We’ve done some extensive research to help illustrate a comparison of traditional manual labor vs automation in the infographic below. We illustrate this example by comparing a production application where the traditional solution to production is adding people to increase output. We compare it to the opportunity of integrating an automated solution and the potential for payback or the Return on Investment (ROI).
In this scenario, our customer was using 8 production workers x 2 shifts per day to meet their production goals. This was challenging in a tight labor market and our customer was frequently faced with a shortage of labor. This turnover was creating many challenges, including repetitive training, decreased productivity, decreased quality, and low employee morale.
Precision Automated Technology proposed an automated solution. This solution would only require a single production worker per shift. The automation included a robot, tooling, conveyors and the full system installed and integrated on the customer’s floor. The automation solved the challenges with their labor shortage, training and quality. In addition, the customer could re-allocate their labor force to other areas in the plant and discontinued the use of temporary labor. Subsequently, the customer decreased their operating costs, increased productivity and enhanced reliability. These factors all contributed to a higher Return on Investment (ROI) and dramatically lower turnover.
We helped the customer understand and justify the cost of a new system, something that is often overlooked due to the fear of the initial expense. It was discovered that the annual cost per production worker was $35,000/year. They were using 8 workers/shift, 2 shifts/day. This equaled a significant amount at $560,000/year. This is just the labor expense and does not consider other costs related to a loss in production capacity, training, injury, etc.
We proposed a total system cost to automate the process at $432,000. The new system still requires one operator/shift to monitor and replenish materials. The cost of this labor is 1 worker at $35,000/year, 2 shifts/day = $70,000/year. Their first-year expense for the system would be $432,000 plus $70,000, totaling $502,000. This translates to a first year ROI of $58,000 ($560,000 labor – $432,000 system price – $70,000 operators).
This scenario gets more exciting when you look at the second year of ownership. Now only having to cover costs of $70,000 in operator costs, the ROI becomes $490,000 during the second year. If this customer chose to not automate their labor expenses, it would have totaled $1,120,000. With the successful installation of automation their total expenses are $572,000. This is a savings of $548,000 over two years.
Finally, in working with the customer we established a relationship of trust and partnership. This is critical in the successful implementation of automation, customers know their process and we know automation. By working closely with the customer our engineers understood the customer’s needs and requirements, incorporating them into the system. With these features now added to the system, the customer has increased reliability, availability, and flexibility of the production line while significantly reducing operating costs.
Precision welcomes the opportunity to talk to you about your needs and challenges. It is a no risk opportunity to discuss and see if we can help you recognize similar savings in your operation.
Automation is on the rise, supported by the latest data from Robotics Industries Association (RIA).
Robotic Industries Association Posted 05/04/2017
Strongest First Quarter On Record with $516 Million in Orders
North American robotics companies posted the strongest ever first-quarter results, according to the Robotic Industries Association (RIA), the industry’s trade group. Both robot orders and shipments achieved record levels.
An all-time high total of 9,773 robots valued at approximately $516 million were ordered from North American robotics companies during the first quarter of 2017. This represents growth of 32 percent in units over the same period in 2016, which held the previous record. Order revenue grew 28 percent over the first quarter of last year. Robot shipments also reached new heights, with 8,824 robots valued at $494 million shipped to North American customers in the opening quarter of the year. This represents growth of 24 percent in units and five percent in dollars over the same period in 2016.
“The automation industry continues to grow robustly as companies invest to increase productivity and boost competitiveness while also providing opportunities for workers,” said Jeff Burnstein, President of RIA. “We are excited to hear about the new jobs being created and how companies such as Amazon, GM, and others are training and retraining their workforce to enable them to embrace these higher skilled jobs.”
Please contact Precision Automated Technology to review and discuss automation in your operation.