Understanding the Return on Investment (ROI) for a conveyor system is crucial before making a capital expenditure. A proper ROI assessment reveals how fast the system pays for itself through labor savings, increased throughput, energy efficiency, and more.
Let’s break down how to calculate ROI with formulas, examples, and key considerations.
ROI Calculation Formula
To evaluate ROI:
ROI (%) = (Total Benefits−Total CostTotal Cost)×100\left( \frac{\text{Total Benefits} – \text{Total Cost}}{\text{Total Cost}} \right) \times 100(Total CostTotal Benefits−Total Cost)×100
Or for Payback Period (years): Payback Period=Total CostAnnual Savings or Profit\text{Payback Period} = \frac{\text{Total Cost}}{\text{Annual Savings or Profit}}Payback Period=Annual Savings or ProfitTotal Cost
Step-by-Step ROI Calculation
Step 1: Identify the Total Investment Cost
Include:
- Conveyor equipment (belt, motors, rollers, VFDs)
- Installation and commissioning
- Automation/control systems (PLC, sensors, HMI)
- Electrical, civil work, training
- Maintenance tools or spare kits
Example:
- Conveyor system + installation: ₹8,00,000
- Setup & maintenance: ₹50,000
- Total Cost = ₹8,50,000
Step 2: Estimate Annual Savings or Benefits
Consider benefits such as:
- Labor reduction (e.g., 2 operators × ₹20,000/month = ₹2,40,000/year)
- Energy savings: ₹30,000/year (from efficient motors)
- Reduced product damage: ₹30,000/year
Total Annual Benefit = ₹3,00,000
Step 3: Calculate ROI
ROI=(₹3,00,000−₹8,50,000₹8,50,000)×100=−64.7% (Year 1)ROI = \left( \frac{₹3,00,000 – ₹8,50,000}{₹8,50,000} \right) \times 100 = -64.7\% \text{ (Year 1)}ROI=(₹8,50,000₹3,00,000−₹8,50,000)×100=−64.7% (Year 1) Payback Period=₹8,50,000₹3,00,000≈2.83 years\text{Payback Period} = \frac{₹8,50,000}{₹3,00,000} \approx 2.83 \text{ years}Payback Period=₹3,00,000₹8,50,000≈2.83 years
Factors to Consider in Conveyor ROI
| Cost Side (Investment) | Benefit Side (Savings/Revenue) |
|---|---|
| Purchase, install, training | Labor cost savings |
| PLC, sensors, automation systems | Higher production throughput |
| Civil/electrical infrastructure | Fewer rejects and product damage |
| Spare parts, service contracts | Reduced machine downtime |
| Safety & compliance upgrades | Lower workplace injury or manual error costs |
Real-Life Application Example
Scenario: A medium-sized packaging facility replaces manual trolley transport with an automated roller conveyor.
- Manual labor savings: ₹2,00,000/year
- Throughput increase (more units shipped): ₹1,00,000/year
- Investment: ₹7,50,000
Boosting Your Conveyor ROI
To further improve ROI:
- Use energy-efficient motors with VFDs
- Integrate smart sensors for predictive maintenance
- Automate loading/unloading to reduce idle time
- Select modular systems for scalability