Return On Investment: Does It Matter, And How Much?

I have a friend who participates in a process known as “extreme couponing.” She has multiple subscriptions to the Sunday edition of our major newspaper, and a couple of local papers that also have coupon inserts. When I see her at the grocery store, she’s got two 4″ binders full of baseball card holders, all stuffed with multiples of clipped coupons, organized by store aisle. The insane amount of money saved is a big factor in her being able to be a stay-at-home mother, which is something else she’s pretty good at.

If you get stuck at step one…or even two…extreme couponing may not be for you!

Now, extreme couponing isn’t for everyone. Even beginners to the process can buy a year’s worth of paper towels for next to nothing. However, that may take up so much room in their house that they need to rent a storage facility for other belongings that folks like you and me simply keep in the garage or basement. It also takes a LOT of time and effort to do it right – as well as discipline. Saving half (or more) on a truckload of stuff you don’t need (or will never use) is a waste of money, time, and space. In fact, I know people who have abandoned extreme couponing for those very reasons…the “return on investment” just isn’t there.

That’s the deal in industry too.  Anyone tasked with finding and exploiting efficiencies – or finding and eliminating inefficiencies – is going to be looking at return on investment.  Like extreme couponing, though, it has to make sense in all aspects of the operation.  For example:

*An OEM taking advantage of a quantity discount for components or subassemblies has to not only have the storage space available, but also has to consider the turnover rate…it costs money to keep product on the shelf.

*A machine shop considering a tooling upgrade has to compare the cost difference with the increased performance and/or lifespan of the “new and improved” product.  A tool that costs 10% more but lasts twice as long is probably a good deal.  A tool that costs twice as much but lasts 10% longer might not provide the “bang for the buck.”

*Any facility, before switching a service or utility provider, will “run the numbers” on promotional rates, contract terms, etc. before making a commitment.

Unlike extreme couponing, EXAIR makes it easy – and beneficial – to evaluate the return on investment:

*Our catalog (if you don’t have the latest, get it here) has complete performance & operational data on all of our products.  This is great if you know what you want it to do.

*If you’re not quite sure, our catalog also has a good number of actual application write-ups for most of our Intelligent Compressed Air Products.  You may be able to find something that’s similar to what you want to do, and further inform your selection from there.

*Once you’ve chosen a product, you can use the Calculator Library on our website to determine actual dollar cost savings associated with replacing a current compressed air powered device with an EXAIR product.

*Application Engineers are available to discuss your application and/or product selection via phone, email, or Live Chat.

*No matter how detailed the discussion, and how confident a plan we may make, the age-old saying about how it “looked good on paper” proves itself every now and again.  When this happens, all catalog products are covered by our 30 Day Unconditional Guarantee.  If you’re not satisfied for any reason within 30 days of purchase, we’ll arrange return for full credit.

*Let’s assume that we’re pretty good at this (because we are) and it actually DOES work out (because it usually does) – we can calculate your new (and improved) operating costs and compare them with the cost of your previous devices.  If you don’t have the instrumentation (flow meters, sound level meters, etc.,) this is a free service we provide in our Efficiency Lab.  Send it in, and we’ll do a full performance test & issue a comprehensive report, all at no charge.  And if you qualify for a Case Study, we can even save you some money on your next order.  Contact me for more details if you’re interested.

Free testing. Verifiable data. EXAIR Efficiency Lab.

Russ Bowman
Application Engineer
EXAIR Corporation
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Coupon Pile Stock Photos courtesy of Carol Pyles  Creative Common License

ROI – Return on Investment

Return on Investment (ROI) is a measure of the gain (preferably) or loss generated relative to the amount of money that was invested.  ROI is typically expressed as a percentage and is generally used for personal financial decisions, examining the profitability of a company, or comparing different investments.  It can also be used to evaluate a project or process improvement to decide whether spending money on a project makes sense.  The formula is shown below-

ROI

  • A negative ROI says the project would result in an overall loss of money
  • An ROI at zero is neither a loss or gain scenario
  • A positive ROI is a beneficial result, and the larger the value the greater the gain

Gain from investment could include many factors, such as energy savings, reduced scrap savings, cost per part due to increased throughput savings, and many more.  It is important to analyze the full impact and to truly understand all of the savings that can be realized.

