Determining the Value of Robotics Using ROI


Like the pay scale of an employee, the price of robots vary. It depends on several factors like the specification of the machine, peripheral equipment system, installation costs, etc. in case of a robotic system it is based on complexity, the number of robots involved, quality, etc. So if you are wondering what a robotic system costs, you may not get a straightforward answer. And you are not the only one muddled by this thought. Google Trends data shows that web searches on the question “How much does a robot cost?” have doubled since 2009. One should also keep in mind that the cost of deploying robotics goes far beyond the robot’s price tag. Even as the rapid robotic process automation (RPA) takes place across all industrial spheres it is essential to calculate when deciding whether or not a robotic system would pay off, i.e. a return of investment (ROI).

Before switching to RPA, one must have a long term vision. This is because every company prefers solutions that can have the highest-volume processes and the most significant impact on the bottom line. As this is not limited to any particular department one has to think of the entire enterprise as a whole. It is also highly necessary to plan for building isolated work areas, or additional backup power while the installation of the robotic system takes place. Else throughput will be effected meanwhile. We also have to account for peripheral machinery like safety barriers, sensors, HMI’s, variable robot grippers, cables, and mounting hardware or apparatus, etc. Even after a successful setup, one has to factor is labor, training costs, energy, materials, software programming, warranty, runoff charges, ongoing maintenance, and production supplies for smooth functioning and longevity of the robots. So the buck never stops here. Different market value leads to fluctuation in industry, operation, and commodities value.

According to a report by the Boston Consulting Group, to arrive at a reliable cost estimate for robotics, customers should multiply the machine’s price tag by a minimum of three. For example, if a medical nurse bot costs US$32000, buyers should be ready to invest a minimum of US$96000. Manufacturers can only compute the ROI of an investment after determining the robot’s total purchasing cost. There are other elements like taxes that vary from country to country, depreciation of machine value with years, inflation, spare parts costs, etc.

Although switching to RPA will reap benefits like doing repetitive, hazardous, tiresome tasks at a fraction of time and cost. It will also continue giving productivity beyond regular employee work hours, higher optimal use of raw materials, minimize human error, etc. Yet there can be certain flaws in the plan. Decision-makers tend to ignore oddities like equipment breakdown, savings beyond the break-even point, process speed estimation, cost-benefit analysis, leasing, and available loan options, alternatives to cut costs, unplanned downtime. Also, most of these calculations are based on rough estimation instead of a thorough analysis.

Hence companies’ owners must have a detailed plan and source of finances, before capitalizing on RPA. When everything is done schematically with having the right pilot project choice, ROI will naturally be higher and predictable. And yield will be maximized too!