The $1.5 Million Mistake: Learning When Automation Doesn't Pay Off
We had done it. After months of back-and-forth on specifications, cycle time discussions, part variability analysis, all the pieces...we'd just wrapped up a massive $1.5 million automation proposal. The scope was ambitious, the cycle time lightning-fast, and the application undeniably intricate – think a ballet of robotic arms delicately placing tiny tubes. We were confident in our solution and ready to move forward.
There was just one tiny snag: the return on investment (ROI) simply wasn't there. In fact, it never had been. Somewhere along the line, we'd become so engrossed in the technical aspect of solving the problem that we'd completely lost sight of the "how and why" – how our customer would ever justify such a significant capital expenditure and why this process wasn't right for automation. They, too, should have recognized this disconnect earlier in the discussion, especially once the sheer scale of the project became apparent.
In the end, we proposed a dazzling array of technology: many robots, sophisticated feeding systems, advanced vision inspection, precise line tracking, comprehensive safety measures, and complex custom fixturing. And all this intricate machinery and our considerable time to program and set it up would free up… wait for it… a grand total of two people with a project cost of…wait for it again…$1.5 million.
Needless to say we didn't land that project. But the experience hammered home a crucial lesson: the ROI conversation isn't a postscript; it's a fundamental part of the automation journey that needs to happen early and often.
Why Automate a Process?
Automation has evolved dramatically, transforming once-challenging applications with marginal returns into viable opportunities to automate. When implemented strategically, automation can deliver significant benefits:
Efficiency rises: Automating repetitive tasks frees up workers for more complex and value-added activities, leading to increased throughput.
Quality goes up: Robots and automated systems can perform tasks with greater consistency and precision than humans, reducing errors and improving product quality.
Cost per part goes down: Over time, automation can reduce labor costs, minimize material waste, and optimize resource utilization, ultimately lowering the cost to produce each unit.
Safety increases: Automating hazardous or physically demanding tasks protects workers from potential injuries.
However, before diving headfirst into automation, it's critical to ask: do these impacts align with the needs of the process we're targeting? If a process already boasts high efficiency with a single operator per shift, consistently delivers top-notch quality, and maintains a safe working environment, the value proposition of automation might be questionable.
So, what truly distinguishes a process that's ripe for automation from one that's not quite there yet? Here are three key indicators that your process might not be ready for the robotic revolution:
1. Uncontrollable Variables
In manufacturing, a "variable" is any element, feature, or factor that is subject to variation or change. When considering automation, understanding and controlling these variables is paramount. Process variables typically fall into three categories:
Part variability: These directly affect the physical characteristics of the part itself and can often be influenced by the raw materials used. Inconsistencies in part dimensions, surface finish, or material properties can wreak havoc on an automated system designed for uniformity.
Upstream variables: These stem from processes performed on the material before it enters the automation cell. For example, a manual assembly process with inherent variability in how components are presented can introduce inconsistencies that downstream automation struggles to handle.
Process variables: These originate within the automation cell itself, often due to the equipment involved. An inconsistent molding process that produces parts with dimensional variations, for instance, will make it challenging for a robot to consistently grasp and manipulate those parts.
If your process is plagued by significant and unpredictable variations in any of these areas, attempting to automate it can lead to frequent errors, system downtime, and ultimately, a less efficient operation than you started with. Automation thrives on consistency; without it, the system will likely struggle.
2. The ROI Isn't There
As our initial anecdote painfully illustrates, the cost of automation must always be weighed against its potential benefits. Understanding your company's specific requirements for a justifiable Return on Investment (ROI) is crucial for determining early on whether an automation project has a realistic chance of success.
Most companies have "low-hanging fruit" – tasks that are prime candidates for automation due to their high labor intensity, often requiring multiple people to perform a task that might be done by one robot. These are typically the best places to begin your automation journey. As these easier wins are addressed, evaluating more complex applications becomes quicker and more informed, allowing you to readily assess if the ROI justifies the investment.
To effectively evaluate the ROI, it's important to know:
The fully burdened annual cost of a single employee performing the task. This includes salary, benefits, and other associated costs.
The company's required payback period for capital investments. This dictates how quickly the automation is expected to recoup its initial cost.
Whether there are other quantifiable factors that can be factored into the project's value proposition. These might include increased safety (reducing potential injury costs), improved efficiency (leading to higher output), or enhanced quality (minimizing scrap and rework).
If the numbers simply don't add up, even the most elegant automation solution is unlikely to gain approval. It's essential to have these ROI discussions early in the process to avoid investing significant time and resources in projects that are financially unsustainable.
3. Not a Pain Point
Sometimes, the task that appears most technically straightforward to automate isn't actually the area causing the biggest headaches within the company. Companies want to deploy capital responsibly, focusing not only on projects with a good ROI but also on those that address critical operational bottlenecks or challenges.
When considering where to focus your automation efforts, take a close look at the areas that are consistently identified as pain points. These are often the processes that are most inefficient, prone to errors, or create significant delays. Even if directly automating the core pain point seems complex, exploring upstream or downstream processes that are easier to automate might offer a valuable starting point and contribute to overall improvement.
Investing in automating a process that is already running smoothly, even if it seems like an easy win, might not deliver the strategic impact the company needs most. Focus on alleviating the real pressures within your operation.
Conclusion
The adage we often use rings true: "Any process can be automated, but not all processes should be automated." By carefully considering the level of control over your process variables, rigorously evaluating the potential return on investment, and focusing on automating genuine pain points, you can make informed decisions about when and where automation truly delivers value.
And remember, just because a process doesn't seem like a good fit for automation today doesn't mean it's off the table forever. As technology advances and your processes evolve, the criteria for successful automation may become more achievable in the future. Keep evaluating, keep learning, and be ready to seize the right opportunities when they arise.
Ready to explore if your process is right for automation? Contact our team of experts for a personalized consultation. [Link to your contact page]
