Are you facing increasing pressure to boost productivity, reduce costs, and stay competitive? Are you considering manufacturing process automation but struggling to justify the investment and understand the true ROI of automation? Many manufacturers grapple with these challenges, unsure how to effectively plan and measure the success of their automation of manufacturing processes.
This in-depth guide will equip you with the essential automation metrics, strategic insights, and practical tools to make informed decisions about automation planning, ensuring your automation projects deliver measurable automation ROI metrics and contribute to your overall business automation goals.
At DEVELOP, we understand these challenges firsthand. We partner with manufacturers like you, providing expert guidance from automation readiness assessments to full implementation, helping you achieve your goal of robotic process automation (RPA) and unlock the full potential of your manufacturing operations.
Data-driven decision-making is the cornerstone of successful manufacturing process automation. Without clearly defined automation metrics and a robust system for tracking them, you’re navigating uncharted territory. Tracking key metrics is essential for:
A comprehensive automation ROI calculation goes beyond simple numbers. It should provide a clear picture of how the investment aligns with your business goals and fuels long-term growth. Here are some essential automation metrics to track:
ROI measures the profitability of your automation investment. It’s typically expressed as a percentage and calculated by dividing the net profit from the automation project by the cost of the investment. However, an ROI calculator often misses the hidden ROI of automated manufacturing.
Example: A plastics company invests $500,000 in automating its molding process. After two years, they realize a net profit of $300,000 from increased production and reduced waste. Their ROI is ($300,000 / $500,000) * 100% = 60%.
Our ROI calculators help you justify capital expenses, going beyond cost containment to demonstrate growth potential. The Standard ROI tool compares manual labor costs to automated solution costs, revealing the payback period. The Reverse ROI tool allows you to set a target ROI and calculate the necessary budget.
The payback period is the time it takes for your automation investment to pay for itself. It’s calculated by dividing the total cost of the investment by the annual savings generated by the automation project.
Example: The same plastics company saved $200,000 per year through automation. Their payback period is $500,000 / $200,000 = 2.5 years.
Throughput measures the amount of product your manufacturing process can produce in a given time period. Automation often significantly increases throughput.
Example: A food & beverage company automated its packaging line, increasing throughput from 100 units per hour to 150 units per hour – a 50% increase. This means lower labor costs due to fewer workers, plus greater accuracy and consistency in filling, labeling, or packaging and palletizing. Automation also improves safety by reducing manual handling, offers flexibility for different products, and provides valuable data for process improvement.
Cycle time is the time it takes to complete one cycle of your manufacturing process. Automation can dramatically reduce cycle times.
Example: An electronics manufacturer automated their assembly process, reducing cycle time from 5 minutes per unit to 2 minutes per unit, an impressive 60% improvement. That translates to significantly higher production capacity, lower labor costs, and greater consistency in product assembly. Automation also minimizes errors, improves product quality, and enhances worker safety by reducing repetitive manual tasks.
Downtime is the bane of manufacturing – the costly period when your production grinds to a halt due to equipment failure or other issues. Every minute of downtime eats into your profits and disrupts your operations. Automation can be a powerful solution, minimizing downtime through predictive maintenance and improved reliability.
At DEVELOP, we offer service and maintenance plans designed to keep your automated systems running smoothly and prevent costly downtime. Our expert technicians provide proactive maintenance, rapid troubleshooting, and timely repairs to ensure your production stays on track. With our support, you can maximize the uptime of your equipment and enjoy the full benefits of automation.
Example: A paper and printing company implemented automated monitoring systems, slashing unplanned downtime by 15%. That translated to increased production uptime, fewer lost orders, and reduced maintenance costs. Real-time monitoring also allowed for proactive maintenance, preventing costly equipment failures and optimizing overall efficiency.
Quality metrics measure the number of defects or errors in your products. Automation can improve quality and reduce scrap rates.
Example: A cosmetics company automated their filling process, shrinking product defects by 8%. This meant less product waste, lower material costs, and improved product quality. Automated filling also ensures consistent fill levels, enhances packaging aesthetics, and boosts customer satisfaction.
Automation can reduce labor costs by automating repetitive or manual tasks. However, it’s important to consider the total cost of labor, including wages, benefits, and training.
Example: An architectural extrusion company automated its material handling process, reducing labor costs by 20% while allowing employees to focus on higher-value tasks. We can help you analyze how automation affects your shift requirements, employee allocation, and total employee compensation to reveal significant cost savings.
Utilization measures how effectively your equipment is being used. Automation can improve equipment utilization by optimizing production schedules and reducing idle time.
Example: An electrical extrusion company automated its production scheduling, and the result was a remarkable leap in machine utilization, surging from 70% to a highly efficient 90%. This translates directly to higher output, optimized resource allocation, and a significant boost in overall plant productivity. No more bottlenecks or underutilized capacity – just streamlined operations and maximum return on investment.
