How to calculate the ROI of an investment in industrial robots? A practical guide

Estimated reading time: approx. 8 minutes

TL;DR:

• ROI (Return on Investment) in industrial robotics helps to determine when the investment will pay off.
• The biggest benefits are higher productivity, lower labour costs and fewer production errors.
• Include integration, training and maintenance costs when calculating ROI.
• Robotisation promotes improved safety and staff stability.
• Even small and medium-sized companies can benefit from automation.

Table of contents

• Introduction
• What is ROI in the context of industrial robotics?
• Key factors influencing return on investment
  • Labour costs and their optimisation
  • Reduction of errors and quality deficiencies
  • Improved safety and ergonomics
• Step by step: How to calculate the ROI of an industrial robot implementation?
  • Determine investment expenditure
  • Estimate projected savings and revenues
  • Consider maintenance and service costs
  • Perform final calculations
• Case study: Faster production and reduced quality costs
• Investment planning support: calculators and advice
• Which industrial robots to choose?
• Implementation - from plan to finished system
  • Process analysis and identification of bottlenecks
  • System design and integration
  • Testing and training of the team
  • Solution commissioning and service
• Summary and main conclusions
• FAQ

Introduction

Industrial robots have revolutionised manufacturing processes around the world. In Poland, it is increasingly noticeable that companies, regardless of their industry, are turning to advanced automation solutions to increase the efficiency of their operations. The level of robotisation is constantly increasing, and in the face of staff shortages and rising labour costs, discerning the possibilities of investing in industrial robots is becoming essential.

One of the key elements when planning such an investment is to understand how to calculate its profitability, or so-called ROI (Return on Investment). Proper analysis allows you to determine when your investment will pay off in the form of increased productivity, lower production costs and improved product quality. In the following article, you will read how to take a step-by-step approach to calculating the ROI of industrial robots. You will also get tips on why implementing such solutions can pay off very quickly and what mistakes to avoid at the beginning.

What is ROI in the context of industrial robotics?

ROI, or Return on Investment, is an indicator that shows how long it takes for an investment to pay off. It takes into account both the capital expenditure (purchase of the robot, integration, training) and the potential savings and additional revenue generated by the new solution. In the case of industrial robots, it is worth looking not only at the cost of the equipment itself, but also at:

• Increased production line efficiency.
• Reduction of errors and quality deficiencies.
• Improving work ergonomics and reducing sickness absence.
• Reducing losses due to downtime.

Such a broad perspective makes it possible to assess, even before purchase, whether an investment in industrial robots will be a beneficial step for a particular company.

Key factors influencing return on investment

Labour costs and their optimisation

The primary factor is the reduction of human labour costs. The robot can work 24 hours a day, 7 days a week, without interruption. Thanks to this:

• The risk of errors is significantly reduced caused by human factors.
• We exclude the additional costs of overtime and shift work.
• We can redeploy employees to tasks that require creativity or qualifications, where they provide better value.

Reduction of errors and quality deficiencies

Industrial robots, especially with precision control systems, perform their tasks with accuracy to fractions of a millimetre. This reduces the cost of complaints or corrections, and product quality becomes predictable and repeatable. Companies that were struggling with a high percentage of defects before implementation often see a decrease of several tens of per cent in defectiveness on the production line.

Improved safety and ergonomics

The processes of palletising, packing or handling heavy items can lead to numerous injuries, especially to the spine and upper limbs. The costs of medical treatment, sick leave and staff replacement can sometimes be difficult to tabulate, but organisations that opt for robotisation strongly feel the long-term savings in this area. From an ROI point of view, the gain is not only financial, but also in terms of the stability of the company's operations.

Step by step: How to calculate the ROI of an industrial robot implementation?

Determine investment expenditure

The first step is to take a fair summary of all the costs you will have to incur to fully integrate an industrial robot into an existing production line or process. Such outlays include:

• Purchase or lease a robot (including accessories, e.g. gripper, vision system).
• Cost of integration, including programming, installation preparation, testing and possible in-line modifications.
• Training of staff responsible for operating and programming the robot.
• Implementation of security elements, including optical curtains or fences.

Estimate projected savings and revenues

The next step is to define precisely where and how the industrial robot will generate added value. The most common considerations are:

• Reduction in human labour costs.
• Reducing or eliminating overtime.
• Decrease in the number of production shortages and claim costs.
• Greater real-time production fluidity, which often translates into new customers and more orders.

In doing so, it is important to determine the period over which you plan to measure the effectiveness of the implementation. In industrial robotics, typical horizons are 2-5 years, although many companies see positive effects within the first 12-18 months.

Consider maintenance and service costs

Even the best industrial robot will need regular maintenance and possible repairs, especially in applications that require continuous operation. Maintenance costs include:

• Periodic maintenance and replacement of consumable parts.
• Possible software extensions or integrations with new modules (e.g. video system).
• Electricity costs, which, although small with high robot performance, are worth taking into account.

Perform final calculations

The formula for calculating ROI can take a variety of forms, but the simplest variants include the following formula:
ROI = (Investment Gains - Investment Costs) / Investment Costs × 100%

In practice, this means that if the total cost of implementing the robot including integration was £300k, and the savings and additional profits during the first year were £150k, the ROI is 50%. This in turn tells us that the potential payback time is about two years.

