Automated Machinery and ROI
Investments in automated machinery often fall short of expectations in terms of total return on investment (ROI).
Here's a breakdown of the reasons why:
1. Misdiagnosis of Time Waste:
Most time-related waste in operations stems from excessive wait times between operations, not the value-adding operation itself.
This leads to high levels of Work-In-Process (WIP), which creates a cascade of negative effects:
Longer customer lead times: Delays in completing orders frustrate customers and damage your reputation.
Slow responsiveness to market fluctuations: Unable to adjust quickly to changes in demand, you miss opportunities and struggle during downturns.
Hidden production problems: WIP masks underlying issues, making them difficult to identify and address.
Order management challenges: High WIP complicates order fulfillment, leading to excessive expediting and firefighting.
2. Instability Breeds Inefficiency:
Unstable upstream processes put undue pressure on the new automated machinery, requiring it to process inconsistent inputs.
Meanwhile the operator can do little but wait for the machinery to cycle.
A common response is to build inventory buffers before the machine, further slowing down responsiveness and exacerbating firefighting efforts.
3. A Strategic Solution:
We emphasizes stabilizing production before introducing automation.
Through continuous improvement, the organization learns to manage change while maintaining process stability.
With lower WIP levels, the true benefits of automated machinery become clear, leading to a more accurate ROI.
In short, maximizing the ROI of automated machinery requires a holistic approach that addresses underlying process inefficiencies and fosters organizational agility.
By incorporating these insights, you can ensure your automation investments deliver the anticipated value and contribute to a more efficient and responsive organization.