How Customized Automation Delivers High ROI

Implementing robotic automation is a major initiative for most manufacturers. However, the big question on the minds of most production floor managers and manufacturing leaders is: What’s the ROI?  

In this insightful conversation, QComp’s Marketing Director, Samantha Himmelspach, sits down with Strategic Sales Director Amanda Henrickson to discuss the return on investment (ROI) and how automation impacts labor, productivity, and long-term profitability across industries.

Transcript

SAMANTHA: Hello again! I'm Samantha Himmelspach, marketing director here at QComp, and today I'm speaking with Amanda Henrickson, QComp’s strategic Sales Director. Good afternoon, Amanda.

AMANDA: Hi, Sam.

SAMANTHA: Today we're going to be covering one of the biggest questions surrounding a robotic automation solution, and that is, what's the return on investment or ROI? Before we get into specifics, let's start with the big picture. What are some of the factors that a manufacturer and robotics integrator need to evaluate to determine ROI?

AMANDA: There are many factors that a manufacturer needs to take into consideration when looking at their ROI. They generally cover the topics of throughput, quality, speed to market, longevity, labor, and so on. So, when determining the true ROI, it's important to gather some data for each of those things at the onset of the project. This way, we can evaluate down the road. If I narrow it down to three key factors, it's really labor costs and availability, safety and compliance requirements, and then the quality standards that you need.

SAMANTHA: That's interesting. Are there a few of those factors that weigh more heavily than others when calculating ROI?

AMANDA: Well, one of the most significant factors in delivering a strong return on investment over time is really labor productivity. While the use of robots to replace human workers is always a contentious issue, it's important to note that most manufacturers are utilizing robotics to perform tasks that are difficult to staff. They are then using the people they had in other areas for value-added roles.

For instance, we implemented a solution for our customer in a cold room environment where the workers wore winter parkas, gloves, and hats at all times. As you can imagine, this customer struggled to retain employees in this position as they quickly requested a transfer or left the organization completely. This high turnover rate incurs substantial costs, including training and onboarding expenses, which are only compounded over time.

As we all know, recent statistics show labor shortages are a growing concern, with many industries facing significant challenges in finding and retaining qualified workers. The costs associated with high turnover in hard-to-fill positions can be substantial, further highlighting the importance of investing in automation technologies.

SAMANTHA: So we all want quick results and instant gratification. When manufacturers invest in custom automation, what are some of the key areas where they can expect to see the most significant short-term return?

AMANDA: Well, I wouldn't say there's instant gratification, but companies will experience ROI in certain areas faster than in others. For example, better resource utilization can significantly reduce the amount of rework and downtime, enabling companies to make better use of their employees. Additionally, our customized solutions are designed to streamline processes, allowing companies to meet their demands more efficiently.

And one of the most obvious results is the increased throughput. We recently worked with a customer who was able to increase production by over 30% by simply automating the process. This resulted in an increase of 30 more pieces produced per minute. To take it one step further, each piece resulted in a net profit of one dollar. So 30 additional pieces per minute multiplied by 60 minutes per hour at a dollar each piece equated to $1,800 of increased production profit per hour. 

They were running two 10-hour shifts, so at 20 hours of production per day, they were looking at an additional $36,000 of profit per day. That's $180,000 additional profit per week. And if you say you're working 48 workweeks per year, it comes out to $8.6 million of increased profit per year. This was roughly a $3 million automation solution and approximately $4 million in upstream manufacturing and modification costs. So the total cost of this solution was about $7 million. It brought the ROI to a mere 9.7 months for this system.

SAMANTHA: Awesome. That's an incredible example. But now let's talk long term. Longevity is a key factor in determining ROI. How long can a company expect a robotic solution to last?

AMANDA: You're completely right, Sam. We need to really think about ROI over time as well. While robotics can be seen as a quick solution to quality or a labor issue, the true benefits are really demonstrated over a longer span of time. The real fact of the matter is that we have an increasing issue with labor shortages. According to Manufacturers Alliance, over two million jobs in manufacturing are projected to go unfilled in the next decade due to the skills gap and an aging workforce.

Automation is often viewed as a threat to jobs, and has been seen as a hot topic in many news stories. But again, automation mainly targets roles that are challenging and difficult to fill or hard to retain a workforce for, even without a labor shortage. Additionally, according to the US Bureau of Labor Statistics, the average tenure of an employee is now 3.9 years.

So even once you find an employee, get them onboarded and fully trained, you're only going to see 3.9 years of productivity from them on average. If you look at the expected lifespan of an automated robotic solution, it's much longer than 3.9 years. We have systems that have been in place for decades for multiple companies in various industries.

For example, we have one customer that has several of our systems. They are currently approaching about 17 years old. These units are still functioning well today and have paid for themselves time and time again. We are currently in the process of upgrading some of the robots, as they are approaching that 20-year mark and have been working typically six days a week and about 20 hours per day.

And the only reason they're looking at upgrading isn’t because the system is not working. It's simply that there's newer, faster, and more productive technology that they'd like to upgrade to. Another piece of the longevity ROI that comes to mind is when a customer’s business needs new product or product specifications change. We recently had a customer that had several of our case packing solutions.

The customer's product was completely changed for new marketing and packaging advances. One of the advantages to a robotic automation solution is the ability to retool and redeploy a robotic solution more quickly and effectively than maybe training a whole new human workforce over multiple shifts, or even modifying a hard automation solution. Many times, hard automation solutions are not capable of being reprogrammed or redeployed.

