Automation (CONT’D FROM PAGE 26)
double our speed again, but it will still be more consistent. Your productivity is more reliable, more consistent. You're not looking at down machine centers. Connell: Anybody else have anything to add to that? Wood: An actual consideration in the last few years has been asset utilization which directly ties to what Jeremy was saying, which is sales growth, more output. Does au- tomation allow us to better utilize the existing asset, not just through increased speed, but through increased up- time because of less demand on total bodies. Those of you that toured the plant — it obviously has significantly fewer people operating in it than it did before we retooled. We went from some very old equipment to some very modern equipment, so that's the payback. I’m with Jeremy, I've never seen a machine line, even a small percentage of it, be paid back in labor savings. It's got to be revenue gen- eration; it’s got to be increased contribution per machine hour or more total hours of asset utilization. Connell: In terms of ROI payback term, Keith you had men- tioned three years. Is that still acceptable? Thomas: I think three years is acceptable. I think it’s being extended again because it’s just a necessary thing. So, if it goes to five years, it’s just something that you can count. CONTINUED ON PAGE 30
about 40 tons a month just by material handling elimina- tion with automation. That's a big cost savings for us. But we don't justify our investment based on that, it'll be justi- fied on growth. If it's a smaller project, let's say $250,000 or less, you can look at probably doing that on cost sav- ings, whether that's labor, waste, productivity enhance- ments, downtime reduction, things like that. But once you get over a certain number, in my opinion, you're going to justify that automation on future business. Connell: Keith what about you? You've got a lot of manual processes, or probably more than these other two, what ROI value variables stand out to you? Thomas: Certainly productivity. One of the integrators we spoke to early on in our process said that it used to be people were looking for a three-year ROI on any kind of investment, now it's about survivability. It's not a matter of when you're going to get paid back, it's a matter of are you going to still be in business. I keep going back to what we did 20 years ago. Had we not done that, we certainly wouldn’t be the same type of business. But productivity, I think when you're looking at ROI, again we were able to double our speed from what we were doing manually with this first phase of our automation. The second phase com- ing up, if it takes three more people off the line, we won't
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