Application Update: What’s the cost, ROI, of a robotic cell?

Thinking of robotics? Here are the metrics needed to make a smart return-on-investment decision about a robot purchase.

11/25/2010


In rough numbers, what does a robot cell cost?  What’s the total cost of ownership?  How do you justify it?  What’s the return on investment (ROI)?  What’s the internal rate of return (IRR)?

Here are some rules of thumb. Companies automate for a combination of the following three reasons, to:

1.  Save money. Labor savings is the most obvious reason.  Labor costs range greatly depending on the industry, geography, if it’s a unionized environment, and other factors.

Typically, labor costs per operator range from a low-end of $20,000 per year to a high-end of $80,000 (all-in costs including wages and benefits).  Besides direct labor savings, other benefits of automating often include improved quality reduced scrap, and less rework. These costs are often tougher to quantify but can play a big role in certain applications.

2. Make more money. Existing production equipment is either starved or bottle-necked because people aren’t fast enough to load or unload it.  In some cases, a manufacturer could sell more product with the capacity to make it.  By using robotics, you can operate faster.  This increase in throughput (and revenue) comes at a low cost in relation to new production equipment.  In other instances, manufacturers are outsourcing the overflow production to meet demands.  By automating the loading and unloading, they reduce or eliminate the need to outsource. (See reason number 1.)

3. Comply with government, regulations, laws, or requirements. In most cases these are ergonomic issues—stresses and strains from high-speed, repetitive tasks or lifting of heavy objects.  They result in workers’ compensation claims, lost time injuries, added rotations through strenuous jobs, etc.  Usually ergonomics doesn’t make or break the business decision to automate, but it can be an important factor.  From my experience, ergonomic costs can range from 5% to 20% of the direct labor costs.

Other times, the risks are more serious than stresses or strains.  Sometimes, the sole motivation is to get people out of hazardous jobs.  A robot is a lot easier to replace than a human life.

What does a robot cell cost?

A typical, single robot cell is $300,000, plus or minus 50%.  Obviously, this is an order of magnitude estimate and will vary depending on the complexity of the process, but generally most single-robot systems will fall into this cost range.

This will include:

  • Mid-sized robot
  • Robot end-of-arm-tooling or gripper
  • Control panel including PLC, operator interface screen (HMI), safety circuits, motor starters, and the like
  • Cell guarding
  • Customized engineering for the system to complete the desired process
  • Some auxiliary equipment, such as conveyors or deburring equipment
  • Fabrication, assembly, setup, and runoff at the system integrator’s facility
  • Shipping to the site
  • Rigging and installation
  • Integration with your existing equipment, and
  • System-specific operator and maintenance training.

 What about ongoing costs?

Description

 

Cost

 

Frequency

 

Initial spare parts

 

$5000 to $20,000

 

One-time purchase with system

 

Yearly service and maintenance

 

$2k to $5k

 

Yearly

 

Yearly replacement and wear items

 

$2k to $5k

 

Yearly

 

Typical costs outside of the main purchase will include spare parts, yearly service, and maintenance, including yearly replacement and wear items.

Return on investment?

Any ROI between 12 months and 36 months is a no-brainer. At a minimum, if you have more than two shifts of operation and all-in labor costs of $35,000 per person, there’s a strong business case to look at automation.


Ken McLaughlin is director, automation systems with JMP Engineering Inc., www.jmpeng.com, London, Ontario, Canada. McLaughlin among the class of 2010 Control Engineering Leaders Under 40. He writes a blog called Robot Shift at http://robotshift.com.


- Edited by Mark T. Hoske, Control Engineering content manager, www.controleng.com.



No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Leaders Under 40 program features outstanding young people who are making a difference in manufacturing. View the 2013 Leaders here.
The new control room: It's got all the bells and whistles - and alarms, too; Remote maintenance; Specifying VFDs
2014 forecast issue: To serve and to manufacture - Veterans will bring skill and discipline to the plant floor if we can find a way to get them there.
2013 Top Plant: Lincoln Electric Company, Cleveland, Ohio
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Bring focus to PLC programming: 5 things to avoid in putting your system together; Managing the DCS upgrade; PLM upgrade: a step-by-step approach
Balancing the bagging triangle; PID tuning improves process efficiency; Standardizing control room HMIs
Commissioning electrical systems in mission critical facilities; Anticipating the Smart Grid; Mitigating arc flash hazards in medium-voltage switchgear; Comparing generator sizing software

Annual Salary Survey

Participate in the 2013 Salary Survey

In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.

Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.

2012 Salary Survey Analysis

2012 Salary Survey Results

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.