9 Steps to Calculate the ROI of Robot Surface Finishing
Posted on Mar 10, 2020 7:00 AM
Robot surface finishing… is it really worth it? Are you better sticking with manual sanding or polishing? Here's how to calculate the Return on Investment.
Before you invest in a fancy new robotic kit for your sanding or polishing task, it's a good idea to calculate the Return on Investment (ROI) of that new technology. This is just good business sense.
But, how do you determine the ROI for finishing?
Which of the different calculation methods should you use?
What should you look out for to ensure you get an accurate result?
Here is your guide to calculating the return of a new surface finishing robot.
Is robotic surface finishing right for you?
Before you dive into the "hard numbers" it's often beneficial to take a step back and look at why you are considering robotic surface finishing in the first place. Everyone will have slightly different reasons and you want to make sure that yours make sense before you move forward.
You can get this bigger picture by asking things like:
What problems in my current sanding or polishing setup will I solve with robotic automation?
How do I see the current situation changing as a result of the robot?
Are there other options?
Once you have considered questions like this and have determined that robotic surface finishing is the best solution to your current situation, you can move forward with your calculations.
Robotiq's Surface Finishing Kit is easy to program without robotics expertise
The 2 methods of calculating return of surface finishing
There are 2 main ways to calculate the return of new technology: ROI and payback period. Sometimes people use these terms interchangeably, but they are subtly different.
1. Return on Investment (ROI)
The ROI is the percentage of the investment you gain back over a particular time period (often one year).
For example, the ROI might be given as: 25% per year
The ROI can also be used to determine the overall return over the life of a fixed-term project, e.g. a 4-year project with a 50% ROI-per-year would give you a 200% ROI overall.
2. Payback period
The payback period (otherwise known as the "simple payback") is the length of time that the sanding robot takes to "pay for itself."
For example, the payback period might be given as: 6 months.
Which is better for robot surface finishing?
Both of these methods describe the return in a similar way.
With many business investments — including many traditional industrial robots — the payback period can be several years. In this case, it can make more sense to use the ROI. However, collaborative robots tend to pay for themselves much more quickly, often in less than 1 year.
A good rule of thumb is to calculate both the ROI and the payback period. They are both simple calculations and together they can give you a good, clear idea of the impact that the robot will have on your operation.
9 steps to calculate the ROI of a surface finishing robot
Here are the steps you can use to calculate the return of your sanding or polishing robot.
1. Download our free ROI calculator
As a general starting point, we have a free, downloadable tool that you can use to calculate the payback period for a collaborative robot.
2. Calculate the current cost of manual finishing
The biggest cost-benefit of a finishing robot comes from your savings compared to manual sanding or polishing.
Calculate the cost of manual sanding by looking at:
- Number of workers employed per finishing shift.
- Hours per shift.
- Shifts per day.
- Sanding/finishing employee's salary.
3. Calculate the upfront cost of new equipment
All robots require a selection of accessories before you can use them in your business. Traditional industrial robots require a lot of extra equipment but collaborative robots only need a few items.
Look at the equipment that you will need to buy to achieve robotic surface finishing — for example, a sanding kit.
Also, consider the cost of the robot itself. If you already have a collaborative robot in your business, and it is underused, you may be able to use it for sanding without buying a new one.
4. Calculate the ongoing cost of the robot
It's unlikely that you are going to replace your employee with the robot entirely, they will probably move to another task within the business.
They will also still occasionally be involved with the robot cell. Using the same headings as above, calculate the cost of the time they spend with the finishing robot.
Also, consider the maintenance costs of your robot sanding cell. This is likely to be low as collaborative robots do not require much ongoing maintenance.
Enter all this information into the ROI calculator.
5. Consider hidden savings
There may be extra cost savings that do not enter into the normal ROI calculations. For example:
- Health improvements — Sanding and polishing are strenuous jobs with various risks. Many of the work days lost to injury are associated with these risks so robot finishing can reduce workplace injury.
- Abrasive savings — Manual sanding can be quite inefficient in its use of abrasive media. With robots, you can optimize the use of abrasives to reduce waste.
Although these savings can be hard to quantify exactly, it's worth thinking about them to get a fuller picture of the return of your robot.
7. Calculate the payback period
Now that you have included all the relevant information, the ROI calculator will automatically calculate the payback period for your collaborative robot surface finishing application.
The payback period is labeled as: Time of Reimbursement [Years]
8. Calculate the ROI-per-year
If it makes sense for your application, you can now calculate the Return on Investment for any year by dividing the Cumulative Total by the cumulative Robot System Cost.
9. (optional) Calculate the overall ROI
Finally, if you are using the finishing robot in a fixed-term project, you can calculate the overall ROI for the whole project by looking at the Cumulative Total for that year.
With the "hard numbers" laid out in front of you, it should now be quite easy to tell if a surface finishing robot is really right for you!