Robot Shift

I’m often surprised how much time up front is spent talking about the nuts and bolts and specifications of the equipment being purchased, and how little time is spent really defining what success looks like.  The equipment (automation, robots, PLC’s, conveyors, whatever) are all just means to achieve a business outcome.  At the end of the day, what you really care about are reduced production costs, higher product quality, or greater production capacity.

That is what should be measured, that is what an integrator should be held accountable to.  Define the contract such that the integrator needs to deliver this – regardless of the bits and bytes of what they put into it.  If they missed or under estimated something – it’s their responsibility to do what needs to be done to achieve the business outcome that was agreed upon – period.

OEE (Overall Equipment Effectiveness) is a quantitative method used measure performance and takes into account the three major things in an automation system #1 How fast does it run, #2 The system uptime, and #3 The product quality coming out of it.

Here’s how you calculate it.

OEE = Performance Efficiency * Availability * Yield

Performance Efficiency = How fast does it run

Example – the system is designed to run 100 pieces per minute, the final system as it is installed runs 98 pieces per minute.

PE = 98 ppm/100 ppm * 100% = 98%

Availability = How much time the system runs of the total available time (uptime)

Example – In a week’s worth of production, over 2 shifts (4800 available minutes), the system has 5 minutes of downtime and 20 minutes of changeover.

Availability = (4800 minutes – 5 minutes – 40 minutes) /4800 minutes * 100 % = 99.06%

Yield = Percentage of good widgets made (quality)

Example – 2 defective pieces out of 1000 pieces made

Yield = (1000 pieces – 2 pieces)/1000 pieces * 100% = 99.8%

OEE = PE * Availability * Yield

OEE = 98% * 99.06% * 99.8% = 96.9%

Figure this out up front.  Work with the integrator to agree on what this number needs to be.  Agree on the inputs that are required to achieve this (i.e. the system needs to have good product going into it, if it is going to have good product coming out).   Spending the extra time up front to define and agree on this metric will ensure you get what you really want at the end of the project.

In some upcoming blog posts, I’ll walk through some examples of how to put this together.

I get asked this all the time.  Rough numbers, what does a robot cell cost?  What’s the total cost of ownership?  How do you justify it?  What is the return-on-investment (ROI)?  What is the internal-rate-of-return (IRR)?

Here’s my rules-of-thumb.

Companies automate for a combination of the following 3 reasons:

Reason #1:  To Save Money:

Labor savings is the most obvious reason.  Labor costs range greatly depending on the industry, geography, if it’s a unionized environment, etc.

Typically, labor costs per operator range from a low-end of $20k per year to a high-end of $80k (all-in costs including wages and benefits).  Besides direct labor savings, other benefits of automating often include improved quality, and reduced scrap and re-work.  These costs are often tougher to quantify, but can play a big role in certain applications.

Reason #2:  To Make More Money:

Often I see the existing production equipment either starved or bottle-necked because people aren’t fast enough to load or unload it.  In some cases, a manufacturer could sell more product if they had the capacity to make it.  By using robotics, you can run faster.  This increase in throughput (and revenue) comes at a low cost in relation to new production equipment.  In other instances, manufacturers are outsourcing the overflow production to meet demands.  By automating the loading and unloading, they reduce or eliminate the need to outsource (really back to reason #1).

Reason #3:  Because the Government Tells Them They Have To:

In most cases these are ergonomic issues – stresses and strains from high-speed, repetitive tasks or lifting of heavy objects.  They result in worksman’s compensation, lost time injuries, added rotations through strenuous jobs, etc.  Usually ergonomics doesn’t make or break the business decision to automate, but it can be an important factor.  From my experience, ergonomic costs can range from 5% and 20% of the direct labor costs.

Other times, the risks are more serious than stresses or strains.  Sometimes, the sole motivation is to get people out of hazardous jobs.  A robot is a lot easier to replace than a human life.

What Does a Robot Cell Cost?

A typical, single robot cell is $300k +/-50%.  Obviously, this is an order of magnitude estimate and will vary depending on the complexity of the process, but generally most single-robot systems will fall into this cost range.

This will include:

• Mid-sized Robot
• Robot End-Of-Arm-Tooling or Gripper
• Control panel including PLC, Operator Interface Screen (HMI), safety circuits, motor starters, etc.
• Cell guarding
• Customized engineering for your system to complete the desired process
• Some auxillary equipment – such as conveyors, deburring equipment, etc.
• Fabrication, assembly, setup, runoff at the integrator’s facility
• Shipping to your facility
• Rigging and installation
• Integratation with your existing equipment
• System specific operator and maintenance training

What About On-Going Costs?

Typical costs outside of the main purchase will include – spare parts, yearly service and maintenance, yearly replacement/wear items.

What is the Return-On-Investment (ROI)?

Anything between 12 months and 36 months is a no-brainer.  At a minimum, if you have 2+ shifts of operation and all-in labor costs of $35k per person, you’ve got a strong business case to look at automation.

Below is a link to a spreadsheet that outlines the typical business drivers and system costs.  You can use it as a tool to get a high-level understanding if robotic automation is a fit for you.  Enjoy!!

http://spreadsheets.google.com/ccc?key=0AqIbTF_Xcj00dHRWVVdJbTJ4ZHNaSkV3blFnZWNjY3c&hl=en