In this specific instance, the customer that we were working with sent the details back to us. We redesigned the tooling. We redesigned the in-feed system and reworked the cell for that customer’s new specifications. It was up and running quickly and handled the new products just as efficiently as it did the previous ones.

SAMANTHA: That's awesome. Are there benefits to robotics and ROI that some manufacturers don't necessarily think about up front, but then realize how important they are after implementation?

AMANDA: It's funny you bring that up, Sam. We just had a very similar conversation with a customer just this week on this very topic. Some of the things people do not realize up front that affect the ROI are things like having scheduled preventative maintenance as opposed to downtime. We have many companies we work with that have one shift per month dedicated to giving their system a once-over.

And it drastically reduces that downtime. They can schedule preventative maintenance when it works best for them, unlike downtime that typically comes at the busiest season for many of our customers. Additionally, as I mentioned just before, having the ability to easily modify or scale a solution for different products, packaging, or changes in the business is a key factor that many people just don't realize.

We recently worked with a company to make their solution fully dynamic with different pallet patterns, as they simply couldn't commit and didn't know what the business would bring in for the coming years. And they honestly wanted to be prepared for any combination of things. As far as benefits are concerned, performance monitoring is another thing many companies underestimate with its robotic solutions.

Being able to have accurate data allows the engineers, managers, and many other employees to strategically plan ways to increase their performance and efficiency. These are factors that our team here at QComp really excels at, and we can help walk you through how these things can really make a positive difference in how your operations work.

SAMANTHA: That's awesome. For those companies that might be hesitant about those upfront costs, what advice would you give them regarding the long-term financial benefits of robotic automation?

AMANDA: You know, honestly, you need to look at it through two lenses in my view. First, view automation as an investment. Just like any significant piece of equipment or infrastructure, robotic automation should be seen as an investment for the future of the business. The initial cost can be offset by the long-term benefits that our systems can bring.

And secondly, conduct a long-term cost-benefit analysis. Companies really should perform a thorough cost-benefit analysis that includes not only initial investment costs, but also long-term savings. You'll need to consider factors like reduced labor costs, lower error rates or rework, and increased productivity over time.

SAMANTHA: That makes sense. Okay, so I'm going to bring up the big question, you know, that's out there. In the end, is there an expected ROI that manufacturers can expect?

AMANDA: Honestly, I wish there was a number I could assign. It's really difficult to give an expected ROI because there are no hard-set numbers due to the high level of customization and unique business models of our customers. Each robotic solution is really tailored to a specific process, which means the expected ROI will depend on how well the solution fits the unique needs of the manufacturer.

Additionally, different industries have different operational and regulatory requirements. All of this customization can lead to varying efficiencies and savings. But here at QComp, we really pride ourselves on being able to provide examples of what similar applications have provided. We had a manufacturer recently that had integrated our robotics for a pre-feeding lid application for wet wipes. Typically, lids are very challenging to load into a system.

It's running at 150 pouches per minute. This can take one person with sleeved lids, or two people trying to pick lids from stacks in a box. Although sleeved lids are more organized, they also cost more for the manufacturer to provide them in a sleeve. So typical systems like this run on three shifts per day. Being able to reallocate some resources to other functions of the system means two people can be moved from the ergonomically challenging lid-loading function and make their lives easier. 

Depending on each company's burden rate, let's just say this is a $50,000 per year position. So $150,000 a year savings on labor alone can be had. On top of that, let's take into account the ergonomic factors and employee satisfaction. Although it's difficult to quantify, it plays a large factor here. In this scenario, it actually decreased the turnover rate of this position due to job satisfaction.

Lastly, the system increased overall line uptime and increased production by $200 per day.

SAMANTHA: That's incredible. Another great example and things you don't think about—employee satisfaction comes in huge in these kinds of ROI systems. I guess my next question is, what are the first steps to working with an integrator to determine a solution and its potential ROI?

AMANDA: You know, first you really need to identify your challenges and outline your goals for automation. Whether it's reducing cost, increasing throughput, or improving your product quality, what's most important to you? Then be sure to gather and collect your data points on your current operations, including production rates, labor costs, error rates, and downtime. This information will really help us assess your needs and provide tailored recommendations.

Once you have that information, feel free to reach out to us here at QComp. We'd love to discuss your current challenges and the goals that you're trying to achieve. Share any of the data that you've gathered, as well as any specific requirements or constraints that you have in mind. We will then arrange an initial consultation to better understand your company's needs.

During this meeting, we'll ask detailed questions, discuss potential solution options and guidelines, and explain the customization options that may be available for you. We will then be able to provide examples of similar challenges faced by other manufacturers and how they successfully implemented our robotic solutions. Our team will work with you to conduct an assessment that verifies the potential ROI of different automation solutions.

This will include cost estimates, expected savings, and payback periods. Lastly, we'll evaluate and review the proposed solutions together, discussing the customization options and how each aligns with your goals and operational requirements.

SAMANTHA: Awesome. Well, thank you again for joining me today, Amanda, and thanks to those who are watching. As Amanda stated, we'd love to connect to talk through your automation challenge and help you explore how to get the most ROI possible out of your automation solution. So contact us here at QComp by clicking “Let's Connect” in the right-hand corner.