Estimating the ROI of a Custom Machine for Your Production Line

At KT Tech, our customers approach us about our custom machine building services with any number of production challenges: bottlenecks, scrap risk, inconsistencies, and more. We offer a turnkey solution by designing and building machines that address several of these factors and free your team to focus on more critical work.

But before committing to an investment, many of our customers try to quantify the potential return on their investment. We can help you identify the key factors in estimating ROI before any project begins.

Understanding Cost: Establishing Scope Through a Clear URS

Any ROI calculation starts with the denominator: total project cost. The most effective way to understand cost and prevent surprises is to begin with a detailed User Requirement Specification (URS). 

A clear URS defines the project’s expectations and scope. It makes clear what is not included, as well, so both sides have the same understanding. This is important in custom machine development because iteration and unexpected challenges will always arise naturally, and both sides need to agree on what was in the original scope. 

Labor hours are often the largest cost driver in automation projects. We provide specific, predictable cost estimates that include design time, prototyping, testing, and more.

Measurable Improvements That Drive ROI

With a clear project scope, we can help customers evaluate the quantifiable benefits on the savings side of the ROI equation. These are often straightforward to model and can deliver immediate impact. The full range of possible benefits is expansive, and below we highlight just a few examples from one recent project: 

Operator Hours

This spring assembly automation eliminated an entire step in their operations, and as a result, the production line that previously required two operators now only required one. This either frees an operator for higher-value work or avoids an additional hire, both of which significantly contribute to ROI.

Faster Iteration and Design Cycles

When customers design and prototype internally, the process typically involves multiple handoffs between design, buyer, and machine shop. A single revision can take weeks.

KT Tech offers design and prototype machining services in-house, so we can often complete multiple iterations in a single day. That reduces development time, cuts costs, and potentially speeds up time to revenue by reaching the market faster.

Cycle Time Improvements

We reduced the cycle time for one step in our customer’s production from about 2 minutes to 15 seconds. Even if the operator had improved significantly enough to cut their time down to 90 seconds, automation still delivered an 80% improvement. That translates into quantifiable savings based on throughput and per-unit cost. And those savings can be substantial as scale increases.

Reduced Scrap

Operators previously installed a delicate part costing more than $40 per component. Any inconsistency created expensive scrap, placing enormous pressure on a highly trained operator. Automation eliminated this variability, dramatically reducing the cost associated with waste. 

Why Hard-to-Quantify Benefits Can Be Critical to ROI

Some of the most important ROI drivers are difficult to measure upfront but carry enormous strategic value.

Simpler Regulatory Approval

For medical device customers, reducing process variability can simplify the FDA approval path. Preventing delays in regulatory review avoids not only the stress and financial cost associated with extended approval, but also prevents any lost time on the road to market.

Accelerated R&D and Time to Market

In this particular case, we partnered with the customer early in their R&D process. By automating a critical step during early development, our customer was able to conduct faster, more consistent testing. Faster R&D means potentially reaching the market ahead of competitors, which can deliver a revenue lift higher even than the easily quantifiable benefits.

Improved Operator Safety

This task was seemingly simple and entailed no significant physical dangers, but even small tasks can require unexpected force and lead to repetitive stress injuries. Automation reduces physical strain and improves long-term productivity by protecting your team.

Agility and Flexibility to Expand Scope

In the middle of the project, our customer realized they needed an additional step to be automated, as well. Because we already understood their production, we integrated that step mid-process without needing any secondary development effort. That agility can save weeks of internal effort and eliminate the need to bring in and manage another manufacturing partner.

Let’s Discuss the ROI of Your Custom Machine Idea

If you’re trying to break through a bottleneck, we can help you estimate the ROI of custom machine solutions tailored to your needs. Our team is ready to discuss concepts, quantify benefits, and outline scope so you can make a confident decision.

Request a quote today from our California machine shop and let’s discuss your path to smarter manufacturing!