Why more ROI evidence for automation matters in 2024

Robot Business

Evidence for investments in robotics

Why more ROI evidence for automation matters in 2024

#HowToRobot -
Editorial team
Getting more evidence of the return on investment is key to increasing the adoption of robotics and automation when risk tolerance is low.

One of the main things that would make businesses more likely to automate is having more evidence of the return on investment. This was a key point from a survey about automation from Make UK, highlighted by 35% of manufacturers asked.

It is also in line with recent trends observed by HowToRobot following a time of growing interest rates and cautious spending: As risk tolerance drops, businesses are seeking more guarantees that their investments will pay off – including when it comes to investments in new robotics and automation technology.

It’s not that automation isn’t a priority. Almost every manufacturer is already automating or knows they have to. Only 4% of manufacturers surveyed say they have not automated and do not plan to. So, for those who do, having more certainty about the outcome is a fundamental piece of the puzzle needed to move on.

Discussing this topic with businesses every day, we can see that only some have the expertise and experience to collect and put together all the pieces needed to build the business case. As robotics technology is still new to many, knowing its potential and limitations can be challenging. This also means that many businesses, to a large degree, depend on getting help. Indeed, 36% of the manufacturers surveyed say that more information and guidance on automation technologies would incentivize investments.

Having easy access to expert guidance and reliable market information is always essential, but even more so at times when there is little margin for error.

Why getting ROI evidence can be challenging

Several factors can make it time-consuming – and sometimes challenging – for the average manufacturer to get solid evidence for the return on investment in robotics and automation.

The robotics market is developing at rocket speed, quickly making knowledge about potential solutions and their costs outdated. This makes it necessary to get updated on market developments regularly – or to seek advice from someone who knows about it.

In addition, as the processes, requirements, and goals for automation are often different between businesses, it is often not possible to directly compare business cases between them. A good investment for one business may not provide the same return for another. This means that each manufacturer may have to create their own business case and do their own research – or at least ensure that the advice and market information they get is tailored to their situation.

So, how can this be done? These are some of the ways that businesses can get a better understanding and more solid evidence of the return on investment in automation:

Exploring the full benefits

Having a clear picture of why you’re automating and what to achieve from it is crucial to get started on the right foot. While many businesses seek to automate to free up labor to work on higher-value tasks and increase productivity, many other potential benefits of automating can be worth taking into account.

An example can be to increase the throughput of the manufacturing process and thereby boost overall production capacity. Indeed, 55% of automation projects posted on HowToRobot’s platform seek this goal. Other examples include quality improvements and reduced use of consumables through automation, leading to cost savings. Improving the working environment by automating dirty, dull, and dangerous tasks can also benefit the bottom line through higher employee retention and reduced staff turnover. The important part is deciding which goals are most important to the business.

Exploring and calculating all possible benefits may provide a more thorough business case and open up new possibilities for automation.

Knowing the total cost

Automation is more than just buying a robot arm. As automation often involves custom solutions tailored to the specific application, a complete solution will include various parts and pieces that depend on the end-user's needs. This means that simply looking up a list price for a solution will not be possible in most cases. In addition, most businesses will need help with the integration, installation, and training for the solution – as well as ongoing service and maintenance, etc.

To get an accurate and up-to-date idea about the cost of all this, businesses must solicit a range of budgetary quotes from relevant and vetted integrators (this can be done in a quick, safe, and simple way through HowToRobot’s platform). Knowing the total cost of automating is key to calculating a more reliable estimate of the return on investment.

Qualifying solutions before choosing

With a range of proposals at different prices from integrators, one of the challenges is choosing the right solution – which often leads to many questions: How do you know which one does the job best? What is the right balance between cost and features? Which technology is more robust?

One way to get a better understanding of all this is to have clear business goals and specific targets for automation (such as those mentioned earlier) and ask suppliers how their solutions stack up to each goal. Doing this makes the comparison between solutions easier. Sometimes, it may also be necessary to get an impartial review from someone with deeper technical expertise in robotics, such as an independent advisor.

Ensuring that the solutions can meet the goals of the business is key to lowering the risk of the investment and achieving the expected return.

Putting it all together

With clear automation goals, a range of vetted solution proposals, and cost estimates at hand, the final work is putting it all together. A reliable business case must eventually be based on business-specific data and up-to-date market data. Calculating the potential cost savings from automation involves having access to internal cost data (operator salaries, etc.) and quantifying the expected benefits from automating, such as quality improvements, increases in throughput, etc. The benefits must be compared to the costs of investing in a solution over a depreciation period.

While this type of calculation can sound complex, the method has already been standardized by HowToRobot and is freely accessible as an online calculator for businesses using the platform. In addition, HowToRobot also has impartial experts who can advise on the matter.

By following the steps outlined above, businesses can get more evidence of their investments before automating – and be one step closer to achieving their goals.