How to Develop a Winning Business Case for Manufacturing Capital Requests
You know that your company needs to explore automation. You have identified process opportunities that are ripe for an automation project. Your company wants to hear more about how automation provides a competitive edge. Or, how automation can help the organization meet key objectives. What’s the big question you should answer before moving forward?
What return can you expect on your investment?
Are you able to write a winning business case? You will need to write one if you want to launch your project and introduce new technologies to your organization. This may sound simple but writing a winning business case requires a thoughtful approach. There is no “one size fits all” strategy for writing a business case. Each company is different. We will outline tips for giving your business case the best chance for winning over the decision-makers at your facility.
1. Start with explaining the benefits of the project
Your project must solve a business problem for your company. There are common reasons for automation implementation.
- To remove manual operations and as a result reduce per unit labor costs
- To improve safety by eliminating poorly designed and unsafe operations or workstations
- To optimize utilization rates and improve quality
- To decrease lead time and increase throughput which positively affects product sales.
Does your project address these reasons? Or is there a problem specific to your business that needs resolution?
2. Accurately develop the project ROI (Return on Investment)
The ROI is the “heart” of the business case. How will you measure the impact that your automation project has on your company’s costs? How can you meet the ROI requirements for your organization? A3Automation.org describes six areas to think about when writing your ROI.
- Long Term Planning: How many years can you expect to benefit from the automation project?
- Operational Costs: How much does it cost to run the automation vs. the manual labor costs?
- Training Costs: Consider the initial downtime while operators and support teams are training.
- Performance: How will automation reduce error or save the company money by reducing resource costs?
- Ease of Use: Will your automation project be user friendly? Will savings come from the elimination of external or highly compensated internal specialists?
- Competitive Growth: Does the automation project allow your company to take part in a new market or offer a new product line?
3. Speak the language of the team that will approve the project capital case
Decision-maker teams have many members. All have different job descriptions and points of view. What's important to the Engineering Manager, Purchasing Manager, Quality Manager or General Manager? Your business case should describe the overall benefit to the organization. Also, your business case should provide each team member with benefits that they can support. For example, will your project result in decreased MRO inventory due to standardization? That is something your Purchasing Manager will see as a win. Will your project collect quality data that decreases the need for manual entry from the quality team? There’s a win for quality. You get the point.
4. Finally, consider the operational value
What are the operational benefits to your manufacturing process? Does your manufacturing automation project increase uptime? Does the project include industrial equipment that self-adjusts based on data collected? Can the equipment predict the need for preventive maintenance? If the answer to any or all these questions is yes, make sure to include the cost savings going forward.
These four recommendations provide a foundation for building your manufacturing automation business case. But this list is not all-compassing. You will discover what it takes to get your project approved as you gain more experience.
Do you need a partner to help you write the business case for your manufacturing automation project? Consider an experienced consultant that can help in writing a winning business case. Contact KM Shinn Consulting to discover how we can assist you. We want to help.