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Why Your New Conveyor Equipment Isn't Delivering ROI
Why Your New Conveyor Equipment Isn't Delivering ROI
Your plant just invested in new conveyor systems, upgraded pallet jacks, or installed material handling equipment. The vendor promised 30% productivity gains. Six months later, you're still waiting to see those numbers.
Northeast Ohio manufacturers are bright and optimistic - we have to be. But too many Aurora, Solon, Twinsburg, Streetsboro, and Hudson plants have shelled out thousands on equipment and missed out on the promises and productivity gains that got them hooked. Sometimes by missing the bigger picture.
The Real Problem Isn't Your Equipment
The Real Problem Isn't Your Equipment
Equipment vendors sell you the hardware. But who redesigns your processes around it?
Thousands of dollars in new equipment and conveyance systems can become hindrances when the workflow feeding into them stays broken. New carts and trolleys clutter aisles because the material handling process still creates bottlenecks three stations upstream. Fancy, automated systems produce at the same old manual rate because nobody addressed the human elements.
The vendors don't redesign your processes, retrain your operators, or eliminate the waste patterns that existed before installation.
One plant had brand new equipment but operators were still spending 10+ minutes searching for every component. The unofficial policy was: "Search for 30 minutes, then ask for help. If you still can't find it after another 30 minutes, get the lead involved."
The bottleneck wasn't the machinery – it was a complete lack of organization and material flow. A systematic part identification and shelving system took that facility from near-bankruptcy to $954,000 weekly revenue. Nothing flashy, but no amount of "try harder, everybody!" pep talks were making a difference.
The question isn't whether your equipment can run faster. It's whether your processes can feed it properly.
Looking for an answer?
Looking for an answer?
Contact me for same day analysis if you'd like to just make sure there aren't any costly miscalculations in your Equipment ROI analysis.
What to Watch For
What to Watch For
Avoid backwards ROI - like rearranging your whole factory at a cost of $30,000 (labor, disruption, opportunity cost of lost throughput, equipment) or a huge new $170,000 machine - for an inconsequential labor savings of $15/day. People do a lot of financial gymnastics, and it can get companies in trouble.
But also don't neglect spending $40,000 on a machine if it could enable $30,000 additional profit next month!
Lastly don't extrapolate your time savings or new throughput from a project at one workstation onto your whole factory. What do I mean by that?
By speeding up the loading and unloading of one machine by around 80%-90% (a very good project! I'm a huge fan of the outcome), a group of engineers somehow calculated a savings of $1.2 Million per year.
If the two operators were being paid 1.2 Million dollars, this would make sense. Unfortunately, this machine was a small blip on the sequential routing and not even a blip in the manufacturing critical path.
This annualized cost savings miscalculation comes from introducing a universal fixture holding plate to be used in a machine that is only manned about half of the day on first shift and less than half on 2nd.
The operators are paid $17 per hour. By my understanding the true annual savings could be, at most, $35,000 if the operation was completely eliminated.
This does not speed up the production rate of the FACTORY by 80%-90% and we can't just claim dollars out of the universe.
The actual savings for this project is about 5 labor hours per day. So it's absolutely impactful and important but don't hurt your credibility or budgetary expectations with some insane number from outer space.
I've seen all of these mistakes and would love to help area companies avoid them, for the good of all manufacturers throughout Cleveland and across Northeast Ohio.
Process Optimization Drives Equipment ROI
Process Optimization Drives Equipment ROI
The missing piece is often the same: process optimization AROUND the new investment.
Before you buy more equipment, ask these questions. Do your operators know the optimal material presentation for the new systems? Have you eliminated the upstream bottlenecks that will limit your new equipment's throughput? Did you redesign job sequences and staffing levels to match your equipment's capabilities?
Most importantly: did you measure the baseline performance correctly, or are you comparing new equipment performance against flawed assumptions about your old processes?
Northeast Ohio Equipment ROI Consulting
Northeast Ohio Equipment ROI Consulting
I help Northeast Ohio manufacturers extract full ROI from equipment investments through systematic process redesign. Free plant walkthrough analysis available for facilities in Chagrin Falls, Bainbridge, Solon, Aurora, Twinsburg, Hudson, and Streetsboro.
Bottom Line:
Bottom Line:
Equipment isn't the answer. Creativity before capital. Everything must work together. Equipment is only as good as the system around it.
Equipment isn't the answer. Creativity before capital. Everything must work together. Equipment is only as good as the system around it.
A new conveyor or a fancy Creform Cart or a set of bins might become one component within a well-planned system. Or they can just be window dressing set to disguise an insane and convoluted production process.
A new conveyor or a fancy Creform Cart or a set of bins might become one component within a well-planned system. Or they can just be window dressing set to disguise an insane and convoluted production process.
Let's build the system that makes your investment pay off. Free Walkthrough Analysis
A new conveyor is great for keeping heavy items off the ground. But remember, equipment doesn't save money.
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