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AEMK Systems inc. Deltabot for food packaging industry

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Presentation on theme: "AEMK Systems inc. Deltabot for food packaging industry"— Presentation transcript:

1 AEMK Systems inc. Deltabot for food packaging industry
Making Automation Affordable

2 Problems Expensive Existing Automation Solutions
Rising Manual Labour Cost Increasing Employee Turnover Training Costs Productivity Compromises Competition Quality and Production Cycle Expensive Existing Automation Solutions Limited Flexibility High Cost and Maintenance There are many players in the in industries that utilize a combination of manual labour and automation. They are currently facing a dilemma, which is whether to use more of manual labour or automation. There has been a 60% increase on cost of manual labour for the last 10 to 15 years. There has been an increase in employee turnover due to workplace injuries and other factors. Training costs and Compensations have been the issues for these companies. Competitions among industry players is an ongoing challenge. For these type of competitors, quality and production cycle time are the two main factors in competitive advantages. Companies need a good enough automation system in order to create an edge over other competitors. The current automation solutions are very costly with limited flexibility and high maintenance. Therefore many companies are still reluctant to adopt automation.

3 Solution Automation System Integration Flexible to integrate
High Speed and Precision Quality and Productivity Competitive Advantage Replace Manual Labour Eliminates Workplace Injury Low Cost and Maintenance Patented Technology With AEMK’s Deltabot, adopters can solve all the previously mentioned problems. AEMK provides the Automation System Integration that uses their patented cable-based technology. It is very flexible to integrate and scalable into any size. The Deltabot technology provides high speed and precision to increase quality and productivity to a degree where it become the adopters’ competitive advantage AEMK’s technology eliminates workplace injury because the automation system integrated to replace manual labour on the dangerous tasks. Since it is automation, it has consistent and high quality performance unlike manual labours, which have varying performance. AEMK’s technology can also reduce the costs and the need to maintain the system.

4 Design – Customers Experience
Food Packaging Industry Pick and Pack Solution Eliminate Manual Labours Limited Budgets Choosing Automation Solution Competitive Advantage High Speed and Precision Integration Expertise Low Cost and Maintenance Sustainability Patented Cable-based Technology Solid Client Base and Relationship After-sale Services/Maintenance Food packaging industry who needs pick-and-place automation solutions Wanting to eliminate manual labours from dangerous tasks Reluctant to apply for currently high cost automation solutions Who also have limited budgets for automation system upgrades AEMK’s competitive advantage is to provide systems integration expertise with high speed and precision that is lost cost and low maintenance AEMK can keep the competitive advantages by having the patented cable-based technology, create strong and long lasting relationship with clients, and provide after-sale services and maintenance.

5 Core Technology and Product Automation System Integration
Design – Product Core Technology and Product Patented Technology Deltabot Core Service Automation System Integration Costs $35,000 - $45,000 Price Point $49,000 - $63,000 AEMK’s core product is called Deltabot that houses the patented cable-based technology. AEMK’s core service is the automation system integration where AEMK have engineers inspect, analyze and design compatible integrated automation systems The costs per robot is from $35,000 to $45,000 and the price is a 40% markup - $49,000 to $63,000 respectively. The difference in price is based on the material used and the difficulty of the projects.

6 Design – Process Automation System Integration
Consulting and Quoting System Design Prototyping and Beta Testing Finalization and Installation After-sale Services Maintenance Automation System Integration AEMK’s sales process is to first have engineers provide consulting and quoting services to give the clients an basic understanding of what they need and how much it costs. Then the engineers start to design and implement the system. Once a prototype is done, the system is brought in and beta testing is performed to make adjustments. Once everything is done the final version is installed and final adjustment and testing is made. AEMK’s product comes with a 1-year warranty and is available for after-one-year maintenance subscription.

7 Deltabot System Integration Subscription for 1+ year Maintenance
Design – Revenue Model Deltabot System Integration $49,000 for Regular Model Integration $63,000 for Stainless Steel material (FDA requirement) Subscription for 1+ year Maintenance $300 annual recurring for 5 years $450 annual recurring for 3 years AEMK generate revenue by selling the automation system integration package which includes the actual system and the design and implement service. As mentioned before, the Deltabot system integration is priced at $49,000 for regular material and $63,000 for stainless steel material that according to FDA regulation needed if it is touching food products. After the initial sales cycle is completed and 1 year warranty period is expired, AEMK also provides the subscribed maintenance service that is $300 annual recurring for 5 years and $450 for 3 years.

8 Design – Organization Capabilities
Management VP-R&D VP-Marketing and Sales Technical Engineers Machinists VP-R&D Responsibilities To supervise the design and development of projects To analyze and validate current technological trends and demands To initiate and engage quality, productivity, and innovation Resources The technical expertise from the engineers and machinists Goals To sustain competitive advantage, maintain quality of products, increase productivity, and reduce development time VP-Marketing and Sales To design and implement marketing strategies To analyze and create market demands To create and maintain client relationship The market research results To update the company with industry trend and demands To strengthen client relationships and ensure sales leads Engineers To investigate and analyze clients’ automation needs To design and implement system integrations Goal To deliver quality and timely products and services Machinists To construct parts and machines based on engineers’ designs To install and maintain automation integrations

9 Tests - Narrative Manual Labour Patented Technology
Need Develop Solution Manual Labour Automation adopters Patented Technology Targeted Market Integration Expertise Low Cost and Maintenance The industries have a need to address the issues with existing manual labours, there is a high manual labour turnover rate and overhead costs. There are many dangerous tasks that need to be done and it is too risky to keep the manual labours at these kind of tasks. The companies that have automation systems are suffering from high switching costs and limited flexibility. AEMK has developed a solution that is patented and has a existing demand. The targeted market, food packaging industry, has a 67% growth rate and current size is $50 million. The future expansion into other robotic industries is possible and has a total size of $5.6 billion. AEMK has in inventory the patented technology and the expertise in system integration that provides quality and low cost and maintenance. Other existing competitors provide the similar solutions with similar performance but much costly. AEMK has enough sustainable competitive advantage to enter the industry and obtain market share.

