One of the main handicaps of engineering projects for industrial companies is the depreciation valuation.
In recent years, many companies have tried to amortize engineering and industrial automation projects in a shorter period than that established before 2008, with the onset of the crisis. On average, considering differences between companies and sectors, organizations now amortize projects over two years instead of the previous five.
The reduction in payback time has affected not only the financial aspect but also the scope of the project itself. Organizations often scale down projects, implementing only 20%–40% of the total potential possibilities or functionalities, rather than executing everything that could be done.
Although it may seem logical at the outset to reduce the repayment term and scope, in reality these conditions negatively affect results.
But, what should we take into account to properly assess an industrial automation and quality improvement project?
- The reduction of costs, such as supplies and energy, or regular or occasional maintenance costs. In this sense, automation allows predictivemaintenance, which translates into higher profitability.
- Forecast growth, customer forecast and market trends. Whenever possible, organizations must involve the relevant departments in project planning, considering not only current or short-term needs but also medium- and long-term forecasts. If growth or unforeseen changes occur later, they will have to complete the project using parts of the initial plan that were previously discarded, which is more expensive, less profitable, and may not even be feasible. Therefore, the initial amortization that the company raises is not real, because it is not customary to maintain the amount over time. In the face of changes, we often have the possibility to reorient the project or adapt the machinery, but it has an extra cost not foreseen in the initial planning.
- Quality improvement. This factor is often more difficult to assess, as it is more difficult to quantify. But the improvement in quality translates into better production performance (fewer errors, less wasted production, less time to solve problems …) and an optimization of customer flow (we do not lose customers due to production problems, and we can access new customers who ask for higher quality standards).
Another point
Another point to value is the fact that continuous improvement should be a constant objective, since it is essential for the survival, competitiveness and growth of companies.
In short, depreciation directly and indirectly affects production, and organizations must evaluate these effects globally. At the same time, companies should plan projects in detail, taking forecasts into account at least in the medium term.
Prepare budgets with foresight
Although it seems obvious, companies sometimes create annual investment budgets based only on the information they have at the time. They often overlook needs that arise during the year, and if the budget does not cover these new requirements, the company must wait until the next period to address them.
It is therefore important to speak with the departments of the company that may have this information, such as the commercial department or marketing and sales, to plan budgets taking into account the forecasts.
Know what the sector and the competition are doing
In order to be proactive and forward-looking we need knowledge. That is, to know what the sector and the competition are doing, and what the market trends will be.
This information is not easy to obtain, especially one that is of quality. In this regard, your engineering team becomes a valuable ally: it knows what they have done for other clients in the sector, what solutions they are implementing, and what clients have requested for their projects. We are not saying that they have to give you confidential information about others Clients, of course, but they can guide and advise you from an internal knowledge of the sector that is difficult to match, since they know what the sector is asking of them.
In addition, based on this knowledge, they can help you define the axis of your competitive advantage: Cost or flexibility, how do you want to differentiate yourself? This choice will define your investments.
In short, proactivity and foresight will help you make much better use of your investments in industrial automation, and for this you need knowledge of the market and the competition. On this last point, your engineering can advise you from a privileged position in the sector.Looking for best Chemical reactor manufacturer in Delhi? Stalwart is the best option for you.