Cost of investment also could have many factors, including the capital cost, installation costs, downtime cost for installation, and others.  The same care should be taken to fully capture the cost of the investment.

Example – installing a Super Air Nozzles (14 SCFM compressed air consumption) in place of 1/4″ open pipe (33 SCFM of air consumption consumption) .  Using the Cost Savings Calculator on the EXAIR website, model 1100 nozzle will save $1,710 in energy costs. The model 1100 nozzle costs $37, assuming a $5 compression fitting and $50 in labor to install, the result is a Cost of Investment of $92.00. The ROI calculation for Year 1 is-

ROI2

ROI = 1,759% – a very large and positive value.  Payback time is only 13 working days.

Armed with the knowledge of a high ROI, it should be easier to get projects approved and funded.  Not proceeding with the project costs more than implementing it.

If you have questions regarding ROI and need help in determining the gain and cost from invest values for a project that includes an EXAIR Intelligent Compressed Air® Product, feel free to contact EXAIR and myself or one of our Application Engineers can help you determine the best solution.

Brian Bergmann
Application Engineer

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Calculating Compressed Air Cost & Savings Made Easy

If you have ever looked through our catalog, website, blog, twitter feeds, or even our Facebook page, you will see that we can almost always put a dollar amount behind the amount of compressed air you saved by installing EXAIR’s Intelligent Compressed Air Products.   No matter which platform we use to deliver the message, we use the same value for the cost of compressed air which is $.25 per 1,000 Standard Cubic Feet of compressed air. This value is derived from average commercial and industrial energy costs nationwide, if you are on either coast this value may increase slightly. On the positive side, if your cost for compressed air is a bit more, installing an EXAIR product will increase your savings.

So where does this number come from?   I can tell you this much, we didn’t let the marketing department or anyone in Accounting make it up.   This is a number that the Engineering department has deemed feasible and is accurate.

To calculate the amount we first look to what the cost per kilowatt hour is you pay for energy.  Then we will need to know what the compressor shaft horsepower  of the compressor is, plus the run time percentage, the percentage at full-load, and the motor efficiency.

If you don’t have all of these values, no worries.   We can get fairly close by using the industry accepted standard mentioned above, or use some other general standards if all you know is the cost of your electricity.

The way to calculate the cost of compressed air is not an intense mathematical equation like you might think.  The best part is, you don’t even have to worry about doing any of the math shown below because you can contact us and we can work through it for you.

If you prefer to have us compare your current compressed air blow off or application method to one of our engineered products, we can do that AND provide you a report which includes side by side performance comparisons (volume of flow, noise, force) and dollar savings. This refers to our free Efficiency Lab service.

EXAIR's Efficiency Lab is a free service to all US customers.
EXAIR’s Efficiency Lab is a free service to all US customers.

If you already know how much air you are using, you can use the Air Savings Calculators (USD or Euro) within our website’s knowledge base. Just plug in the numbers (EXAIR product data is found on our website or just contact us) and receive air savings per minute, hour, day and year. We also present a simple ROI payback time in days.

Now, back to the math behind our calculation.
Cost ($) =
(bhp) x (0.746) x (#of operating hours) x ($/kWh) x (% time) x ( % full load bhp)
——————————————————————————————————————————
Motor Efficiency

Where:
bhp
— Compressor shaft horsepower (generally higher than motor nameplate Hp)
0.746 – conversion between hp and KW
Percent Time — percentage of time running at this operating level
Percent full-load bhp — bhp as percentage of full load bhp at this operating level
Motor Efficiency — motor efficiency at this operating level

For an average facility here in the Midwest $0.25/1,000 SCF of compressed air is accurate.   If you would like to attempt the calculation and or share with us your findings, please reach out to us.   If you need help, we are happy to assist.

Brian Farno
Application Engineer Manager
BrianFarno@EXAIR.com
@EXAIR_BF

 

There’s More Than 1 Way To Blow Some Air

Just today I spoke with a customer who is threading the ends of pipes and needs to blow the coolant and chips out of the threads.   The pipes range from 4″ to 9 – 5/8″ Diameters.  They are all threaded then fed into a trough and pushed down line to the next operation.

