Optimising production costs: A complete guide for industrial companies

Reading time: approx. 10 minutes

TL;DR

• Automation and robotisation help to reduce labour costs and improve productivity.
• The key areas generating expenditure are primarily labour, energy and raw material costs.
• The process of continuous improvement (Lean) allows waste to be eliminated.
• Regular inspection and maintenance of machinery is essential to avoid breakdowns.
• Thoughtful investments in industrial robots often pay for themselves within 1.5-2 years.

Table of contents

• Introduction
• Key cost-generating areas in the company
• Impact of automation on the reduction of production expenses
• Robotisation to support cost reduction and quality improvement
• Case study: when does the investment in industrial robots pay off?
• Additional optimisation solutions
• Summary of key findings and recommendations
• Further reading and contact
• FAQ

Introduction

Optimising production costs is now not only one of the most important objectives of industrial entrepreneurs, but also the key to achieving a competitive advantage. Rising raw material prices, staffing difficulties and increasing quality requirements are causing companies in Poland and around the world to look for solutions to effectively reduce the expenses associated with producing goods. In this article, we will present various strategies to reduce production costs - including automation, robotisation and other efficiency-boosting initiatives. You will learn how to make step-by-step changes, which measures generate the greatest savings and which ones can be implemented almost immediately. As a result, you will learn concrete ways for your company to achieve long-term profitability and financial stability.

Key cost-generating areas in the company

Before going on to discuss methods of reducing expenses, it is worth identifying the key areas where high costs are generated at the production stage. Below are those that typically have the greatest impact on the final price of the product:

Labour costs

Many industries are still dominated by manual, labour-intensive processes. With a rapidly changing market situation - rising minimum wages and a shortage of skilled labour - labour costs are rising fastest. Moreover, in situations of high staff turnover, the company incurs additional expenses for recruitment and training.

Raw material and energy costs

One of the key trends in the industry is the drive to reduce resource depletion and use energy-efficient solutions. Material and energy prices fluctuate almost constantly, which can destabilise a company's budget. Optimisation in the area of procurement and effective management of raw material inventories help to control this cost factor.

Downtime and machine breakdowns

Production line downtimes are some of the biggest sources of unplanned costs. They result from equipment failures, poor work organisation, mis-synchronisation between cooperating lines. Meanwhile, properly implemented automation and robotisation systems very often minimise unplanned downtime and improve preventive management.

Product shortages and quality errors

Poor quality of manufactured goods leads to complaints and material losses. The costs associated with rectification or the need to dispose of defective products can reach dizzying heights in some sectors. Human factors are one of the main causes. Robotisation and advanced control systems can significantly reduce such problems.

Impact of automation on the reduction of production expenses

Automation as the first step in optimisation

The main benefit of introducing automation is the streamlining and acceleration of processes. Instead of several employees handling each phase of assembly or packaging, some of the repetitive activities can be taken over by computer-controlled equipment. As a result:

• You reduce labour costs - not only in hourly terms, but also in terms of relieving the workload of employees and moving them to more creative positions.
• You minimise the impact of human errorwhich translates into an overall improvement in product quality.
• Speed up the production cycle, reducing lead times.

Michale Automatyka, also known as Michale Automation, has been helping companies in Poland to design and implement automated processes for years. Our aim is to create comprehensive solutions, tailored to the individual needs of plants, both in the context of new investments and the modernisation of existing infrastructure.

Technologies to support automation

Today's companies are turning to a wide range of solutions to reduce production costs. Among these are:

• Automatic packaging lines - help streamline logistics processes and order picking.
• Vision systems - allow the quality of products to be monitored in real time, eliminating defective pieces already during the manufacturing process.
• Advanced PLC and SCADA controllers - enable coordination of machine operation and real-time data collection.

