete figure to work with, it’s important to note that you won’t get a clear picture of the true value and impact that automation will have on your business. 

To make a more accurate and holistic calculation, the first step is to start with the initial costs and then to further consider the short-term and long-term tangible and intangible benefits that you’ll reap from this type of investment.

4 aspects to consider when building your business case

Considering these four aspects of automation when building your business case, will help you choose the right robots and robotic equipment for your business. 

1. Total investment in robotic equipment

If you automate using collaborative robots, which offer flexibility and work safely side-by-side with your human workers, what would the total robot investment be compared to the deployment of traditional robots?

To calculate your total robotic equipment investment, you must include the initial investment and take into consideration fees for additional system accessories or infrastructure within your factory and integration charges that you may incur. How easy are the robots to program and how flexible are they? Will you need to call in a system integrator every time you need to make a small change, or can you train your personnel to make small, needed changes because the robots and their accessories are easy to program and don’t need hours of expensive consulting time for customization? 

Consider future maintenance costs and whether or not a particular robot can be easily redeployed within your business to meet the changing needs of your production. Look at whether you need to change the layout of your factory floor if you’re looking to deploy traditional robots, as this can come at a high cost and tends to be a more fixed and less flexible installation. Be sure to factor in costs related to upgrading or updating the technology and take into account later additions and associated development costs.

Example: Deploying an autonomous mobile robot (AMR) with ROEQ mobile robotic equipment, instead of a traditional autonomous line guided vehicle, can mean that your integration costs will be minimized due to the ease-of -use, flexibility, small footprint, easy programming and the ability for you to update and maintain the technology yourself in-house. Learn more about AMRs vs. AGVs here.)

2. Impact on your employees

What would the deployment of robots and the right equipment mean for the health, wellbeing and safety of your employees?

If you automate certain aspects of your production, how much would you save in terms of social costs and health, medical and insurance-related expenses due to an introduction of safer, more efficient and ergonomic work practices? What would the value be of less accidents based on human error? And what would it mean to you to free up your valuable employees for other, more complex tasks?

Automation can keep employees safe, particularly if you adopt collaborative robotic equipment, which has safety features built in that enable the robots to work together with humans safely and effectively on a busy production floor.

There are many occupational health and safety issues associated with repetitive motions and manual handling processes. Such problems can be significantly reduced through the introduction of collaborative robots and the right robotic equipment, freeing up your workers to work on less labor-intensive and repetitive tasks and perform higher value roles within your business. It also gives workers the opportunity to learn about robotic technology and to acquire new skills that will support their future growth as well as the growth of your business. Employee satisfaction is difficult to place a value on, but invaluable to your business.

Example: If you were able to deploy AMRs with ROEQ lifter modules, you could safely and efficiently deliver loaded pallets from the end of your production line to your warehouse, freeing up the employees that previously operated forklifts to do the task, for other, more complex tasks, thereby making better use of your resources.

Read more in this business challenge story…

3. Increased efficiency

What would the productivity gained by using robotic equipment mean for your business? What would more consistent quality mean for your products?

Take a look at the number of repetitive and manual processes you have running now in your business. How many hours, weeks or days do these tasks run? How many employees does it take to complete the tasks? Are the products consistently at the same level of quality? To ensure the continued health and safety of your workers, imagine the employee and business benefits gained simply by automating these processes with robotic equipment. Doing this will give your employees peace of mind when it comes to their health, wellbeing and safety and also allow them to spend more time working on other more interesting tasks or projects within the business.

If a robot could do on repetitive or monotonous tasks, like fetching parts when they run low, for you 24 hours a day, consider the shortened turnaround time for your products to go from your factory to your customer’s door. If your production is more efficient and of a more consistent quality, consider the additional productivity that could mean for your business. Could you take on more orders?  What would that mean for your bottom line?

Example: If you were able to automate the process of fetching the parts human employees need to assemble your products using an AMR with ROEQ mobile robotic equipment, you would have less down time and increase your production, because employees would have the parts they need delivered safely and efficiently, just when they need them.

Read the MiR case story…

4. Minimal customization

What if the robots were easily programmed and could had the flexibility to perform multiple tasks?

If you choose the latest robotic equipment technology, it comes loaded and programmed with all the experience and knowledge of various kinds of production. It can be set up easily, programmed, reprogrammed and integrated into a business by virtually anyone, which means you don’t have to call in specially-trained engineers or technicians to integrate and maintain the robotic equipment, or switch it between different workflows. Nor do you have to use countless hours on customization and engineering in the beginning, because the software comes with all of that engineered in. Automation using mobile robotic equipment is easy, it will save you time and it means your production won’t be offline too long during setup or changeovers between different tasks. This means you will also save money and time on recruitment and training processes, so be sure to factor that into your calculation.

Summary

It’s worth stepping back and taking a holistic view of your investment into robotic equipment. Having a look at the big picture gives you a real understanding of the short- and long-term value robotic automation will bring to your business. It’s a detailed process because this is an investment in the growth, development, sustainability and competitiveness of your business. 

When you’re building your business case, use the term ROI to justify your robot investment rather than the term “payback period,” which is the number of days, months or years it will take for you to recover the cost of your investment. Your payback period will always be longer than your ROI as your payback calculation is used to offset wages, whereas ROI calculation takes into consideration the whole range of tangible and intangible business benefits and impacts in the short- and long-term.   

We are happy to help you build a strong business case for automation with robotic equipment.