OEE is a comprehensive metric that measures the overall productivity of your manufacturing process. It takes into account availability, performance, and quality.
Example: An ambitious life sciences company, aiming for operational excellence, embraced automation, resulting in a dramatic improvement in their OEE – a jump from 60% to 80%. This substantial increase signifies optimized production, reduced waste, and maximized equipment utilization. Ultimately, this translates to higher output, lower costs, and a stronger competitive edge.
Velocity refers to the average time it takes for an automated process to execute. This metric is commonly tracked because it quantifies the time and cost savings of having a bot do the work quicker than an employee.
Example: A leading manufacturer of electrical components automated their grounding lug production, achieving a cycle time of just 5.6 seconds per part. This translated to a dramatic increase in production velocity, enabling them to meet surging demand, reshore production from overseas, and significantly boost overall capacity, all while improving safety and maintaining stringent quality standards.
You can explore how we worked with Elec-Tron, from Automation Assessment to implementation, in our detailed case study. Alternatively, find out more about the Automation Assessment process with our free eBook, Automate to Elevate: Your Automation Assessment Guide.
Accuracy looks at how often the automated process is executed with errors. This metric indicates if your automations deliver another key RPA selling point: improved process output quality that yields fewer errors than manual execution, saving time and money from rework.
Example: An architectural extrusion company automated its cutting and finishing process for aluminum profiles, reducing errors from an estimated 1 in 200 with manual methods to virtually zero with the automated system. This near-perfect accuracy significantly minimizes scrap material from mis-cut extrusions, reduces the need for costly rework, and improves customer satisfaction by ensuring precise dimensions and consistent quality in every order.
Total Automated Processes is the sum of all the automated processes you have in production that make up your bot portfolio or digital workforce. The reason this is tracked is rather basic. It’s an indication of how automation programs evolve and grow, how adept teams are at identifying automation opportunities and prioritizing them through to development, and how mature the organization is in terms of its automation goals.
Expected Business Value (EBV) is an RPA metric that essentially consolidates all other RPA KPIs. It represents the overall return on investment from automation and is quantified using different variables depending on the specific process. A key factor impacting EBV is bot downtime. Long periods of downtime, often caused by the need for debugging and repairs, significantly reduce the realized ROI of RPA initiatives.
That’s because the bot’s potential value sits idle while it’s out of commission, eroding expected returns. Downtime also incurs additional costs, such as the expense of the personnel required to investigate and fix the bot. Effectively minimizing bot downtime is crucial for maximizing the EBV of RPA deployments.
SMART goals (Specific, Measurable, Achievable, Relevant, Time-bound) are crucial for successful automation planning. Your automation goals should be directly linked to the key metrics discussed above. Here are some examples to consider:
Before you take the first step toward manufacturing process automation, it’s essential to assess your automation readiness. Our comprehensive checklist will help you evaluate your current processes, identify potential challenges, and determine the best approach for your specific needs. This checklist covers areas like:
A thorough Automation Assessment, whether conducted internally or with an automation integrator like DEVELOP, is crucial for identifying valuable automation opportunities. We believe that combining your deep understanding of your business with our systematic approach to opportunity analysis is key. Consider these key areas.
We’ve briefly mentioned the hidden ROI of automation for manufacturers, because beyond the tangible financial benefits, automation offers significant intangible advantages:
We understand that implementing automation can seem daunting. Let’s address some common concerns, and consider some of the myths of automation.
While the initial ROI calculation is crucial, it’s essential to recognize that it’s a starting point, not the finish line. The true value of automation lies in its ability to unlock further opportunities for growth and optimization.
While detailed calculations have their place, focusing on the big picture can simplify the ROI process:
Treat ROI as a tool at the beginning of the project. We use an ROI scatterplot to visualize multiple projects with varying ROI potential and risk levels, allowing you to prioritize the best opportunities. Consider these factors:
Stop just keeping up. Start leading. For the hyper-competitive manufacturing industry, automation isn’t a luxury anymore — it’s a necessity. Are you tired of grappling with inefficiencies, struggling to meet rising demand, or watching your competitors race ahead? It’s time to seize control of your business growth through intelligent manufacturing process automation.
But simply throwing technology at your problems won’t cut it. You need a strategic partner who understands the intricacies of automation planning, can decipher the critical automation ROI metrics, and helps you define laser-focused automation goals.
DEVELOP offers precisely that. We’ll help you assess your true automation readiness, pinpoint the areas ripe for transformation, and design a customized roadmap to maximize the ROI of automation. Don’t just dream of a more efficient future — build it. Contact us today for a free consultation and let’s engineer your success.
Our project managers, automation specialists, and machining experts specialize in translating practical manufacturing targets into cost effective automated solutions. Schedule a meeting today to plan your swift return on investment.