If you would like to learn more about automation services, please see the information on our website: Robotisation in industry

The role of integrating automation with the existing IT ecosystem

The ability to combine automation systems with ERP (Enterprise Resource Planning) or MES (Manufacturing Execution System) software is not without significance. Integration allows central management of the entire process, collection of performance data, tracking of quality parameters and optimisation of the production schedule based on real data. With this approach, the company is able to react faster to changes in demand and prevent downtime.

Robotisation to support cost reduction and quality improvement

Why is robotisation gaining popularity?

Robotisation, especially in the face of staff shortages and rising wages, is one of the most effective ways to reduce labour costs. Modern robots can be used in:

• Welding a variety of components in a reproducible and precise manner.
• Packaging or palletising products, which significantly reduces lead times.
• Tasks requiring high precision, such as PCB assembly or optical inspection.

Michale Automation is an official distributor of SIASUN robots, which means that our customers have access to some of the most advanced and reliable robots in the world. Thanks to our many years of experience in robotic system integration, we are able to provide comprehensive support - from the design phase to installation and employee training.

Where does robotisation translate into the greatest savings?

• In repetitive and monotonous processes where the risk of human error is high.
• In operations requiring stringent safety or quality standards (e.g. food or chemical industries).
• In tasks that are particularly hazardous to humans (involving toxic substances or high temperatures).

Replacing human labour with robots in selected areas guarantees a reduction in labour costs, often by several tens of per cent. In addition, companies can reduce the number of accidents at work, which translates into both safety and a reduced financial burden related to employee absenteeism. To find out more about the robotisation of repetitive activities, it is worth visiting: Robotisation of repetitive production

Robotisation and quality and competitiveness

Investment in industrial robots is not only limited to savings resulting from fewer active jobs. Robots guarantee better quality and repeatability of manufactured products. Many industries - from automotive to consumer electronics - base their competitive advantage on stable quality and speed to market of new models. Robotisation enables companies to:

• Maintain consistent product quality regardless of the time of day or external conditions.
• Reducing the time needed for line changeover when changing the product range.
• Better use of production space (robots can be installed in areas that are difficult for humans to access).

Real-life examples of savings from automation and robotisation are described in many industry reports. In Michale Automation's experience, a well-planned and executed implementation project often pays for itself within 1.5-2 years, as we will discuss in more detail later in this article.

Case study: when does the investment in industrial robots pay off?

Key parameters for evaluating ROI

Any optimisation measures should always be accompanied by a precise economic calculation. When calculating ROI (Return On Investment) in the context of robotisation, the following factors should be taken into account:

• The current cost of human labour for the jobs to be robotised.
• Anticipated savings from reduced staff turnover and no need for ongoing training for new employees.
• Reduced costs associated with production errors and warranty fixes.
• Expenditure on service and maintenance of robots.

Sometimes additional equipment or a modification of the hall layout is needed to fully exploit the potential of robotisation. Nevertheless, in most projects the benefits outweigh the initial outlay. To estimate the potential return yourself, you can use tools such as: ROI Calculator: Welding Robotics

Example of an implementation project

Suppose a medium-sized manufacturing company plans to robotise its welding process. With the help of SIASUN robots and appropriately selected positioning systems, the operator can control the weld quality of multiple parts at the same time, significantly reducing the machining cycle. Estimated results:

• Decrease in line labour costs by 25%, by moving operators to more advanced inspection tasks.
• Reduction in product shortages by 30% due to increased robot precision.
• Reduced training time for new employees, who primarily supervise and maintain equipment rather than perform complex operations themselves.

The result is an increase in the productivity of the entire production department, which translates into an increase in production volumes and thus better financial results. Estimated payback period? Approximately 18 months.

Additional optimisation solutions

Lean Manufacturing and Continuous Improvement

Lean Manufacturing, based on Japanese Kaizen practices, is about the continuous reduction of waste in production processes. To implement it effectively:

• Identify the key value streams (Value Streams).
• Verify which steps do not add real value for customers but generate costs.
• Introduce periodic meetings with production staff to generate improvements.

