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Calculating ROI and Payback Period for your Robotic Investment
02. November 2017 / By Shermine Gotfredsen / 2 Comments
If you’re looking to automate with robots, it’s important to build a solid business case if you want to know the true value of robot automation.
Many businesses calculate ROI by using the payback period, which is taking the cost of the robot and then dividing it by the monthly salary of the worker. It’s important to note if you calculate your ROI this way you won’t be able to calculate the total value and impact that robot automation will have on your business.
To make a more accurate calculation the first step is to start with the initial cost and to also consider the short-term and long-term tangible and intangible benefits that you’ll receive from investing in this type of automation.
It’s worth spending the time taking into account all these factors so you can get a real understanding of the short-term and long-term value robot automation will bring your business. It’s a detailed process because this is an investment in the growth, development, sustainability and competitiveness of your business. To learn more contact your local Universal Robots partner.
Injection molder Dynamic Group in Minneapolis, USA, quadrupled production with UR robots and had an ROI of just two months
When you’re building your business case, use the term ROI to justify your robot investment rather than the term payback period, which is the number of days, months or years it will take for you to recover the cost of your investment. Your payback period will always be longer than your ROI as your payback calculation is used to offset wages for examples whereas ROI calculation takes into considerations overall tangible and intangible business benefits and impact both short and long term.
Shermine Gotfredsen is the General Manager of Universal Robots in Southeast Asia and Oceania. Shermine is committed to working in partnership with companies across the Asia-Pacific region to help them make the right decisions on how to improve productivity through automation. Contact us at email@example.com