Case study: Faster production and reduced quality costs

To illustrate, let's imagine a medium-sized manufacturing plant with dozens of hours of overtime work per month, mainly for manual packing and palletising stations. The introduction of a single industrial robot with a suitable gripper has eliminated:

• Overtime for operators, which translated into a cost reduction of around £15k per month.
• Problems with repeatability of product placement. Product damage dropped from 5% to 0.5%.
• Losses due to shipping delays, because the robot works steadily around the clock without taking breaks.

The company involved in the implementation - Michale Automation - carried out an ROI calculation, taking into account all the expenses for the purchase and integration of the robot, as well as the training of the maintenance team. The calculation came out that the investment would pay for itself within 18-24 months, a very satisfactory result for such a deep process modernisation.

Investment planning support: calculators and advice

You can make ROI estimates for robotisation using external tools or based on your own analytical data. Many technology companies prepare ROI calculators tailored to specific processes, for example those related to robotic welding or packaging.

If you are interested in a practical tool to quickly calculate your benefits, you can use our free tool on the website: ROI calculator for welding robotisation. It will give you an initial idea of how much you can save and in what time your investment will start to pay off.

Which industrial robots to choose?

Choosing the right industrial robot has a direct impact on the financial viability of a project. At Michale Automation, we offer a wide portfolio of equipment, including SIASUN robots, which are distinguished by their high level of precision and modern software. When choosing equipment, consider:

• Type of application (welding, packaging, palletising, machine operation, painting).
• Lifting capacity and reach of the robot (important for processes handling large and heavy parts).
• Working environment (wet conditions, dusty conditions, explosive atmospheres).
• Possibility of later expansion (additional sensors, integrations with AI or vision systems).

The diversity of the market allows for the careful selection of a robot for specific needs. It is also worth bearing in mind the great importance of selecting the right integrator to take into account the specifics of the company, prepare an implementation schedule and take into account future technological developments.

Implementation - from plan to finished system

Process analysis and identification of bottlenecks

The first stage of implementation is to identify the areas where an industrial robot will bring the most value. It is worth examining historical data, such as machine failure rates, scrap levels or overtime costs, to determine where the effects of the investment will be felt most.

System design and integration

Once the main objective has been selected, it is time to prepare the design. At this point, we define the target technical and functional parameters (e.g. cycle speed, type and dimensions of products handled, type of gripper). At this stage, it is essential to work closely with the integrator who will fit the robot to the production line, install the safety system and develop the control software.
If you need to discuss in more detail the benefits that integrating a robot into your line can bring, you can find more information in the Robotisation in your companywhere we describe possible implementation scenarios.

Testing and training of the team

After physical integration, the robot undergoes a testing phase, during which the line performance, product quality and reliability of the solution are checked. At the same time, the employees responsible for operating and programming the device receive training. At Michale Automation, we pay particular attention to this part of the project, as the competence of the team determines the ease of further operation of the system.

Solution commissioning and service

After successful testing, the system is put into regular production. During the first weeks of operation, improvements can be made and exceptional situations such as any necessary adjustments to the gripper can be monitored. It is also important to establish the frequency of technical inspections and bench maintenance. If you are interested in how robotic lines are serviced, please visit the section Service and maintenance.

Summary and main conclusions

- Industrial robots significantly increase production efficiency while reducing labour costs and defect rates.
- The ROI allows you to determine after what time your investment in automation will start to generate real returns.
- In addition to the cost of the equipment itself, integration, staff training and technical maintenance must be taken into account.
- Reducing the risk of accidents and improving ergonomics lead to long-term savings and reduce turnover among the workforce.
- Robotisation does not have to be limited to large plants. Even small and medium-sized companies can significantly increase their competitiveness by investing in modern technology.

Properly calculating ROI is not just about comparing the cost of buying a robot with the short-term savings. It is an in-depth analysis of all aspects of the process: from waste reduction, to increased quality, to the future scaling potential of the business.

If you are wondering whether Robotisation of welding, packaging or any other process will meet your requirements, check out the sample implementations under Robotisation offer and see what real savings have already been experienced by companies that trust in Michale Automation's solutions.

Gaining a full understanding of the costs, savings and benefits of implementing industrial robots is a fundamental decision for any business thinking about growth. Accurate ROI analysis allows you to predict with confidence whether your investment will quickly pay off and what long-term benefits it will provide for your company.

Feel free to ask questions and share your own experiences in robotisation. If you need help selecting a robot or would like a comprehensive audit of your production, contact us at Michale Automation. Thanks to years of experience in the automation industry and our collaboration with market leader SIASUN, we can offer tailor-made solutions for your needs.

Do you have questions? Want to find out how specifically an industrial robot can support your plant? Contact us and find out how investing in modern automation allows you to build a sustainable competitive advantage in the market.

FAQ

How long does it take to implement automation in a company?
The implementation time depends on the complexity of the processes and available resources. It can range from a few weeks for simple solutions to several months for extensive projects and large integrations.

Does robotisation only pay off for large companies?
Today, advances in technology are leading more and more small and medium-sized companies to turn to robotisation. Costs are coming down and flexible solutions can deliver a favourable return on investment even for smaller operations.

How do you determine which production process to robotise first?
It is best to start by analysing the places that generate the highest costs, error rates or labour intensity. Identifying bottlenecks in production allows you to implement a robot where the benefits will be highest and most quickly noticeable.