Do not look at this as simply an investment. An investment in new technology is not equivalent to an investment in capital goods. In fact, an investment in capital goods is based on what you need, and not what you want. On the other hand, a decision to invest in new CNC technology should be driven by the recognition of a need to improve the operations of your organization and increase process efficiency. The drive should not be instead based on the accessibility of funds or the attractiveness of the demonstration.
Once you have recognized the need to improve operations, you need to observe your additional costs that are resulted from the present process. At this moment, your firm is manufacturing without this new machine or technology. Not making an investment does not mean you are necessarily saving money. The correlation is not that simple. You are most likely already spending this money on the plant floor. Since you are used to these costs, and at often times, they are indirect costs and/or costs paid in small increments rather than one lump sum, they go unnoticed. These are called hidden costs. Usually these costs are associated to additional labour, quality assurance and control, wasted material, and excess inventory. They may be hidden in your pay cheques handed out every other week, the electricity bill, the costs for rejected products, the costs for adjusting quality concerns, or the higher price you pay for raw materials. As you can see, not investing also has a price tag.
Now you may be concerned with the additional expenses of implementing the new investment into your operations. Of course, the installation of CNC equipment consists of financing and paying additional expenses. The additional revenue is what covers these costs in no time. Arax Mechanical invested in MultiCam’s V-Series CNC Plasma machine for their production facility. They found that the machine saved them both time and money:
“The V-Series CNC Plasma machine is currently cutting our labour time down by 30% and our scrap metal by 40%, in turn saving us money.” – Vince Sarkissian, Arax Mechanical
Sometimes the hesitation is not on investing in new technology because you do not need it, but because you already have an older one. Although its capabilities are deteriorating with its age, you believe the price of a new one is more than you can afford. At this point, it is pivotal to realize the amount of additional activities that you invest in order to maintain the quality of your product because the machine cannot do it. The straight labour costs for this non-value-added activity can probably amount to the cover for monthly lease payments of a new machine. Now consider the savings you make after the machine is paid. Finally, do not fail to realize the competitive edge new technology provides you. Your older equipment does not level off with the precision, quality, and speed of the updated machinery. To compete, you would have to work twice as hard and the computed benefits will not meet your margins.
Price has always been a driver of organizational decision-making in terms of investments. As efficiency-focused operators, you need to be prepared to take a better look at your every day processes, and remember to keep the big picture in mind. It is easy to hold on to the way you do things now since you have done it the same for years, even though you realize it is inefficient and costs you money. It is the step you take beyond realization that will actually save you money. Ask yourself, “Can I afford to NOT invest in new technology?”