Use our handy Return On Investment (ROI)
Guide to see what you will save when you use a High-Speed Digital Video Camera System!

Calculating Return on Investment (ROI)
There is no mystery to Return on Investment. Return on Investment is an important metric that finance people use to help establish the value of a purchase or investment. Building an ROI case is usually required for many purchases of equipment.

ROI simply establishes the length of time it takes for the money saved by making the purchase to equal the money spent on the purchase, or:



It makes sense, but how do you determine the amount you save per year? A
good strategy is to not worry about every single way that TroubleShooter high-speed digital video camera can save you money, just pick a few of the major factors that will be influenced to make your case. Two of the biggest for most assembly lines are Increased Production Value and Reduced Scrap Value.

Increased Production Value
Increased Production Value, or Increased Production Capacity results because you can fine-tune your production equipment to operate more smoothly. By reducing the amount of dwell time between operations, line speeds can often be increased. Increased line speed translates to higher output for your shift.



Reduced Scrap Value
Reduced Scrap Value can be especially important in high-volume production environments where direct material costs are a major variable cost. When manufacturing processes get out of control, common trial and error solutions typically prolong the time needed to correct the process. The result is high wastage and repair costs.


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Use these charts above to calculate ROI in this way:

Assume that your Annual Direct Material Cost is $1Million per year. If you successfully reduce wastage by 1% with your TroubleShooter high-speed digital camera, then you have saved $10,000 per year. Now, if your Annual Production Value is $5Million, and you increase production by 1% with your TroubleShooter high-speed video camera, you have “saved” $50,000 per year (even though you actually didn’t “save” $50,000, it is still money for goods that your line would not have produced, so for this equation it is “saved”).

What is a good ROI that will prove your case?
The answer varies from company to company depending on a company’s financial practices and strategies. Factors can include the budgetary allocation used to purchase your TroubleShooter digital camera, the way that your TroubleShooter is amortized over it’s expected life, and the total cost of your TroubleShooter. An important thing to remember is that an ROI value that is too small (“we’ll achieve ROI tomorrow around lunchtime”) can be as much trouble as a number that is too large, because it is difficult to believe. You can usually find out your company’s ROI strategy by asking senior management. For a purchase like TroubleShooter in a manufacturing environment, ROI numbers under 6 months are often well received.
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Figuring the material savings factor.
You know what your material costs are, and you know what your line’s production value is, but you can’t know how much you will save in material costs or increased production until you actually get TroubleShooter high-speed camera and use it. The answer to this is that you must make some reasonable guesses based on your experience. You may wish to do a business case analysis, using worst case, middle case, and best case. Suppose your annual direct material costs are $1Million, and you want to set a 0.5% scrap reduction as your worst case. That’s not on the chart, so you calculate it:

$1,000,000 x 0.005 = $5,000

For this example, pick 1% as your middle case, and 3% as your best case, with cost savings of $10,000 and $20,000 respectively. For savings on increased production values, assuming for this example a production value of $5Million, you calculate your worst case at 0.5%: