When looking to invest in a high-value piece of automation equipment, a key question of any potential purchaser is: what is the payback period? In the UK, the typical expectation is that timescale will be under two years. Yet the value that the right automation solution can deliver to a manufacturing business will last far longer than that. This focus on short-term return is hindering our productivity as a nation. Our neighbours in the EU typically expect payback in three to five years, which goes some way towards accounting for their higher levels of both automation and productivity.
Despite our relative reluctance to automate, the UK recently overtook France to become the eighth largest manufacturing nation. If we are to continue competing on the global stage, however, then it is imperative that we increase our level of industrial automation not least because of the ongoing labour shortages across all areas of manufacturing. We are the only G7 nation to sit outside the top 10 robot adopters; that alone should inspire us to increase our levels of automation in order to drive higher productivity, greater efficiency and increased output.
To do that, we need to get realistic about return on investment. Focusing on a sub-two-year payback can lead to businesses compromising when developing their manufacturing strategy and, thereafter, their capital equipment and automation purchasing strategy.
By contrast, determining the value of automation using total cost of ownership (TCO) is a far more accurate measure. Any investment in capital or automation equipment should form part of a business’ long-term strategy, and not simply because the purchase price fits into an arbitrary short-term payback period. By calculating the lifetime costs – and more importantly, the lifetime savings – associated with automation, manufacturers can ensure that the sums add up in the long term and not just at the point of purchase, resulting in the right solution for their business both now and in the future.
What follows here are the factors that make up TCO lifetime costs. Before considering any automation purchase, make sure to talk to your supplier about how their solution can help to control these costs, to ensure you’re getting real value from your investment.
PURCHASE PRICE
While much of the focus of any negotiation is concerned with purchase price, it actually only accounts for between 15-25% of the total cost of ownership. Solely focusing on this as the deal-breaker can lead manufacturers to invest in an automation solution which may not be fit for purpose. When it comes to the initial purchase price, with as much as 85% of the ‘hidden’ costs of ownership coming via other factors, it is counter intuitive for manufacturers to base their sole automation investment decision on this point.
TRAINING
Whether your workforce is used to dealing with smart, connected automated solutions or is unfamiliar with modern robotics, some element of training will be required to ensure the full value of your equipment can be realised. Ensure your business can keep up with the pace of change in today’s digital world by making sure any automation supplier you choose offers full training for the lifetime of your purchase.
MAINTENANCE
Keeping your equipment running at optimal levels will ensure it delivers day after day, week after week, year after year. We work with our customers to schedule any required maintenance at a time that’s least disruptive to their business, maximising equipment uptime.
REPAIR
The longer a machine is out of action, the greater the financial impact on your business. Speak to your supplier to find out what their average engineer response times are.
DOWNTIME
Preventing downtime to minimise production losses is essential. As well as ensuring your automation supplier offers preventative maintenance and short repair times, the best way to keep downtime to a minimum is to invest in equipment which has a reputation for reliability. Ask your automation supplier for evidence of its products’ mean time between failure (MTBF). Make sure you also find out what services are available to support reduced downtime occurrences.
UPGRADES
Your automation supplier should be able to equip your purchase with the latest smart software upgrades as they are released. Our Zero Downtime (ZDT) programme tracks our machines when operational and feeds back performance data to ourselves and the customer.
SECURITY
Hand in hand with technological advancements comes cybersecurity. Ensuring that your equipment, as well the data it handles and produces, are kept secure is a pre-requisite and something that we take extremely seriously. Make sure your supplier can clearly explain their cybersecurity measures to help your business avoid a costly breach.
ENERGY
No longer a ‘nice to have’, sustainability is now a business imperative from a financial, environmental, social and governance (ESG), and legislative perspective; not to mention essential for winning and retaining key contracts. As well as questioning the energy efficiency of any automation solution in terms of the electricity and gas it consumes, make sure to also find out its credentials regarding water usage, particularly when it comes to keeping the equipment clean. However, some solutions go even further and actually re-use energy within the process.
END OF LIFE
Everything has a cost to recycle, so you’ll also need to factor in a plan for when your product reaches the end of its life. Of course, this will be determined by its expected lifespan. Will you need to recycle it and purchase a replacement in five years’ time or in 10, 15 or even 20 years’ time?
PRIORITISE TCO – AND EMBRACE AUTOMATION
To conclude, if UK manufacturing is to retain its place as a global powerhouse, we must increase our levels of automation. This requires a shift in focus by all stakeholders within a business towards purchasing the right equipment first time around and looking at the overall value it can deliver. Prioritising TCO – rather than obsessing over a short payback period – will help to ensure long-term success, supporting a business’ growth strategy to deliver higher productivity and, ultimately, higher profitability.