Through meetings with various clients from the manufacturing world, our experts are increasingly aware ROI (return on investment) is not the only element to consider for automation projects. Many companies are beginning to consider the strategic aspect of automation, which has the effect of changing the analysis and oblige companies to look at the opportunities more globally. In a context of labor shortage, automation is an essential element to maintain production capacity and promote employee retention. This article presents a few ideas to help you evaluate your automation projects.
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The classic ROI approach
Traditionally, ROI is used to evaluate the profitability of a project. Expressed as a percentage, it takes into account the money invested and the final result obtained: gain or loss. In the context of an automation project in the manufacturing industry, the evaluation is mainly calculated with the labor savings obtained in comparison with the total investment cost of the project.
The evolution of project analysis
In today’s labor shortage environment, automation is essential to maintain and increase production capacity and sales. Some companies are indeed lagging in terms of automation, which poses several risks to their competitiveness and sustainability. The business model is then at risk for obtaining new market shares and achieving strategic objectives. The manufacturing capacity is threatened by the lack of employees and the increasing number of retirements.
The analysis of a new automation investment project should include the opportunity cost (loss of market due to lack of capacity). Opportunity cost can be an important influence in decision making. By taking this approach, the analysis will bring out more strategic elements, giving the decision-maker confidence to make a better decision in such an investment.
Our observation: companies that have used automation are growing, have better sales and are more profitable.
Improved working conditions
Generally speaking, jobs with repetitive and physically demanding tasks are more difficult to fill. Automation can improve working conditions and offer jobs that are better suited to the worker of today and tomorrow. Companies that integrate automation and make work more stimulating increase their power to attract the best candidates. All the conditions are then in place to optimize their productivity.
From this point of view, the development of a strategic vision of automation in which the enhancement and improvement of employees’ work is a key factor in the success of companies. Automation is a solution for achieving strategic objectives and is a challenge for the sustainability of companies. Our teams of experts can help you carry out your projects in this area. Contact us today!
MERKUR is a firm of experts in manufacturing performance and innovation and has been doing so for over 25 years. From strategy to execution, its sole objective is to make Quebec’s manufacturing companies more efficient by offering innovative solutions in product development, operational excellence, manufacturing engineering, automation and smart factory. Merkur is proud to contribute to innovation and productivity in Quebec!
KHROME PRODUIT TRANSPORT is a manufacturing integrator located in Drummondville specialized in the design and manufacturing of train car interiors and exteriors. Its strength comes from its great engineering capacity and its manufacturing agility. Among its customer portfolio, there are major manufacturers such as Alstom, Bombardier Transportation and Kawasaki Rail Car.
SYNKRO is a software developed by Merkur and designed specifically for high-performance manufacturers. It collects, classifies, and distributes the right data to the right people at the right time. SYNKRO gives you a real vision of your operations. SYNKRO is the software solution that finally connects your floor and your offices!