Advertise with fastmoving.co.za
 
 

Manufacturers need to ensure that their equipment remains effective and runs optimally at all times.
Manufacturers need to ensure that their equipment remains effective and runs optimally at all times.

Calculating your return on investment

BRAND ACTIVITY

Issued by Pyrotec - Sep 4th 2018, 08:33

In today’s competitive business environment, staying ahead of the game is essential. To do this, manufacturers need to ensure that their equipment remains effective and runs optimally at all times.

The overall performance of machinery and equipment depends on its Overall Equipment Effectiveness (OEE), which refers to a number of factors – the availability of the equipment, its performance rate, and the quality versus reject rate. In other words, each of these OEE factors relates to downtime costs. As we know, downtime is a major hindrance to attaining manufacturing efficiency. It leads to hold-ups in manufacturing processes and creates a cascading effect that disrupts workflow.

All equipment has a limited lifespan, so it is important that when considering purchasing new production machinery that your return on investment (ROI) is based on sound planning.

Terminology

• ROI: a benchmark used to evaluate the gain on an investment in comparison to the initial amount invested.
• Pay Back Period (PBP): an estimate of the number of years needed for the equipment to pay for itself.
• Useful Life: the number of years a piece of equipment can operate.
• Residual Value: the value of the equipment at the end of its useful life.
Purchasing equipment typically needs a large up-front capital investment, and some financial factors will help you to make the decision.

Your ROI is probably the most helpful because it will allow you to compare how one capital investment compares to others. The PBP is also useful because it pinpoints when the equipment will have paid for itself.

The residential value tells you the cash you’ll be able to get back for the equipment when you resell it.

What your ROI means
ROI is the gain from each rand invested. While higher percentages are more desirable, the ideal range is dependent on the equipment.

To calculate ROI: ROI = Net Income/Cost of Investment

PBP is calculated by dividing the cost of the investment by your annual cash flow. This gives you the amount of cash the equipment is expected to generate for the business each year.

Pyrotec Finance helps customers to purchase or replace their coding and labelling equipment. In addition to purchasing new equipment, this includes a rental service, where customers can rent a unit and return the machine at the end of the contract.

Another possibility is financing in the form of a rent-to-own agreement. Customers pay a set monthly fee, depending on the rental period, which includes a maintenance contract. At the end of the rental period, customers have the choice of paying an additional fee to own the printer or trading it in for a new unit.

Straightforward trade-in agreements, where customers simply trade in old printers for new units, are also available.

Click here for more information on Pyrotec 

Related Activity

Fighting the supply chain skills crisis 16
FEB
Fighting the supply chain skills crisis
Reflecting its commitment to tackling the supply chain skills crisis head on, SAPICS, The Professional Body for Supply Chain Management, recently hosted the 11th annual Supply Chain Management Education Excellence Awards. This event recognises individuals, organisations and educators who are going the extra mile to advance and develop the supply chain and operations management profession
Iconic Bull Brand repositions with ‘Inner Strength’14
FEB
Iconic Bull Brand repositions with ‘Inner Strength’
Bull Brand, one of SA’s most iconic food brands, has launched a new bold ‘Inner Strength’ brand repositioning aimed at leveraging the heritage of the brand while finding new relevance for a broader audience.
DHL SA looks to the future with appointment of new MD05
FEB
DHL SA looks to the future with appointment of new MD
DHL has appointed Jed Michaletos as Managing Director of DHL Express South Africa, effective from 14 January 2019. Michaletos is responsible for driving business growth for the company in South Africa, with a strong focus on enhancing customer experience, employee engagement and service quality.
Rhodes Food Group adds new products to Squish Baby Foods range 15
JAN
Rhodes Food Group adds new products to Squish Baby Foods range
Rhodes Food Group, producer of popular convenient baby and toddler food brand Squish, has launched an extended range to its Squish portfolio of 100% fruit and veg purees, and 100% fruit and veg pressed infant juices.

Try these recipes

Chocolate Chilli Steak with Zucchini Noodles12
FEB
Chocolate Chilli Steak with Zucchini Noodles
Because sometimes we can’t wait until dessert to get our chocolate fix…
Minty Italian Kisses12
FEB
Minty Italian Kisses
Perfect dessert for your Valentine's Day dinner in.
Mixed Mushroom Deep Dish Quiche 05
FEB
Mixed Mushroom Deep Dish Quiche
This is not a cheap dish to make, but it is a spectacular meat-free recipe fit for a celebratory lunch or dinner.