Production engineers often get excited about new technologies and tend to think that the benefits of investing in them are obvious to everyone else in the company. However, enthusiastic engineers can get an unpleasant surprise if they are not prepared to argue their case properly.
Whenever engineers seek to add a new technology to the shop floor, management invariably asks the same question: What is the payback period of the proposed investment? That’s a fair question, but it’s worth pointing out that “payback period” does not actually describe the profitability of an investment; it just describes the time needed to “repay” the amount of money used for the investment. It does not take into account the time value of money, the risks involved, opportunity costs, and other factors.