How to Measure Manufacturing ROI
Measuring the ROI in manufacturing is key to being profitable and being able to stay in business. To understand this metric an engineer, analyst or business owner will need to look at several main areas to break observations down into actionable information. Here’s what you need to know about measuring ROI in manufacturing.
How to Analyze the Cost?
To determine the ROI on the purchase of new manufacturing equipment, you’ll first need to examine the costs. Here is a sample list of considerations to determine the ROI:
- Cost of integration into manufacturing – e.g. facilities, training
- Setup and changeover costs – equipment flexibility and utilization for the tasks it will be needed to do
- Utilization – efficiency in run-time for equipment – based on hours per day / days per week
- Downtime – for repairs, maintenance and updates
- Energy costs – depending on the process, factors such as clean space, power and AC may be a relevant cost
- Which helps determine the PBP or “payback period” – time required to pay off your purchase
Equipment costs can be an expensive factor in the production of goods, largely dependent on the quantity of automation vs. human content, and material costs. Other manufacturing factors may include proximity to materials and personnel (like mining), transport of finished goods (internationally sourced goods), and even government oversight (e.g. healthcare and other highly regulated products).
Equipment ROI for the manufacture of medical devices may largely be influenced by health and safety regulations and compliance. However, the cost of buying new, efficient manufacturing equipment can be offset by high levels of productivity, process repeatability, greater yields, and resulting higher profit margins.
Manufacturers using more automated thermal plastics assembly equipment can frequently run with lower costs and be more profitable. The high repeatability and low contamination production of items produced with thermal plastics assembly includes the latest wearable medical devices, computer and electronic goods, and automotive equipment. These products take advantage of the repeatability and reliability of heat sealing and heat staking of their plastic components.
What Is the Potential for a Profitable ROI with New Manufacturing Equipment?
Businesses are always looking for ways to lower costs, improve yields, and increase profitability in manufacturing processes.
Take the industrial IoT, or internet of things, for example. All hype aside, the zeal for this young industry is driving explosive growth for manufacturers who produce IoT hardware and software connectivity. Other types of manufacturers benefit from the use of manufacturing metric algorithms being applied in their manufacturing processes.
A huge amount of data is being collected and compared to quality and yield in order to continually adjust processes for the best results. Manufacturing managers using equipment that can measure and adjust to these improvements will continue to improve product reliability and profitability.
By relating costs to benefits – production capacity, increase in operations efficiency, flexibility to complete manufacturing needs, and decrease cycle times – the Return on Investment of new equipment can be calculated.
When economic times are good, sometimes even weaker manufacturing performers can succeed. Products are in high demand and inefficiencies may be hidden in pricing or volume. However, as the economy tightens with more difficult pricing and competition, the more efficient processes with the higher ROI will likely be more successful.
Do the Smart Thing and Partner with Thermal Press for a Higher ROI
We have continued to add technology to our heat staking and heat sealing equipment. With the highest reliability and consistently impressive repeatability in processing equipment, Thermal Press is proud to produce industry leading plastic assembly equipment and controllers.
Work with Thermal Press engineers to determine the optimum equipment and processes for your next assembly process and substantially increase your ROI in manufacturing. As your manufacturing demands grow, consider upgrading your Thermal Press equipment to include the latest in application and measurement tools to produce the highest-quality products. The increase in quality, repeatability and lower downtime for maintenance and changeover will likely prove to be worth the investment.
We will help you determine your manufacturing equipment ROI, and let us show you how Thermal Press equipment stacks up against the competition.
Get in touch with Thermal Press today and learn about how our incredible heat staking and heat sealing equipment can make your ROI in manufacturing skyrocket.