While Lean does not always require massive financial investment, it does require a culture of continuous change and the involvement of the entire team, from line workers to management.

Machine modernisation and digital monitoring tools

Old machines often consume more energy and cause more frequent downtime. Although investing in new equipment in the short term can be costly, in the long term it usually translates into savings. Systems for machine condition monitoring (Condition Monitoring), real-time data exchange (IoT - Internet of Things) or automatic reporting also play an important role. With these:

• You reduce unscheduled stops because you recognise in time the need to replace wear parts.
• You optimise energy and raw material consumption by keeping track of the entire line.
• Plan production schedules more effectively.

Service and maintenance stands

The key to ensuring the continuity and quality of production is regular servicing of robotic workstations. Only then can you count on minor failures not translating into long-term downtime, and the robot itself serving the company for years. At Michale Automatatyka, we offer specialised servicing and maintenance of stationswhich helps companies maintain business continuity and the highest safety standards.

Use of outsourcing and optimisation of logistics

Although robotisation and automation are powerful cost-cutting tools, it is sometimes worth considering outsourcing certain processes - especially those that are not central to a company's strategic operations. This step involves:

• Reducing expenditure on production infrastructure.
• Shifting some fixed costs to variable costs.
• The ability to focus on the highest value-added processes.

It is also worth looking at internal and external logistics, as well-organised transport and warehouse management avoids overstocking and thus freezing capital.

Summary of key findings and recommendations

The most important ways to optimise production costs in today's market realities are first and foremost:

• Implementing automation:
  • Reducing the costs flowing from high staffing in the area of repetitive tasks.
  • Improving quality and eliminating human error.
  • Shorter production cycles and greater flexibility.
• Robotisation:
  • Significant cost reduction in monotonous tasks or those requiring extreme precision.
  • Enhancing company security.
  • Possibility of a faster return on investment (approx. 1.5-2 years).
• Application of Lean methods and continuous improvement:
  • Eliminate processes that do not create value for the customer.
  • Encouraging the whole team to seek improvements.
• Regular maintenance and upgrading of the production line:
  • Reducing expenses and losses associated with failures.
  • Extend the life of machines and maintain their high performance.
• Data analysis and systems integration:
  • Ability to react quickly to changes in demand and support informed decision-making.
  • Precise production planning and optimisation of resource utilisation.

To achieve a competitive advantage, a systematic approach to cost optimisation is necessary. A company that does not invest in modern technology today may fall behind tomorrow. Decisions to invest in automation or robotisation should be preceded by a sound analysis of the return on investment and consideration of the specifics of the business. Nevertheless, the real benefits in the form of reduced expenses, stable quality, employee safety and production flexibility determine the validity of such a strategy in very many industries.

Further reading and contact

Do you have questions about optimising production costs in your company? Do you want to find out how the implementation of robotic workstations looks like in practice or do you need a consultation on modifying a process line? Visit our website and see how we can help you: Automation services Michale

If you are also interested in other areas of robotisation, take a look at our offer and find out how we implement robots in various production processes: Robotisation of welding

Remember that optimising production costs never ends with a single action. It is an ongoing process that requires regular evaluation and strategy updates. The most successful companies constantly track performance indicators, expand their technological infrastructure and improve their team's competencies. The introduction of robots or automation systems is often a breakthrough; however, it takes both expertise and commitment at every level of the organisation to realise their full potential.

We hope that, after reading this article, you have a fuller picture of the opportunities available in relation to optimising production costs. We invite you to get in touch and explore together the solutions that will increase the profitability of your business, regardless of its size or industry. Michale Automation - your partner in building a more efficient future.

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 automation mean redundancies?
Usually no. Automation allows employees to focus on more creative and strategic tasks, while freeing them from monotonous tasks. Many companies use this to retrain and develop their team professionally.

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.