PEO ACWA
A machine with an out-feed roller conveyor similar to the pipe threading machine mentioned.

The photo above is not the exact machine but you can see where if this was used to process piping the different diameter pipes would all sit at the same level.  One option could be to use a Super Air Wipe  for this application but then the smaller diameters would not pass through the center of the Air Wipe, instead they would pass through the bottom half of the airflow which may not give optimal performance. Instead, I suggested to use 4 of our 6″ Super Air Knife kits and 2 of our Electronic Flow Control units.

 

2 - 110006 - 6" Aluminum Super Air Knives coupled together w/  a 110900 SAK Connector Kit
2 – 110006 – 6″ Aluminum Super Air Knives coupled together w/ a 110900 SAK Connector Kit

I  suggested that we make two pairs of knives for this blowoff setup by coupling two of the 6″ Super Air Knives together.  Once they are coupled together like is shown above, we could mount the two coupled air knives vertically along the trough and blowing at a 45° angle toward the center of the conveyor.  The plumbing of the two bottom knives will be to one EFC while the top two knives will be plumbed to the other.    The sensors will then be set up at two different heights, lower knives to sense the bottom of the pipe and the upper knife sensor will be set just above the bottom 6″ knife.

The reason for using 4 – 6″ Super Air Knives and 2 EFCs instead of 2 – 12″ Super Air Knives and 1 EFC is to save the most compressed air possible.   By enabling them to turn the top two 6″ Super Air Knives off automatically when they are running below a 6″ diameter pipe.  Then when a larger pipe is processed the top knives will also kick on with the lower knives and provide a uniform blowoff of the product.

So if you have multiple sizes of product being processed on the same line and don’t think any one solution will work, contact us and see if we can’t come up with our own recipe.

Brian Farno
Application Engineer
BrianFarno@EXAIR.com
@EXAIR_BF

 

Machine image courtesy PEO ACWA Creative Commons

 

Pressure Profile: Where to Measure Your Air Pressure

Generic Layout drawing of compressed air piping system.

In order to fully understand how efficient your compressed air system may be, you will need to generate a system pressure profile at some point.   This is a list or diagram of what pressures you have in your compressed air system at specific locations, as well as the pressure required by all the demand devices on your compressed air system.

One of the reasons for the pressure profile is that you may have an application that is far away from the compressor but also highly dependent on a specific operating pressure.   You may also find an application that, due to pressure losses within the system, causes an artificially high pressure demand.

The list below gives the critical points for measuring your compressed air system profile.

  1. At the air compressor discharge. (If using multiple compressors, measure at each.)
  2. If dryers of any type are being used after the compressor measure downstream from the dryer.
  3. Downstream of each filter. (If a particulate filter and oil removal filter are being used it is best to measure downstream of each individual device.   This is to tell when you have more than a 5 psig pressure drop or a clogged filter.)
  4. After each intermediate storage device, such as receiver tanks.
  5. At the point just before the main line from your compressor room branches off to distribution.
  6. The furthest point of each header line you have installed.
  7. On both sides of every filter/regulator units that are at high pressure point of use applications.

To give you an idea of why it is so important to measure these locations, take a look at the blogs we have posted on pressure drop. (Link Here)  As you can tell by the list of blogs that comes up, pressure drop through piping can really cause a lot of wasted energy in your compressed air system.   If you can get a good base line measurement by utilizing a pressure profile then you can start the process to optimizing your compressed air system.

6 steps
The EXAIR Six Steps To Optimizing Your Compressed Air System.

 

If you would like to discuss this or any of the other 6 steps to compressed air optimization, feel free to contact us.

Brian Farno
Application Engineer
BrianFarno@EXAIR.com
@EXAIR_BF

Don’t Waste Your Money (or Compressed Air)

This week I worked with a customer trying to separate a 135” wide paper sheet from a fabric used for commercial paper towel machines. They were using 45 spray nozzles, spaced 3” apart on a manifold, to blow off the sheet which then would fall into a chute below. The nozzles were doing the job but they were growing more concerned with their compressed air expense for this process.

