How to Determine the Real Value of Technology Investments in Your BusinessHow to Determine the Real Value of Technology Investments in Your Business
Shifting from an immediate cost-centered evaluation of a new technology to its long-term benefits will unlock hidden value and open doors to new business opportunities.
October 20, 2023
Paul K. Steck
Without question, manufacturing and technology have nearly merged seamlessly. You cannot operate a manufacturing operation without embracing and continuing to invest in new and ever-changing technology. But it’s not technology for technology’s sake, by any means. These investments go to the very heart of what every manufacturer needs — and values most.
In today’s dynamic manufacturing environment, businesses continually seek to optimize processes, enhance efficiency, and ultimately maximize value for both themselves and their customers. A crucial aspect of achieving this objective involves shifting from a simplistic cost-centered evaluation of equipment and software to a comprehensive assessment of their intrinsic value and long-term benefits. By doing so, manufacturers can unlock hidden potential, drive innovation, and forge lasting, mutually beneficial relationships with their customers.
The dollars and sense of technology investments
In the ever-evolving manufacturing landscape, value encompasses various dimensions beyond monetary considerations. These dimensions may include enhanced productivity, improved quality, quicker time-to-market, increased flexibility, and the ability to adapt to changing market demands. Therefore, understanding the many advantages offered by an investment in equipment or software is essential for making informed decisions that align with organizational goals, especially those tied to your company’s growth trajectory.
Some of the critical areas to consider as you evaluate potential equipment purchases include productivity enhancement, quality improvement, operational flexibility, and, perhaps most important, research and innovation. This more comprehensive approach to evaluating purchases will pay big dividends in the long run. Let’s examine these briefly.
Critical areas to consider when making technology investments
Productivity enhancement. Investing in high-quality equipment or software can significantly boost productivity. The latest tools often streamline operations, automate repetitive tasks, and reduce human intervention, thereby increasing the overall output and efficiency of the production process.
Quality improvement. Sophisticated manufacturing tools and software can have a direct impact on the quality of the end product. From precision engineering to advanced quality control systems, these assets can enhance product consistency, reduce defects, and contribute to an improved brand reputation
Operational flexibility. Manufacturing landscapes are evolving, and businesses need to be agile to meet market demands. Versatile equipment and software can offer adaptability in operations, enabling manufacturers to shift production focus, modify designs, or swiftly scale operations up or down
Innovation and research. Cutting-edge technology encourages innovation by allowing manufacturers to experiment with new ideas, processes, and products. It facilitates research and development, leading to the creation of innovative solutions that can drive a competitive edge in the market.
Let’s not lose sight of the ultimate goal — customer satisfaction. Wise investments in the right technology at the right time can result in consistently delivering high-quality products on time, made possible by these assets, which strengthens customer relationships and builds a loyal customer base.
A path to greater profitability
Often, companies will need to purchase hardware and/or software to win a specific new customer or to satisfy the demands of a current customer. However, evaluating every single equipment purchase simply on the basis of winning or retaining that particular business is shortchanging your company, the equipment purchase’s true value, and your customer base. Instead, consider that purchase as a door-opener that will lead you to more new customers, new verticals, and, ultimately, to greater profitability.
Beyond that, the secondary benefits, of course, include the ability to amortize the purchase over time and potentially sell, trade up, or donate the equipment. You may also be eligible to request federal and possibly state R&D tax credits. Finally, consider the added potential of expanding your bench with new hires that bring new skills to the company, as well as possible state grants for training new and existing employees on the new technology.
About the author
Paul K. Steck is the president of Exothermic Molding Inc., a third-generation, family-owned specialty plastics manufacturer in Kenilworth, NJ, serving a variety of verticals including healthcare, laboratory sciences, and defense.
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