Life Cycle Cost Analysis in the Swedish Automation Industry : A Case Study for developing a Total Cost of Ownership Model for Industrial Robots

Abstract: Automation plays an important role when dealing with changes caused by globalization. The introduction of industrial robots is widely seen as an effective strategy against rising competition and outsourcing to low-cost countries. With the launch of amongst other the “Industrie 4.0” initiative, automation has been put into focus more than ever before and it is seen as the future way of production. Although the investment decisions for industrial robots are quite complex, the final purchasing decision is often only based on the initial offering. Procurement decisions based only the initial price are often poor decisions since they do not consider the hidden costs such as maintenance costs or energy consumption. A far better alternative is to calculate the total cost of ownership (TCO) of industrial robots and use this as the fundament in the decision making process. The TCO incorporates all costs from acquisition to the disposal of the industrial robot cell.   The study develops, based on a TCO and total value of ownership (TVO) model for industrial robots, an operational template, which can be used in the sales process. By applying the case study research methodology, the model is developed based on a literature review as well as on expert knowledge from employees of Yaskawa Nordic AB (YNR). Qualitative and quantitate data is gathered at two customer companies and the most crucial factors are identified in order to create a simple, operational template. As most important factors, operators’ wages, spare parts and energy consumptions have been identified. However, while the development of a general model is accomplished in a satisfying way, the realization of the template is hindered due to too few available data. The study shows that many companies cannot control the costs, which are created by their automation equipment. This leads to the conclusion that with further implementation of tools for “Industrie 4.0” the model and template can be revised allowing far more precise TCO/TVO calculations.