Getting Real about Robotic ROI

Small to mid-sized manufacturers often hesitate to consider CNC automation because of the up-front costs. We believe that the hesitation is completely justified. It is hard to imagine the return on investment for robotic process automation. Luckily, for CNC machine shop owners now don’t have to imagine it. A recent study from the McKinsey Institute states that robotic process automation (RPA) offers a potential ROI of 30-200 percent in the first year alone.

Recent market changes contribute to the massively increased return on investment CNC machine shops receive when they participate in automation. These changes include increased labor costs, large variations in demand, a lack of skilled operations, and, most recently, the coronavirus. Without participating in advanced technology, CNC machine shops risk being outperformed by competitors.

Our studies show that the return on investment is guaranteed with robotic automation. Take, for example, a standard high mix/low volume machine shop. With eight hours of production time per day for 250 days per year, machine output results in 2,000 hours of production yearly. Now, think about having just an extra four hours of production per day; the result is an extra thousand hours of production yearly. This huge increase in production hours is what awaits machine shops that choose to employ CNC automation. With this increased machine output, the estimated ROI for standard machine shops is just six months.

Additionally, research shows that the gross margin for automated shops increases when accounting for the hourly machining rate, labor costs for an operator, CNC machine depreciation, and tooling costs.

As stated, the first step is always going to be the hardest. However, once machine shops begin their automation journey, it becomes increasingly clear that robotic automation processes pay for themselves.