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The Payback Playbook: First Steps to Robotic Automation

The Payback Playbook: First Steps to Robotic Automation

Posted: 8/16/2022 6:50:26 PM by Josh Leath
Topics: Tips and Tools

The moment you implement robotic automation there is potential to cultivate transformative benefits. From saving money on increased labor to meeting production goals via increased output, multiple positive outcomes are common for manufacturers that take the robot leap. A fluid supply chain, enhanced product quality, effective risk mitigation, optimal labor retention, and successful wage and inflation hedging are other key takeaways business owners tout along their robotic automation journeys.

While all of this can work together to create a better organizational culture, it is most important for those still on the fence about robot implementation to note how high-performance, incredibly reliable robots can facilitate extremely efficient and cost-effective operations.

Moreover, as skilled labor deficits grow, customer demands persist and advanced technology evolves, manufacturers will be hard pressed to remain competitive without successfully transitioning into Manufacturing 5.0 – where STEM-based education and essential soft skills will need to cohesively exist with robotic automation to sustain a highly productive workforce. While human workers maintain a strong presence in job categories rooted in service and creative skill such as sales, technology, management, construction, education and custom design, robots will be needed to bridge the labor gap.

The Robust Robot Reality

Thanks to improved arm flexibility, axis speeds, device connectivity, interface usability, computational power and more, robots are more equipped than ever to tackle this challenge and perform risk-intensive tasks. This is good news for manufacturers that have found themselves with fatigued workers and subsequent staffing shortages. With nearly 60 billion dollars spent on serious, nonfatal workplace injuries a year, decision makers should consider implementing capable and efficient robots for dull, dirty and dangerous applications. Not only do robots excel at these tasks (i.e., welding, coating, palletizing, component assembly, press tending, warehouse picking, etc.), but also, they can help protect workers while optimizing productivity for a better bottom line.

From saving on workers compensation claims to amplifying Total Factor Productivity, robotic automation has the potential to provide considerable cost savings over the extended life of the robot (30,000 – 40,000 hours with proper maintenance), especially when compared to manual operations. For example, a human welder (depending on experience) makes $13-30+/hour for as long as the worker is employed. Compare this to a welding robot that costs approximately $25/hour to operate for the first four years, then $8 thereafter. Whether buying or leasing a robot, situations such as this present economical savings where reduced worker strain, redeployment of skilled workers and optimized product quality work together to provide positive cash flow.

The 411 on Robotic Automation Payback

While the instinct for many potential robot buyers is to immediately specify a workcell design and peripheral components, the first concepts manufacturers should consider and survey their employees about include:

Defining business expectations
  • What metrics do we want to increase and decrease when it comes to time, production, cost of labor and other factors?
Calculating return on investment
  • What is an acceptable amount of time to minimize our risk yet maximize our profitability by investing in automation?
Gauging payback time
  • Given the factors mentioned above, what is a realistic amount of investment and payback time we can expect?
Applying this knowledge as a collective helps to ensure the ideal solution is chosen – as a good system design can still miss the mark if long-term goals are overlooked. Expectations should reflect your local and industry factors as well, such as scarcity of human capital or unique quality measurements in the industry. Also, investment into automation could come as capital investments or leasing equipment. Many manufacturers can realize an immediate payback on leased equipment, but greater long-term profitability on capital investments. In our current post-pandemic economic situation, some companies are allowing 4 to 5 years for payback, while it was common to expect less than a half of that time in previous years.

To help you estimate a budgetary target for a robotic system that meets your payback and productivity requirements, utilize our Robotic Welding System Payback Calculator. Our in-house experts or one of our strategic partners can also help to quickly calculate these numbers and get your company on the right track to manufacturing productivity.

Josh Leath is a Senior Product Manager

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