When digitalisation comes up in a factory, the answer is rarely “no”. More often it is “not now”. The reasons are usually sensible: the season is busy, the budget is tight, the team has no time to learn a new system. The decision slips to next quarter, then to next year.

Putting it off looks free. Nothing new is bought, nobody's habits are disrupted, and production keeps running the way it always has. But waiting is a decision too, and it has a cost. Because that cost never appears on an invoice, it rarely gets counted.

The real competitor: the way things are

In The Jolt Effect, Matthew Dixon and Ted McKenna report that 40 to 60 percent of B2B sales processes end neither with a competitor nor with a deal, but with no decision at all. The strongest rival to a piece of software or a consultancy is usually not another company. It is the decision to “carry on as we are for now”.

That does not mean the people deciding are getting it wrong. Today's way of working was a deliberate choice, made with the best information available at the time, and it still works: orders go out, shipments leave. Change, on the other hand, carries risk, cost and a learning curve. Seen that way, waiting looks entirely reasonable, until someone puts a figure on what the current setup costs.

Returns are a maybe, today's losses are a fact

Digitalisation projects are usually sold with a return on investment (ROI) calculation: productivity rises by this much, the investment pays for itself in that much time. The weak spot of these calculations is that they are about the future. They ask the decision-maker to change how things work today and to believe the benefit will follow.

B2B sales consultant Jen Allen-Knuth suggests turning the question around: instead of asking what a new system would bring, ask what the current method is costing right now. She calls this the cost of inaction, and puts it this way: “ROI is a maybe; COI is a fact.” That cost is already being paid. Seeing it requires no faith in anyone's promises.

The calculation has one more useful property: it is not tied to any product. It looks only at the results of the current method, not at the features of some piece of software. First you establish whether there is a real problem, and how big it is; only then is it time to talk about solutions.

Where the cost of the status quo builds up

In a factory, the cost of inaction does not sit in one line of the accounts. It is spread through day-to-day work. The questions below point to some of the places it can hide:

Stoppages: Which line or machine stopped yesterday, for how long and why? How long does it take you to find out?
Setup times: How long does a changeover take, and is that time recorded?
Work in progress: How much WIP is waiting between lines, and for how long?
Quality losses: Which report shows what scrap and rework cost you?
Data you can trust: When and how are the figures discussed in management meetings collected from the shop floor? How far do you trust them?
Cost: Do you know the true cost of one minute of your production?

If some of these questions have no clear answer, that does not yet mean you are missing a piece of software. It does mean part of the price you pay is invisible. An invisible cost cannot be weighed against any investment, which is why waiting looks cheap. According to Allen-Knuth, “let's talk about this next quarter” usually signals that the problem does not yet look big enough to act on.

Nor is the cost always measured in money. Lost time can stand in the way of a company priority: on-time delivery, capacity for new orders, or profitability. So the losses are worth discussing against the company's goals, not just the line's.

Work out your own figure

Nobody else needs to do this calculation for you. The most convincing figure is the one you find in your own data. To start, pick a single loss, unplanned stoppages for example:

Find how many minutes of unplanned stoppage one line has on an average day (A).
Note how many days a year you produce (B).
Work out the true cost of one minute on that line (C).

Annual cost ≈ A × B × C

It is a rough estimate, but it is a start. With hypothetical figures, just to show the arithmetic: 30 minutes of stoppage a day over 250 production days comes to 7,500 minutes, or 125 hours, a year. Multiply that by your own cost per minute. If you do not have C, that is a finding in itself.

Repeat the calculation for setup times, scrap and rework. When you find the figures yourself, what you end up with is not a vendor's promise but your own finding.

The first step: measuring today

At argemas we do not start a transformation with a ready-made recipe. We start by laying out the factory's current state in full. The 58-Question Factory Analysis is carried out on the shop floor: production lines and material flow are examined in place, managers and shop-floor staff are interviewed, and existing reports, the software in use and the reliability of KPIs are reviewed. At the end, three questions have clear answers:

Where are we today? A measurable “before” picture of the current state.
Where and why are we losing? Loss points with their root causes identified.
What is our real potential? The financial and operational target reachable with the right engineering and technology moves.

The cost of waiting then comes from the factory's own data rather than from estimates. The decision is still yours, but this time you make it knowing what waiting costs. If you would like an analysis for your factory, start from the Factory Analysis page.

Sources

Matthew Dixon and Ted McKenna, The Jolt Effect (2022).
Jen Allen-Knuth on Databox's Metrics & Chill: Leverage Cost of Inaction (COI) to Win Sales (YouTube).

The cost of delaying digitalisation