You are a package printer, considering an investment in an ink dispensing system. To evaluate your investment, you have to understand how to calculate Return on Investment (ROI). In this piece, we will discuss the basics of ROI and how to use it in your investment decision.
The ROI formula is simple – you substract the cost from the gains of an investment, then divide the total by the cost of the investment. Or:
ROI = (Gains – Cost)/Cost
When usingto compare , it is important to use the same inputs to get an accurate comparison.
The list of major gains of your capital investment in a dispensing system is as follows:
- lower ink prices
- lower transport costs
- less ink consumption
- less ink and substrate waste at job change
- lower stock of base inks and return inks
- reduced ink containers and discharging costs
- fewer indirect tasks
1. Lower ink prices
- By purchasing basic inks in bulk instead of ordering ready mixed inks, you can negotiate better ink prices with your ink supplier
- Since you add more value yourself (by mixing your own colors), you eliminate import duties and taxes on ready-mixed inks
An example of a label printer
Assume a label printer has a 4,000 kg yearly ink consumption and buys UV flexo ink at an average price of € 25 per kg. Bulk purchasing will save approx. € 8 euro per kg, totalling € 32,000 per year.
2. Lower transport costs
- Deliveries by the ink supplier of base components instead of small batches of ready-mixed colors
- E.g. 50x200L barrels instead of 500x20L buckets
3. Less ink consumption
- Dispense the right quantity at the right time, instead of ordering excess amounts of ready-mixed inks at the ink supplier “just in case”
- Press return inks which you cannot avoid will be reused or recycled, resulting in a reduction of ink consumption
An example of a label printer – continued
Assume that the label printer reduces ink consumption by 15%, by reusing and recycling returns. This will result in a saving of 15 % of 4,000 kg x € 17 per kg, amounting to € 10,200 on a yearly basis.
4. Less ink and substrate waste at job change
- With an automatic ink dispenser, delivery of inks to the press will be first-time-right, minimising the waste of inks and substrate
5. Lower stock of base inks and return inks
- You can mix all required colours out of a limited number of base colours, eliminating inventory of ready-mixed inks
- A dispensing system facilitates the reuse and recycle of press return inks, resulting in a lower return ink stock
- Managing your stocks of fresh inks and return inks is easy with IMS ink management software
6. Reduced ink containers and discharging costs
- With an ink dispenser, inks will be delivered in larger packaging (e.g. drums instead of buckets)
- This will save the container costs, as well as the costs of discharging polluted packaging
7. Fewer indirect tasks
- Fewer shipments, less handling and less carrying of inks
- Installing a dispensing system in the vicinity of the printing press eliminates movement of ready-mixed colours from the warehouse
- Fewer purchase orders and administrative tasks
An example of a label printer – continued
Before investing in a dispenser, the printer placed purchase orders of ready-mixed colors per print run. A job for 8 print positions was 8 x 5 kg = 40 kg. By investing in a dispenser, the printer places only one monthly order for all printing requirements (4,000 / 12 = 334 kg), resulting in 12 purchase orders per year instead of 100. Assume that each purchase order will take appr. 1 hour work, costing the business € 30. Overall administrative savings to the business are (100 – 12) x € 30 = € 2,640 per year.
When it comes to costs, you should consider the capital costs as well as operating costs.
Capital costs consist of the dispensing system, including transport, installation and training as well as the costs to prepare the ink room (infrastructure, electricity and air supply).
Operating costs are the costs of operating, cleaning and maintaining the system. Major influencing factors:
- operating: the systems’ dispensing speed and desired accuracy; user-friendliness and functionality of the ink management software; how easy it is to change base inks (e.g. easy-to-exchange drum modules).
- cleaning: dripless valve design, valve cleaning system and a stainless steel dispensing area.
- maintainance: modular system design, easy accessibility to key technical components and (remote) assistance by the equipment supplier.
CALCULATING THE FORMULA
Calculating the ROI of your investment depends on your typical business situation, print operation, substrate and applied ink technology. We hope that we have provided some insights to calculate savings that you can attain by investing in an ink dispenser. Please contact us to help you make the right investment decision to boost your business results!