Only six percent of manufacturers in North America have automated at scale, according to a recent article in Harvard Business Review. Most organizations approach automation as a bottom-up process, expecting incremental improvements to eventually coalesce into success. This approach rarely works for large-scale transformation programs. Organizations that achieve true automation scaling treat it as a strategic priority from the outset, with clear executive sponsorship and deliberate action.
For a senior automation leader, this means clearly articulating the business case to executives and the board in terms they care about: What measurable impact will this have on operations, and how does it directly support financial growth?
Why Automation Transformation Must Start from the Top
Securing CEO approval for an automation transformation begins with setting an agenda that is economically relevant.
In practice, this means savings measured in millions. A project that saves $50,000 or even $100,000 will not command executive attention, regardless of how impressive the returns are on it.
For instance, consider the ‘Mission 30’ initiative by GEA, a world leader in food and pharmaceutical systems, which targets EUR 120 Million EBITDA contributions by 2030 through process harmonization. Similarly, Hershey’s Advancing Agility and Automation initiative targets over $300 Million in annual savings by 2026.
Defining this top-down target begins with establishing a financial baseline. Automation leaders must first quantify the cost savings at stake before they can build a credible case for transformation.
Establishing the Financial Baseline: Quantifying “Salary OPEX”
Company-wide manufacturing transformation begins with accounting, not engineering. The starting point is operating expenses, particularly the operator salary costs of manufacturing labor. For most organizations, this is the single largest controllable expense line. If not explicitly defined in the financial statements, this tends to about 10-20% of the Cost of Goods Sold for most manufacturers.
For example, for a manufacturer with $66 Million as salary OPEX, this figure becomes the baseline for subsequent calculations.
Setting the Achievable Reduction Target
A realistic “salary OPEX” reduction target must satisfy two criteria. First, does it move the needle enough to justify the organizational disruption? Second, can it be achieved and within a reasonable timeframe?
From Vention’s experience with Fortune 1000 manufacturers, a deliberate automation roadmap can realistically target 15–20% reduction in salary OPEX. When that percentage translates into savings meaningful enough to move the needle for the CEO, the first condition for setting automation targets is met.
Most C-level executives need to think about automation in the context of impact that they can deliver to the board and shareholders. This is why an OPEX reduction must ensure at least 1% improvement on factors such as profits or savings. Typically this also needs to be achieved in a relatively short time span of 2-3 years for it to be compelling enough for executive action.
Generally savings below the million-dollar mark rarely generate executive enthusiasm, even if they fall within this range. Targets above 20%, on the other hand, become progressively harder to achieve without extended timelines or add higher risk for automation projects. The 15–20% range, therefore, strikes the balance between ambition and feasibility.
Returning to our example: if the salary OPEX baseline is $66 million, a 15% reduction target yields $9.9 million in annual savings. In practice, this number would also exceed the 1% performance improvement benchmark that executives are chasing.
This is the strategic ‘North Star’. Every project, every investment, every tradeoff will be evaluated against its contribution to this figure.
Sizing the Transformation
Financial targets must also be grounded in operational realities. This is why it’s essential to convert the OPEX reduction goal into the language of factory operations: headcount and resulting CAPEX required to make transformation possible.
First, let’s consider the fully burdened cost of a human operator. This is not just base salary, but the total expense to the organization: hiring & onboarding, benefits, insurance, training, and overhead. For many US-based manufacturers, that figure typically falls between $40,000 and $75,000 annually based on the region
Dividing the “salary OPEX target” by the fully burdened operator cost yields the exact headcount reallocation target.
In this example, the outcome reflects the scale of transformation required, not necessarily a reduction in workforce. In this example, achieving the savings may involve reallocation of roughly 180 roles or realizing efficiencies through natural attrition. In today’s tight labor market, most enterprises focus on redeploying and upskilling. Operators often move into technical or maintenance roles that support new automation systems, while others take on higher-value tasks within production.
Determining the CAPEX and Winning Payback Condition
Once the headcount equivalent is established, the next step is to estimate the capital required. Based on Vention’s data from successful deployments, reallocating a single headcount equivalent permanently through automation requires approximately $65,000 in capital expenditure. This figure encompasses hardware, software, integration, and commissioning, though individual projects will vary widely depending on complexity and existing infrastructure.
Multiplying the headcount target by the CAPEX benchmark provides the automation transformation budget. In our example, 180 headcount equivalents multiplied by $65,000 equals $11.7 million in total automation transformation budget.
This winning condition essentially serves as the automation pitch to the CFO. In this case, a one-time $11.7 million CAPEX delivers $9.9 million in recurring annual OPEX savings.
This capital requirement must also pass a feasibility test. If the estimated need exceeds the company’s typical capital budget, the program may have to be phased or narrowed in scope. Just as important, the return must justify the risk and complexity. A 12-month payback with strong ROI usually clears the bar easily, but organizational health matters. In a company under financial crunch, even attractive returns may take a back seat to liquidity preservation.
If the capital requirement is feasible and the return compelling, the winning condition holds true. If not, transformation may not be viable under current constraints.
Taking the Next Step
With financial validation complete, the analysis shifts from spreadsheet to the shop floor. The factory walk is where top-down strategy meets bottom-up execution. The objective in this next phase is to identify specific automation opportunities to deliver the validated headcount targets and in turn OPEX reduction.
For automation transformation to move beyond pilot purgatory, automation leaders must redefine their mandate. Their role can no longer be confined to opportunistic optimization. It must evolve into a driver of organizational action. How the automation leaders navigate this transition will ultimately determine the pace of automation adoption and its economic impact.
