The Truth About Automation ROI Part II: A Deep Dive Into Soft Costs
In Part I of this two-part series, we discussed how to calculate automation ROI at a basic level. However, some of the true cost savings of automation are difficult to quantify in an easily measurable way.
“Soft ROI” can actually be one of the main drivers to make a switch to automation in manufacturing, even if they are harder to attach to dollars and cents. Here, we discuss some of these soft ROI aspects of making the switch to automation that should be part of your overall ROI analysis.
What Is Soft ROI?
Soft ROI is extremely difficult to measure. The result, unfortunately, is that it is sometimes ignored or given less weight compared to information used to calculate hard ROI. Soft ROI contributes to the long-range success of your company based on your automation investment. It is often only seen over the long term, sometimes years into the future.
In our previous post, we specifically mention improvements in employee job satisfaction, which often decreases turnover. Faster response times because of reduced downtime are also considered a soft ROI measure.
Automation and Soft ROI: Key Sources of ROI Beyond the Numbers
Increased Efficiency and Productivity
Over the long term, automation allows for increased efficiencies in creating products or in certain aspects of your product development process. When used properly, automation allows for faster outputs with a lower rate of error. It decreases the likelihood of bottlenecks and addresses inconsistencies.
For example, making the switch from a human packaging process to an automated process will generally result in a faster, more accurate packaging process over time. An automated process will not have an “off” day on a random Tuesday or move a touch slower because of fatigue or illness.
Meeting Client Expectations with Consent Quality
Your customers expect a certain standard of product or service every time they interact with your company. Automation allows for a consistent experience each time the client touches a product you create.
Here, the soft ROI aspect is that you will not lose clients to quality concerns, as the client should receive the same quality item each time. Winning back dissatisfied customers is sometimes impossible, and where it is possible, it can quickly sap marketing dollars that you may rather spend getting new clients.
True Cost of Employee Injuries
Automation can decrease the occurrence of employee injuries. As a result, the true cost of employee injuries (compared with and without automation) should be a part of your soft ROI calculation.
According to OSHA, workplace injuries and fatalities cost U.S. employers more than $1 billion per week in workers’ compensation benefits. According to one estimate, the average worker must produce an additional $1,100 in goods and services per day to offset their work injuries. Further, when workers are injured on the job, it also makes them question whether they want to continue working in an environment that they might consider unsafe. These considerations indirectly affect turnover as well.
Cost of Over/Under Staffing
When production needs fluctuate, your staffing needs fluctuate. However, with automation, you can simply shut off a machine rather than having to pay workers to be less productive. You also certainly do not need to pay overtime to address high production demands when all or portions of your production are automated.
Learn More About Automation ROI
Soft ROI considerations vary by industry. To get a complete analysis of potential aspects that would affect your company’s ROI, contact our team at Primetest Automation. We can help you evaluate whether automation makes sense for your business.