- Investing in new automation machinery or custom process equipment should start with a step-by-step approach
- Make a list prioritizing features the new equipment should have to meet project goals
- Identify all costs associated with the current manufacturing process and determine ROI from the new equipment purchase
Is your company dealing with problems caused by labor shortages, poor product quality, equipment downtime or spare part unavailability? Is the impending release of a new model or product forcing you to dramatically modify your current manufacturing equipment? If you think it may be time to invest in new automation machinery or custom process equipment, follow this easy, step-by-step approach to guide you through the equipment specification and justification process.
Define Your Goals and Write them Down!
Start off with a prioritized list of the features the new equipment should have. Base this list on your past experience with the current processes and existing equipment. It’s possible that you’ll have to compromise to meet your budget, so make sure to differentiate between the needs and wants.
- Will a modernized duplication of the current machines solve all of the problems you’re having?
- Has the product or process evolved so dramatically over the years that developing a completely new system is justified?
- How flexible does the equipment need to be to accommodate future product variations?
- Do you need to increase capacity, or focus on solving a specific quality problem?
It’s a good idea to request input from your company’s multiple operational groups in this initial step of goal definition. It’s likely that they will come up with needs and expose problems with existing equipment that you weren’t aware of. By involving your internal customers in the process, they will be more likely to take ownership of the new equipment when it is ready to be commissioned on the factory floor.
After your research is complete, invest the time it takes to write your thoughts down in a formal “scope of work” document. The process of writing your requirements on paper forces you to organize and think things through completely. Include all of the product drawings and process information that is pertinent to the project. At this point in time, it’s OK to have gray areas and uncertainty in regards to how the goals will be achieved.
Your document will be extremely valuable as you explain your needs to the potential equipment suppliers who will help you execute the design and manufacture of the new machinery. And it doesn’t need to be three hundred pages long and take two months to write: Keep it as short and to the point as possible. Once you know the project is approved, and you get additional feedback from your selected equipment builder, refine the document and evolve it into a more detailed procurement specification.
Total Cost Analysis
Now that you have defined the goals of your automation project, the next step is to identify all of the costs associated with the current manufacturing process.
- What is the total labor content and current cost, fully burdened, and what are the future labor trends in your region?
- How much does poor quality cost the company in non-value added inspections, penalties and warranty returns?
- Does the current equipment meet industry standards and safety codes?
- How much potential revenue is lost if you can’t produce enough product on time, and you lose sales to your competition?
- How long will spare parts be available in the future to keep the existing equipment running?
Intangible costs will be very difficult to put into terms of dollars and cents, but it’s important to do this conversion to the best of your ability. Cost analysis is a critical step if you want management to understand the TOTAL cost of your current process, as well as any potential future liabilities. This will allow for the best decision to be made for the company moving forward.
Project Budget and ROI
Now that you have quantified the total cost of the current process and have created a specification document that defines the goals that you would like to achieve with the new equipment, you can determine if the project is justifiable from a financial standpoint.
- Your company’s management team can tell you what payback formula they utilize to approve capital expenditures.
- Select a reputable equipment builder or two that has experience in the industry and capabilities that match your needs.
- Schedule visits with them to both your plant and also their facilities, and share the information you have put together.
- Ask them to provide you with system concepts and “budgetary quotes” to help guide you and your management team to the “right” level of automation.
Keep in mind that a fully automated process can be extremely expensive and not financially justifiable and a completely manual, LEAN, manufacturing system may be initially low cost, but far more expensive to operate over the long term. The best solution is often an integrated combination of both standard and custom semi-automatic equipment.
Select an equipment builder with a long history of success, a solid reputation and expertise in your industry. They will work with you to develop the “best value” solution for your unique goals and financial situation. Contact us to learn more about possible solutions to your most challenging manufacturing problems. Our goal is to be your long-term supplier of custom, integrated automation and process equipment.