Deciding the viability of an automation project

Will Bourn, sales manager of Modular Automation in Birmingham, takes a practical look at the factors that should decide the viability of any automation project.

The justification for buying capital equipment is all a question of arithmetic.

By applying a simple Discounted Cash Flow forecast even the lowliest accounts clerk should be able to make a reasonable guess about the financial sense if capital investment.

But is it always so simple? Rarely.

And many of the criteria by which we judge the practicality of major automation projects have little or nothing to do with money - at least not at first sight.

Here, Will Bourn, sales manager of Modular Automation in Birmingham, takes a practical look at the factors that should decide the viability of any automation project.

Let's tackle the tricky one first, head on.

People are one of the most significant costs in any manufacturing process and, therefore, reducing the number of people on any one project will have a dramatic effect on its feasibility.

You can easily make a rough approximation of the cost savings by applying this simple formula: 1 person x 1 shift = £15,000pa.

By that calculation, if to automate a process would save you two people over three shifts per day the cost saving would be £90,000pa.

If you require a two-year pay back period, it's worth spending up to £180,000 on the automation.

Simple? No, not quite that simple.

This assumes that the people who are replaced are found gainful and acceptable employment elsewhere within the factory, if not, additional payments will be required.

There is also a social element to be considered and the effect on the morale of the remaining workforce.

But, assuming an acceptable re-deployment of labour, this formula provides a good rule of thumb.

But there's much more to consider.

Your problem might not be how to deploy your labour force, but how to recruit one.

Some geographic areas have a chronic shortage of skilled and semi-skilled labour.

Modular Automation itself, for example, is actively involved in promoting modern apprenticeship schemes in the Birmingham area specifically to improve the skill base in the region.

In areas where labour is a problem, increasing levels of automation might be the only sensible option even if the strict application of a cost analysis doesn't justify it.

The working environment is also a major factor when considering automation.

Whether the application requires clean room hygiene or is such an hostile environment that manual intervention is impossible, automation may be the only answer irrespective of costs.

Semi-conductor manufacture, for example, requires a very high level of automation to avoid contamination.

Conversely, applications using heating or pressing for example, could be dangerous for the operator.

So too, applications where the actual environment itself is too hazardous (from heat, dust, etc.) such as foundries and nuclear establishments.

But probably the greatest and most irresistible reason for automation, is quality control.

Many companies recognise that automation or semi-automation is the only practical way of ensuring the quality of their products, eliminating failures and costly returns or recalls.

If processes are truly to be Defined and Repeatable, they must also be automated.

The demands of 'defect free' engineering practices, common now throughout industry, require automation as the only way of ensuring that quality standards and tolerances are met.

In the automotive industry, for example, first-tier suppliers are generally only considered for contracts if they employ automated processes.

As product quality relentlessly becomes the defining factor throughout manufacturing industry, increasing amounts of automation will be inevitable.

There is usually a chicken-and-egg decision to make when considering automation: you don't have the market share and therefore lack the volumes to necessitate automation; but, if you don't automate you won't be able to reduce the unit cost and improve the quality to a level that increases sales.

There is no easy answer.

The working environment is usually not possible to change and, therefore, if this is the critical factor the decision is made for you.

The simple cost calculation discussed at the beginning of this piece might help you clarify the financial question.

The availability of labour and the training requirements to bring them up to the required standard must be decided regionally.

And the issue of quality can either be a marketing decision for your company or one that is imposed from outside.

Whatever the circumstances it pays to be sure.

The cost of automation can be quite high particularly when it employs the latest robotics, vision systems, welding technology, etc.

But the cost of not automating, when really it was necessary, can be devastating.

If in doubt, call Modular Automation.

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