ROIC Considerations of Industrial Automation Equipment for Manufacturing

ROIC Considerations of Industrial Automation Equipment for Manufacturing

Automation equipment can deliver significant value to manufacturing companies if done right. Automation projects should always be justified from a financial standpoint, so it’s important to select a solution that fulfills production needs while being able to minimize costs over the long term.

At Advanced Manufacturing Development (AMD), our team has more than 25 years of industry experience creating automation solutions that fit our clients’ budgets and business strategies. We have over 100 engineers and technicians that can incorporate cutting-edge automation technology into individual assembly stations, high-speed stations capable of managing 100 ppm, and fully automated manufacturing lines. Since we first opened our doors in 1996, we’ve completed more than 1,500 industrial automation projects.

Start your project by considering the different degrees of industrial automation—and the potential financial costs and benefits of each system—to zero in on the right fit.

Degrees of Automation

There are four degrees of automation used in manufacturing facilities:

Manual Operation

This is the lowest level of automation where all tasks are performed manually by human operators. There is no involvement of automated systems or machinery.

Partial Automation

At this level, some tasks or processes are automated while others still require manual intervention. Certain repetitive or time-consuming tasks may be automated to improve efficiency and reduce human error.

Process Control Automation

At this level, the focus is on automating control systems for monitoring and regulating specific processes. Automated control systems, such as programmable logic controllers (PLCs) or distributed control systems (DCS), are employed to manage and optimize process variables.

Full Automation

Full automation refers to a system or process where all tasks and operations are completely automated, and human intervention is minimal or non-existent. The system can perform complex functions independently without the need for constant human monitoring. Full automation does require having an experienced technician that can address any issues the machine might encounter over its lifetime.

Breaking Down the Benefits of Manufacturing Automation

Automation brings numerous unique benefits, and it is one of the most important long-term investments manufacturers make in their facilities. A successful automation solution will provide benefits in one or more of the following areas:

1. Production Volume: An automated line could increase production volume under a set level of constraints. We usually see this when our customers are having trouble meeting demand for their products, or are constrained by a low supply of labor, space, or time.
2. Cost Decrease: Automation systems are highly relevant for customers that are having trouble sourcing the right talent for their manufacturing operations. A single automated system can help your existing workforce be more efficient and decrease the need to hire and retain additional headcount. This is particularly relevant in a tight job market.
3. Quality Improvement: Automated systems will deliver great repeatability across a wide range of complex manufacturing operations such as welding, assembly, machining, and more.

Breaking Down the Costs of Manufacturing Automation

Automated solutions require a significant capital investment and some ongoing costs associated with the new equipment, such as:

1. Experienced Workforce: For most automation systems, your organization will need to retrain or hire and train employees that can service and operate your chosen solution.
2. CAPEX: This includes the automation system itself and ancillary hardware and tools. Setting up the equipment will also represent other discrete and continuous expenses such as rent for the space, shipping costs, etc.
3. Maintenance: This includes all expenses associated with the maintenance of the equipment. This can include changing equipment once its useful life is over, replacing parts that are under stress, and preventive maintenance of equipment systems such as hydraulics, pneumatics, electrical, etc.

By categorizing these benefits and costs, your organization can understand the automated solution’s ROIC, where those costs fit into your budget, and determine what level of automation is best for you.

Other Cost Considerations for Manufacturing Automation

Total cost considerations can be complex to estimate. Consider these costs that are usually overlooked as you finalize your estimates:

• Comprehensive purchase price, which may include:
  • Getting a higher-quality automation system that meets regulatory standards in your industry
  • Safety requirements
  • Switching platforms

• Costs incurred throughout the system’s usable lifespan:
  • Cost of variable life cycles
  • Potential downtime during repairs, maintenance, and modifications
  • Inefficiencies after adoption
  • Cost of training
  • Scalability needs

Your new automation systems won’t immediately be optimized for your production. New automation systems need time to reach their full potential and become a seamless part of your processes.

Request a Quote for a Precise Cost-Benefit Breakdown for Your Next Project With AMD

At Advanced Manufacturing Development (AMD), we partner with each client to help develop a cost-effective plan for automation. Learn more about the costs and considerations of implementing automation by calling our team at 832-745-1292. You can also request a quote by contacting our team online.