10 Tests - Numbers BE in 2 Years BE volume 65 robots 1.6 Million Funding
Payback in 4 years B/E volume = Fixed Costs /Contribution margin = $750,000/$11550 = 65 Payback period = Initial investment /Annual operating cash-flow = $1,600,000/$400,000 = 4 years

11 Milestones and Assumptions
Business Concept Prototype Development Prototype Testing Product Introduction 0 - 3 Months Correct Market Size Correct Costing Correct Sales Forecast Months Production Costing Beta testing Costs 1 – 2 Years Customer Demands Sales Cycle Time Sales Channel Milestones for AEMK are Business Concept Prototype Development Prototype Testing Product Introduction There are assumptions to be tested at each stages in order to forecast business operations. They can be tested through market research and beta testing. The business needs to be planned with the correct market size, costing, and sales forecast. The initial prototype development will require the correct production and beta testing cost in order to design price point and sales forecast. The actual prototype testing will need the right customer demand criteria in order to make sure the right products and services are delivered. The sales cycle time is also needed in order to predict the annual sales volume and corresponding adjustments. Product Introduction will require the right sales channels in place.

12 Tasks and Sales Cycle Tasks Research and Development Market Research
Beta Testing Marketing Plan Client Relation 3 days Analyze Quoting 1 month Design System Hardware Design System Software 1 week Beta testing Implement Prototype Install Finalize Major tasks are needed by AEMK: Research and Development is to maintain and create competitive advantage Market research is to make sure the right products and services is delivered and the right pricing is set. Beta Testing is to validate the feasibility of the technology and to test the average development time. Marketing Plan is to effectively create awareness of the technology and plan in order to attract sales. Client Relation is to maintain a strong and lasting business relationship and to utilize word-of-mouth marketing to create customer loyalty. The sales cycle is as shown above

13 Growth and Financial Plan
Growth Plan Beta-testing and Prototyping Marketing Plan Strategic Partnership Develop into new Market Business Concept Prototype Development Prototype Testing Product Introduction AEMK can grow by obtain desired results from beta-testing and prototyping. Customer demands and technological trend can be obtained in order to improve AEMK’s internal operations. Marketing Plan is to create awareness of the technology and the brand. It will draw business not only from the food packaging industry but also other industries that is interested to adopt AEMK’s technology. Creating Strategic partnership with one of the big robotic industry competitors such as ATS in order to utilize their resource and capital. It can provide AEMK a door to enter into other industries as well as create and maintain client relationship within the current industries. Once AEMK has an established group in the food packaging industry, AEMK can utilize the above to explore opportunities and feasibilities in other industries. The funding required at each stage is as shown, if all assumptions are correct, AEMK can generate 2M in the first year and 100M in the fourth year. 0 - 3 Months 200,000 Self, Friends, and Family Months 800,000 Angel Investors 1 – 2 Years 1,500,000 Venture Capitalists 2M First Year 100M Fourth Year Revenues

14 Appendices – Rationale for Automation
Assume: 2 manual labourers = 1 robot Assume: 10 year period Fact: Employee turnover is in excess of 1% / week. ($1000-week) Assumptions for Manual Labour : $10/hour 40 hours a week Assumption for Turnover: -2 people turnover a week which costs $1000/week = $48,000/year or $480,000 for 10 years Calculation for Manual Labour Salary: $10 x 40hrs = $400/week x 4 weeks = $1600 x 12 months = $20,000/yr or $200,000 for 10 yrs

15 Appendices – Financial Projections
2005 $27M Market Size Projections 2006/2007 2007/2008 2008/2009 2009/2010 2010/2011 Growth Rate 250% 375% 500% Industry $33M $45M $68M $85M Market share $2M $10M $50M $100M

16 Appendices – Market Size
126,700 Newly Installed Robots worldwide in 2005 1,000 Total newly installed robots in the food industry in 2005 1,000/126,700 Calculation for market share percentage 1% ( ) Total food market share of industrial robots *$5.6 Billion Estimated market size based on the present worth of the industrial robot industry $44,184,000 Million Estimated food industry expense in industrial robots to date

17 Appendices – Management Team
CEO ‘Acting’ Amir Khajepour VP Finance – ‘Acting’ Jas Banwait VP Sales/Marketing – Jon Chang 2 Sales Agents VP Business Development VP Operations VP R&D 3 FT Engineer 2 PT Machinists 6 FT Engineers 2 Machinists Needed Occupied

18 Appendices – Hiring Schedule
Position Timing CEO May 2007 VP Finance May 2008 VP Sales and Marketing VP Operations Amir Khajepour VP R&D Sales Agents May 2007, 1 following each year Engineers May 2008, 2 following each year Machinists May 2008, 1 following each year Administration May 2007, one full time and one part time

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