Manufacturing analytics can help manufacturers make informed decisions, improve productivity, and reduce costs. However, it is essential to understand the costs involved before implementing manufacturing analytics. Measuring the costs of implementing manufacturing analytics involves identifying the goals of the analytics solution, determining the required infrastructure and resources, calculating the initial investment, estimating the benefits, and calculating the return on investment.
Whether you are a small manufacturer or a large enterprise, understanding the costs of implementing manufacturing analytics is crucial to realizing its potential benefits. Here are some of the factors you must consider while calculating the costs of implementing manufacturing analytics.
Identify the Goals of Implementing Manufacturing Analytics
The first step in measuring the costs of implementing manufacturing analytics is to identify the goals of implementing the analytics solution. By understanding what you hope to achieve through the implementation of manufacturing analytics, you can develop a clear understanding of the costs involved.
For example, invest in sensors and software that can track production processes in real-time to improve productivity. On the other hand, to improve quality control, you may need to invest in software that can analyze data from various sources, including production processes, suppliers, and customers.
Determine the Required Infrastructure and Resources
Manufacturing analytics require specific infrastructure and resources, including hardware, software, and human resources. You need to determine the infrastructure and resources required to implement manufacturing analytics.
For example, you may need to invest in hardware such as sensors, servers, and storage devices to implement manufacturing analytics. You may also need to invest in software such as data analytics platforms and visualization tools. Additionally, you may need to hire or train employees with the skills to manage and analyze data.
Calculate the Initial Investment
The initial investment includes the cost of acquiring hardware and software, setting up the infrastructure, and training human resources. You need to calculate the initial investment required to implement manufacturing analytics.
For example, the cost of hardware and software may depend on the scale of your operations and the complexity of the analytics solution. You can implement manufacturing analytics using off-the-shelf software and hardware if you are a small manufacturer. However, if you have a more extensive operation with more complex requirements, you may need to invest in custom software and hardware. The cost of training human resources may depend on your employees’ existing skill set and the analytics solution’s complexity. For example, if you already have employees with data analysis skills, you can train them to use the new analytics solution. However, if you need employees with the required skills, you may need to hire new employees or outsource the training to a third-party provider.
Determine the Ongoing Costs
The ongoing costs include maintaining the infrastructure, upgrading software, and training employees. You need to determine the ongoing expenses required to maintain manufacturing analytics.
For example, the cost of maintaining the infrastructure may depend on your organization’s size and the analytics solution’s complexity. As your organization grows, you may need additional hardware or software to support the analytics solution. Additionally, you may need to allocate resources to monitor and troubleshoot any issues with the analytics solution. The cost of upgrading software may depend on the frequency of updates and the complexity of the analytics solution. Some software may require updates to fix bugs or add new features, which may incur additional costs. The cost of training employees may depend on the turnover rate and the complexity of the analytics solution. As employees leave or new employees are hired, you may need to allocate resources to train them on effectively using the analytics solution.
Estimate the Benefits
The benefits of implementing manufacturing analytics include increased productivity, improved quality, reduced costs, and better decision-making. You need to estimate the benefits to determine the return on investment.
For example, if you invest in manufacturing analytics to improve quality control, you can reduce the number of defective products and enhance customer satisfaction. If you invest in manufacturing analytics to improve productivity, you can increase the number of products produced daily, leading to increased revenue.
Calculate the Return on Investment
Calculating the return on investment will help you determine whether implementing manufacturing analytics is financially viable.
For example, if the initial investment in manufacturing analytics is $100,000, and the estimated benefits are $150,000 over the next year, the return on investment would be 50% (($150,000 – $100,000) / $100,000). This would suggest that the investment in manufacturing analytics is financially viable and that the benefits outweigh the costs.
Measuring the costs of implementing manufacturing analytics is critical to making an informed decision about its implementation. By analyzing costs carefully, you can determine whether investing in manufacturing analytics is financially viable for your organization. Although implementing manufacturing analytics may require an initial investment, the benefits of improved decision-making, increased productivity, and reduced costs can significantly outweigh the costs in the long run.