An industrial slicer will provide your food processing line with many advantages, such as reduced labor, increased yields, and decreased waste. When it comes to determining the ROI of a slicer, what
An industrial slicer will provide your food processing line with many advantages, such as reduced labor, increased yields, and decreased waste. When it comes to determining the ROI of a slicer, what exactly should you consider?
Production rates, labor, and waste are just a few of the many factors that will determine the return on invested capital. Read on to learn more about calculating industrial slicer machine ROI to make a more informed buying decision.
The Importance of Calculating Industrial Slicer Machine ROI
Whether you’re an established processing company or looking to upgrade from manual or tabletop slicing, taking the time to calculate the ROI will allow you to determine if the capital investment makes sense for your company.
Crunching the numbers will also provide valuable insights into which areas of your business require improvement to help ensure healthy growth.
Calculate Machine Total Cost
When determining the ROI of an industrial slicer machine, you’ll need to look further than the initial price tag. Instead, start with the total cost of ownership, which includes:
- Machine purchase price
- Freight to your facility
- Installation cost
- Technical service (planned or emergency)
- Aftermarket parts and maintenance
Calculate Existing Costs
Once you know the total lifetime cost of the industrial slicer machine, it’s now time to look at current expenses, such as:
- Labor—There can be many different cost considerations when it comes to your labor. Consider not only the wages of your workers, but also benefits, insurance, and 401k matches. These can all have a drastic impact on your bottom line.
- Process—Consider your processes. For example, using pre-sliced products will add to the overall cost. Processing time and production rates (both current and potential) can also affect your ROI.
- Product-dependent—Each product has its associated costs that include waste/scraps, giveaway (extra product in too big slices), and rework time/cost. More expensive ingredients coupled with shoddier performance means your rework time and cost will add up very quickly.
Calculate Future Opportunities
How much new business could you add with a new industrial slicer machine? How much more could you produce?
Evaluate the Equipment Manufacturer
Carefully consider the level of service and reputation that you’ll get from the equipment manufacturer—this could dramatically increase or decrease the total lifetime cost.
When calculating the ROI, try to determine the answers to the following questions:
- Does the manufacturer offer support over the entire lifespan of their machines?
- How knowledgeable are they about the equipment and your needs?
- How large is their parts department, and how quickly can they ship a part to you in a maintenance emergency?
- What installation and training support is available? Does it require an onsite visit or are documentation or virtual tools available?
- Can you send your products to the manufacturer for them to demo machines replicating your exact operating conditions?
There are a few other considerations to consider when looking at the ROI of an industrial slicer:
- Production rate—Current and potential
- Operation—How easy is the machine to use and train on?
- Functionality—Do you require one application or multiple? Are you bulk slicing, shingling or stacking, or applying slices on a sandwich, pizza crust, tray, or screen?
- Integration—How easily will it fit into your existing line/process? Is it modular, easily movable, does it cantilever over your current belt or have one built-in, available in left and right hand, how much space does it require, how many operators?
- Maintenance and sanitation—Frequency, parts needed, downtime, training? Does the machine have a sanitary design (tool-less, fast changeouts, washdown rated, open frame)?
- Durability—Can the slicer run for a long time and over days/weeks with no issues?
Interpreting Your Industrial Slicer Machine ROI Calculation Results
Once you have the complete picture in front of you, you can now answer the important questions. Use the following formula to determine the potential ROI or payback period:
ROI = (Profit / Cost of Investment) x 100
Payback Period = Initial Investment / Yearly Cash Flow
Once you know your ROI and payback period, you’ll be better able to answer the following questions:
- What’s the profitability of this slicer?
- When will we realize payback? Is it within two years?
- Should we purchase now or at a later date?
- Will the new slicer provide a net gain or loss?
Be sure to double-check your math and numbers—the validity of your calculations is only as good as the data used. Ballpark numbers will produce ballpark results.
Grote Industrial Slicer Machines
Carefully calculating the ROI of an industrial slicer machine will ensure that you’re making an informed buying decision. If you’re still unsure whether the ROI is there, give the experts at Grote a call. We’ll go over your numbers and provide you with our expert opinion.
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