How To Establish a Proper Automation Budget
Updated: Jul 15, 2021
Though the budget is often a top consideration when determining whether to automate processes and how to maintain those processes once the equipment is in place, it shouldn't be. Automation in manufacturing can significantly change the budget in many ways, but it is well worth the investment in the end. Creating an accurate budget is essential across all levels of manufacturing, but can also be difficult to determine what falls into the budget for automation. Here we review a few items that you must consider as you start developing an automation budget after implementing an automation solution that will work well for your company’s needs.
Consider Automation as a Method to Increase Plant Profitability
Establishing an automation budget, especially if you are just starting this process, sometimes requires a mindset shift. Automation will improve profitability in virtually all situations, but it needs to be approached holistically. Many automation department managers make the mistake of thinking internally at what their specific department needs rather than “plant-wide” regarding the automation budget. While cost considerations are part of the decision, automation should really be viewed as a method to maximize profitability across the plant, and therefore should be looked at through the lens of a cost-benefit analysis. This approach will provide you with the highest level of savings and the best profitability.
Some areas where automation often results in significant cost savings can include:
Improved energy efficiency
Lower raw material waste
Better health and safety
Reduced environmental impact
While automation may not help in every single area for every different plant, it will typically touch several of these costs, reducing expenses and drastically increasing productivity and profitability. Many of these cost-savings considerations are reviewed as part of the planning and installation process. However, a regular review of how each of these costs can be reduced by increased automation will be helpful to continue to improve your company's bottom line as you reap the benefits of automating your process.
Minor Ongoing Automation Expenses
Automation creates its own rewards, drastically improving your company's profitability. However, it's not a one-and-done thing, because you will need to cover some minor expenses after installation to keep your equipment operating at peak efficiency and profitability. Once you have installed your automation equipment, you need to consider the expenses required to keep the system up and running. Each of the following expenses should be reviewed as you work through this process. Regardless, these expenses are typically much, much lower than the cost of not automating your systems, making automation a very worthwhile expense.
Automation equipment requires far less regular maintenance than many other types of equipment that require manual usage, but periodic maintenance is still important. This protects your investment in automation equipment and reduces the potential for expensive repairs later on. Consider a car or truck. If the oil isn't changed, a relatively low maintenance expense, it becomes much more expensive to fix when the engine fails. Regular physical maintenance usually includes costs related to labor and parts. Each piece of equipment is different, so check the user manual and refer to our team to provide information on necessary maintenance requirements and costs so that you know what this expense will be moving forward, making it easier to account for as a regular expense.
Today's world is going through a significant transformation seen three times previously in history: the industrial revolution, the industrialization of electricity and the introduction of industrial computers. Data logging is vital to successful digital transformation. Because your new automation equipment can gather a lot of data, it can also use that data to reduce expenses and optimize production. However, there are some small costs to be aware of related to gathering and storing this information as necessary. How detailed you want this information to be will have a big impact on the costs associated with this expense, but will also impact the effectiveness of your company's digital transformation, with more information often equaling more efficiency and profitability.
Programming and Software
Most programming and software concerns are addressed upfront at the time of design and installation. That being said, the ability to upgrade your equipment's software makes it easier to adapt to future changes, giving you a longer lifespan from your automation equipment. If you decide to make those changes down the line, you'll see some expenses for changes and improvements, which can vary a great deal based on the type of equipment involved and its function in your plant, but the changes will also improve productivity and security overall.
This isn't really something you need to worry about with regards to automation per se, because no matter what kind of new equipment you have, you'll need to have your team trained on it and will need to occasionally have refresher courses, new team training and update training for upgrades. This could involve bringing in a third-party trainer or simply have your team lead review training information. Consider the comfort your company's team lead has with technology when determining this figure.
Though automated equipment will run effectively for long periods of time, there will be some small amounts of downtime that you'll need to consider in your budget. This is one area where high levels of data collection can come in handy. Instead of stopping your line to replace all of a specific part, collected data allows you to only replace the parts on the equipment that actually needs it, reducing your overall downtime and parts budget. For this reason, this time is minimal compared to many other systems, making it easier to schedule around, and can include maintenance, cleaning, and upgrades.
Ready to Create a Reliable Budget? We Can Help
When you're ready to automate your processes, our automation experts can help you with creating a reliable budget, finding outstanding solutions that work for your company, and will oversee the entire process, allowing you to focus on running your business. When you work with the experienced team at Primetest, you get to work with some of the best experts in the automation industry, making it much easier to maximize the benefits of automation. Contact the team at Primetest Automation to discuss your next automation project. We’ll work with you to come up with the most reliable install and ongoing expense estimates possible.