Determining the Cost of Automation for Your Business

It’s clear that manufacturing automation is not going away anytime soon; in fact, there’s been an increase in automation since the 2008 recession. An obvious benefit of using manufacturing automation workflows is cost-effectiveness.

How Much Money Will You Save?

There’s no exact formula for determining how much money your company will save, but there are a few critical areas of your organization you can look at to find an answer.

Human Labor Costs

Automation replaces or assists humans in completing tasks, and in some cases, employees only perform the bare essentials. With an automated workflow, employees can focus on projects and tasks that automated processes can not handle. Automation allows employees to spend their time more effectively; therefore, saving on labor costs.

So just how much does workflow automation save in terms of labor costs? It depends on a few factors:

First, you have to understand what average hourly rates for an operator’s position. You can then multiply your hourly rate by the number of hours a process would take to complete.

Next, you will need to calculate how much time automation will save on any given task. If you already have access to a demo, you can run the job and calculate the project time. Otherwise, you may have to ask the automation company for estimated times for specific tasks.

Determine potential savings by subtracting automated labor costs from your current labor costs.

Weighing all of those costs against the monthly or annual cost of an automation system can help you determine whether the change is worthwhile.

Workflow Bottlenecks

Bottlenecks can also be difficult to calculate because they are often unexpected events: machine breakdowns, uploading errors, jams, etc. Your company can look back at operational history (e.g., over the past five years) to determine potential future mistakes.

To get an idea of total cost and time loss associated with physical operations, calculate the cost machine breakdowns, part replacements, and customer refunds. In many cases, using automation may help to prevent some of these scenarios in the future. If your company is consistently running behind on certain projects or processes, then automation can help bridge those gaps. While it may take a few months to see the full benefits of using automation, the results should be apparent in your yearly budget reports.

Time Wasted

Losing time on miscommunication or human-made errors can add up in costs. This includes an array of things such as employee absence or illness, unscheduled breaks, unproductive work hours, and exaggerated time cards, or poor reporting.

One way to try and calculate the cost of time loss: look for free online calculators that help estimate time theft or payroll loss due to exaggerated time cards.

Your automation tool doesn’t take daily breaks to post on Facebook. (Unless that’s what it’s designed to do!) Unlike with employees (who are only human), there’s rarely any time wasted with automation.

Consult With the Automation Experts

How can you seamlessly integrate automated manufacturing into your business? Engineered Automation (EAM Inc.) designs and manufactures custom assembly and product handling automation equipment. We provide custom automated machinery and manufacturing automation equipment to a variety of industries. We also offer consultation services so your company can find the most cost-effective solution for your business.

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