Competitor Nozzle
45 pcs. of this nozzle were replaced with EXAIR’s Super Air Knife to save $87,000 annually!

The current nozzle setup was also causing another issue – there were “empty voids or gaps” in the airflow between the nozzles, which resulted in creases in the fabric. They were considering adding more nozzles and spacing them 2” apart but that was only going to increase their compressed air expense, so I asked them to consider our Super Air Knife. They were intrigued but were concerned that they would consume more compressed air, you’ll see below that the Super Air Knife uses less air and eliminates the creasing problem because the Super Air Knife provides a continuous airflow from end to end.

After reviewing the specs, I determined that each nozzle was consuming 29.6 SCFM @ 90 PSIG of compressed air, meaning they were consuming 1,332 SCFM for the process (29.6 SCFM x 45 nozzles).

I recommended using (2) 48” and (1) 42” Aluminum Super Air Knives, coupled together, to provide a 138” laminar sheet of airflow. I chose these In Stock – Ready to Ship lengths, so the customer wouldn’t have to order a special length even though that lead time would have only been 3 days. The Super Air Knife only consumes 2.9 SCFM @ 80 PSI (per inch of knife), and provides a laminar sheet of uniform airflow with a 40:1 air amplification rate, which would not only perform in the application, but also provide the needed compressed air savings.

SAK
What a great replacement for multiple nozzle manifolds! How SAK works

Using the above air consumption for our Super Air Knife, 2.9 SCFM @ 80 PSI (per inch of knife or 2.9 SCFM x 138”), I calculated the Super Air Knife consuming 400.2 SCFM @ 80 PSIG.

Since their process is a 24 hour operation, Monday – Friday, every week of the year, I calculated the following (* Using $ 0.25 per 1000 SCF used):

  • 45 nozzles x 29.6 SCFM = 1,332 SCFM @ 90 PSIG
  • 1332 SCFM (current) – 400.2 SCFM (EXAIR proposed) = 931.8 SCFM saved
  • 931.8 SCFM x 60 minutes x $ 0.25 / 1000 SCF = $ 13.98 saved per hour
  • $ 13.98 per hour x 24 hours = $ 335.52 saved per working day
  • $ 335.52/day x 5 days = $ 1,677.60 saved per week
  • $ 1,677.60 week x 52 weeks = $ 87,235.20 in yearly savings

After reviewing this savings with the customer, they mentioned they were glad they called because they were looking at increasing their air compressor size or purchasing another auxiliary unit. Now, they were not only going to save money on their current process, but they were eliminating the need to spend major funding on another compressor – not to mention the saved compressed air being available for future growth and processes.

At EXAIR, we commit to providing our customers with solutions to optimizing their current compressed air system.

Please contact an Application Engineer for optimizing your system today.

Justin Nicholl
Application Engineer
justinnicholl@EXAIR.com
@EXAIR_JN

 

Combat Rising Energy Costs

It has been a long cold winter this year and I just got my utility bill in the mail. I almost fainted. Sad to say, I’m told that I should expect rising utility costs due to the increased cost of producing electricity.

Rising utility costs has a trickle down effect and no one is exempt. Manufacturers, retailers, farmers, food service, etc. all share the same duress. As the cost to do business increases, prices go up. It’s almost like I’m taking the hit twice.

A recent survey by the U.S. Department of Energy showed that for a typical industrial facility, approximately 10% of the electricity consumed is for generating compressed air. For some facilities, compressed air generation may account for 30% or more of the electricity consumed. Compressed air is an on-site generated utility. Very often, the cost of generation is not known; however, some companies use a value of 18-30 cents per 1,000 cubic feet of air.(ref. DOE)

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With that being said, EXAIR is your partner in compressed air energy savings. Our products are designed to use less compressed air for blow off, cooling, and non contact motion control. It is as simple as finding the leaks and making the repairs, controlling the air use, and upgrading to efficient engineered blow offs. Request your copy of our blow off guide [link]

Joe Panfalone
Application Engineer
Phone (513) 671-3322
Fax (513) 671-3363
Web: www.exair.com
Twitter: EXAIR_JP

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