Calculating the ROI of Industrial Automation
Before investing in industrial automation, it’s important to calculate the potential ROI. To do this, you’ll need to consider the cost of the automation equipment, the time saved by automating tasks, and the potential increase in revenue or cost savings.
For example, let’s say you’re considering automating your assembly line. Currently, your staff spends an average of 6 hours per day assembling products manually. By automating this task, you estimate that you can save 4 hours per day. You also estimate that by reducing errors and improving efficiency, you can increase production by 20%, resulting in an additional $50,000 in revenue per month.
Based on these estimates, you can calculate the ROI of industrial automation as follows:
Cost of automation equipment: $250,000
Time saved per day: 4 hours
Additional revenue per month: $50,000
ROI = (Additional revenue per month x 12 months) – Cost of automation equipment) / Cost of automation equipment
In this example, the ROI of industrial automation would be:
ROI = ($50,000 x 12) – $250,000) / $250,000
ROI = 40%
This means that the investment in industrial automation would pay for itself in less than 3 years, and would result in a 40% increase in profitability.