Financial Justification

When you are trying to convince management that automation would be a good route to follow, you need to make a solid case to support your argument.

Why should the directors believe that you have a cast iron case to support the requirement for investment. You have to present a strong supporting argument.

Lets make some assumptions! Say that the process is running on three shifts with 2 operatives/shift. Lets assume that an operative has a cost of 25K/year and this includes sickness benefit allowance, holiday pay, pension contributions etc.

Payback in Years = C/(O*W*S)-R

Where:

C = System Cost
O = Number of operatives
W = Annual Wage
R = Running Costs inc. scheduled maintenance
S = Number of shifts

Assuming an automated solution will displace 3 operatives/shift working 2 shifts, with an automated solution costing £200,0000 to implement, and the wage/benefit bill is considered £25,000 per employee.

Payback in Years = 200000/((3*25000*2)-5000) = 1.38 years

2 years is normally considered an acceptable payback period

Wow! that's some application. Replacing 3 operatives/shift on a 2 shift system. Now you can see why the automotive industry formed the bedrock of the robot revolution. High volumes, repetitious mass production techniques and 2/3 shift patterns made it easy to justify automation proposals. But this is not the complete picture. A robot installation can bring many more benefits to the production process and it is your job to ascribe a value to them.

A good application will not only isolate the production process from high labour costs and overheads but it should also add value to the process.

Here are some ideas to consider:

The exception which defies the rule is anything related to Health and Safety issues. RSI and personal injury claims can turn around the financial justification numbers. A robot replacing a single operative on one shift can be justified in the 'Hot and heavy' area. Also hazardous materials or operations can be taken into consideration. Grinding is a current case in point.

97% robot uptime isolates production from Labour/staffing problems

Dependable production process introduces control to factory output

100% repeatable process automation eliminates scrap and rework costs

Reduce upstream automation costs. Parts handling introduces control and orientation

Enables competition with 'Low Wage' producers. Minimal labour content

Improve product quality

Reduce Unit costs

Enhance Supplier profile

I'm sure there will be others but you have to find your problems before you can solve them.