How Industrial Automation Equipment is Helping to Bring Back Manufacturing to America

Industrial Automation is Powering and Innovating American Manufacturing

Advances in automation technology improve manufacturing techniques and power product innovation by enhancing how components are produced. Due to technology such as adaptive robotics, machine learning, and others, manufacturing processes are currently more refined and inexpensive than in the past. Investing in these technologies has enabled smaller factories to produce more new products and quickly adjust to changes in demand. These tools encourage innovation and facilitate the development of higher-quality products. 

In recent years, new technological advancements in optics, wireless communications, and sensors have enabled automated systems to graduate from simple repetitive tasks to undertaking increasingly complex processes. There is a common misconception that adopting technology like this results in a disadvantage for American workers; however, research and statistics offer a different story.

The Economic Advantages of American Automation

Investing in automated manufacturing technology offers several economic advantages aside from innovation and job growth. Most importantly, automation can enhance productivity. It has been predicted that automation can raise global productivity by 0.8% to 1.4%, which results in higher output, higher margins for businesses, higher wages for workers, and lower prices for consumers.

This productivity growth especially helped during the pandemic. Despite lockdowns and reduced workforces, automated equipment helped to raise U.S. productivity by nearly 4% since 2019. Companies are expected to continue investing in newer technologies through 2024, which will further boost productivity and enhance overall living standards.

The Boom in Robotic Automation & Its Benefits for Manufacturers 

In recent years, an ever-increasing number of manufacturers have been adopting robotic automation solutions. Reuters reports that in 2021, North American companies invested over $2 billion in robotic manufacturing solutions, a 28% increase from the previous year. This increase can be credited to the many benefits that robotic automation provides, such as process optimization and increased supply line resilience.

While there is currently a record demand for products, supply chain challenges are increasing production difficulties. Robots mitigate many of these issues for manufacturing companies, including a lack of labor resources. Robotic automation can be applied to any industry to eliminate errors caused by highly repetitive work, as well as improve safety, increase throughput speed, and improve processes. Overall, industrial robots have helped manufacturing companies in four key ways:

• Increasing manufacturing company resilience
• Optimizing processes to increase efficiency
• Help manufacturing companies keep up with record product demand despite supply chain challenges
• Alleviate strain on manufacturing companies due to labor shortages, as robots can fill positions that are challenging for human workers to fill

Manufacturers are seeing the undeniable benefits of robotic automation, and experts predict an increase in robots in the workplace. This is currently being seen across many industries. For example, while the automotive industry has historically been the largest user of robotics, the electronics industry is currently the world leader in robotics acquisition, with more industries following suit. 

Industrial Automation Doesn’t Eliminate Jobs or Hinder Job Growth

A commonly expressed fear of industrial automation is that it would eliminate jobs. However, in actuality, these advancements are creating new types of jobs. The World Economic Forum projected that by 2022, automation would be responsible for 133 million new jobs despite a 75 million loss. This can be seen historically as well, when the invention of computers displaced secretaries and typists but created a demand for IT professionals and technicians.

Robots are often involved in misconceptions about automation; however, the facts show that robots actually create significantly more jobs than they displace. Robotics upskill workers, allowing them to obtain additional capabilities in automation. The reliable productivity robotic solutions provide has even enabled many manufacturers to expand and hire more workers.  

How to Upskill Workers

A barrier to adopting industrial automation solutions is that workers might not have the necessary skillset. This is where an automation integrator can help. An integrator incorporates a robot into a manufacturing environment and ensures workers understand how to operate it. Automation integrators, such as AMD, provide a manufacturer with all the tools they need to be successful and self-sufficient. This can involve training the manufacturer on operating automated equipment, being available to provide tech support, and more. 

Industrial Automation Costs

While automation systems might seem prohibitively costly upfront, particularly to small or mid-sized manufacturers, the undeniable ROI they provide ensures they quickly pay for themselves. Some of the most significant financial benefits of automation systems include:

• Improved product quality
• Increased production capacity
• Improved efficiency
• Safer working conditions

When considered in the long term, adopting automation solutions can significantly improve the financial success of businesses of all sizes.

AMD is Helping American Manufacturers, Like You

While in the past there have been numerous misconceptions about the effects of automated manufacturing solutions, this technology is rapidly being adopted by a range of industries, with demonstrated positive results. AMD helps manufacturers of all sizes successfully automate their facilities and become self-sufficient. We work closely with our customers to craft solutions that meet their every need and goal. 

At AMD, we use CNC machining to produce our automation system parts in-house, delivering high-quality solutions every time. Some of the industries we help automate include automotive, appliances, consumer goods, and much more. To learn more about the solutions we offer, contact us. You can get started on a personalized system today by requesting a quote.