Pilot on one process
When it may fit: Savings are uncertain.
Evidence needed: Pilot design and metrics.
Trade-off: A pilot may not scale.
Manufacturing Intelligence Brief
How to Compare Automation Investment Scenarios
Automation trades capital for labor and sometimes for quality. The case holds when the savings are real, the equipment is used enough and the plant can absorb the change.
1. The business problem
Will automating this process pay for itself?
Automation can cut labor, improve consistency and reduce scrap, but it is also costly, takes time to commission and often brings new maintenance needs. The savings promised often depend on assumptions that are not tested.
Comparing scenarios side by side, with a range of outcomes, shows how sensitive the case is. This is a framework for comparing scenarios, not an investment recommendation.
2. What the evidence can reveal
An automation case needs a few numbers:
- Calculated Labor cost and hours in the process to be automated.
- Calculated Expected savings in labor, scrap and rework, with a low, medium and high case.
- Calculated Full cost: equipment, installation, training, maintenance and downtime during changeover.
- Information gap Volume stability, product variety and the plant’s ability to maintain the equipment.
Automation pays best on stable, high-volume work and least on varied, low-volume work.
3. Investigate the problem
In the synthetic plant, Calculated direct labor cost $13.2M a year, up 10.9%, and scrap and rework cost $3.10M, up 34.8%. Those are the two lines automation would aim at.
Illustrative An invented comparison: a $9 million automation project, depreciated over 8 years with $300,000 a year of upkeep, costs about $1.4 million a year ($1.125 million plus $300,000). If it cut direct labor by 15%, the savings of about $2.0 million would net about $0.6 million a year. At 20%, savings of about $2.6 million would net about $1.2 million. At 25%, about $3.3 million would net about $1.9 million. The case is sensitive to the size of the labor saving, which is the least certain number.
Calculated The scenario shows a smaller, cheaper lever: a 20% cut in scrap and rework is worth about $620,000 a year ($31K per 1%), with no equipment. Hypothesis A plant should check what process improvement can deliver before committing to automation. Information gap Product variety, volumes and equipment costs are not in the demo, and they decide whether automation fits.
4. Explore the interactive experience
Investigate it yourself.
Manufacturing Performance Dashboard: a product-line dashboard with downtime and scrap, a scenario simulator for volume, price, materials and scrap, evidence-linked answers from APIS, and a sample brief, all on synthetic data.
The experience below is built on a synthetic manufacturer, “Demo Components Inc.,” analyzed by product line. It has no equipment, capital-cost, quote or supplier data, so it is used to show the operating economics that a capital decision depends on. Nothing in it is real, and nothing in it is an investment recommendation.
- In the Scenario tab, the preset cuts scrap and rework by 20%. Note the profit effect.
- Compare it with the net savings in the illustration.
- Ask APIS how scrap and rework affect profit.
5. Evaluate possible solutions
Automation decisions benefit from low, medium and high cases and a pilot.
6. What leadership should do next
Questions to answer
- How much labor and scrap is in the process?
- What range of savings is realistic?
- What does it cost in total?
- Can we support it?
Data to gather
- Labor and scrap by process
- Vendor quotes
- Volume forecast
- Maintenance plan
Steps to take
- Build low, medium and high cases.
- Pilot.
- Compare to non-capital fixes.
- Decide.
7. Engage Two Pillars
Identify Opportunities Across Production, Costs, and Capacity
Two Pillars can help manufacturers investigate production performance, cost structure, inventory and capital investment decisions using your own plant data. A good first step is an automation case with low, medium and high scenarios, compared against lower-cost process fixes.
Sources and data notes
- The organization, its figures, and every number in this article and its interactive experience are synthetic and illustrative. They are not real data, a benchmark, or a forecast.
- Reviewed October 2026. This article describes an approach to investigation. It does not replace review by qualified professionals, and it is not legal, tax or financial advice.