We’re required to run tests that take more than a week and must be completed in final packaging. We’ve had our microbiologists working to build our own lab beginning in 2022. We started the equipment investment in 2023 and had to hold off due to cash pressures. This was a double edged sword costing more money and outside testing, which is a direct hit to our gross margin as volumes increased causing more tests and we were unable to capitalize on our investment to that point. We’ll invest less than $400,000 in 2024 to finish this project. It will have a hard dollar payback of less than two years saving approximately $300,000 per year at current volumes, and will take a week or more out of our cash cycle. This will also lead to happier customers.
The second project involves the transition of our wet processing lines from Romeoville to our Bolingbrook facility. When we found extra time in Q4 as production was held up, we invested some of that time in beginning to transition our wet processing to our Bolingbrook facility. Given that we now do 100% of our filling and assembly in Bolingbrook, this is a logical next step. This project has a two and half year payback and we expect it to yield more than $400,000 per year in hard cash savings or even more as volume increases. The third project involves the further expansion and automation of our filling and assembly processes in Bolingbrook. We have five clean rooms running or runnale in Bolingbrook, two of which are fully utilizing a high degree of automation.
For a relatively small investment, we’ll add automated capacity to two of the remaining three rooms, which will increase throughput while reducing cost per unit. As our business volume and product suite has expanded, we found that it’s much more efficient to have different rooms dedicated to different types of filling and assembly, be it for tubes, [titles], sticks, bottles or whatever configuration the market desires. Some equipment is currently serving double duty and needs to be reconfigured as we switch between product types more often than it makes sense given our growing volumes. We expect this project to have a roughly 15 month payback period. These three projects, in total, will cost just over $2 million with some of this total expenditure having already been made in 2023.
We expect payback for the combined projects to be less than two years. We also expect that these three projects will allow us to produce up to $100 million in Solésence finished products. This additional capacity will become available by late summer. While we’re not nearly satisfied with our 2023 results, we are doing the things we must to capitalize on the fantastic products we continue to develop and sell. Now I’d like to ask Kevin Cureton, our Chief Operating Officer, to share his comments and his optimism around the progress we’re making and the approach we’re taking through 2024. Kevin?
Kevin Cureton: Thanks, Jess. To our investors, thank you for your continued commitment. And to our teammates, thank you for your tireless efforts in helping us achieve our mission. Today, my role is to provide more details about how we are evolving our management practices, to enable our company to translate revenue into sustainable profitable growth. While I’m sure some of our shareholders would prefer that we just do it, we also realize that several of our investors would like the reassurance that we understand the sources of the issues we have faced and therefore also understand and moreover can fix them. To begin, in part because there has been some discussion on the message boards to the contrary, I want to be sure that our investors understand the connection between our ability to bring the world’s most innovative SPF infused skin care, complexion and color cosmetics products to market and our ability to manufacture the novel aspects of these products.
The characteristics of the zinc oxide and the dispersions that we produce to build our formulations are at the core of what drives our market differentiation. These methods are at a minimum novel and in some cases one of kind in terms of how they are practiced in our industry. This makes us unique as a vertically integrated manufacturer, still the only manufacturer of this type that we are aware of in our industry. This integrated structure means that we manufacture over 30% of all the materials that we use to make the products that our brand partners take to market. It also adds a level of complexity to our business that our competitors don’t have, which also gives us an competitive advantage that they have a challenge to match. Our investment in IP further buttresses this critical point of difference.
While in fact there are some elements that we could outsource, we also would take a risk of teaching the market more about what we do and how we do it. As those of you who are familiar may know, rendering patented knowhow into physical products typically will include trade secrets that make all the difference in terms of achieving the performance attributes and the aesthetics that we seek. It’s vital to our future and ultimately our profitability that those secrets remain so, and therefore, we continue to make the unique materials internally. Obviously, these elements of the business add to the complexity of how we manage and scale our company. The good news, as Jess has already mentioned, is that we have long — at long last build a strong operating team.
The strongest we believe since the inception of Nanophase, which has a unique ability to both build the processes we need to improve internal controls and execution and the capability to operate the company as we grow to a nine figure organization over the years to come. An important part of the change in our operating model is the implementation of key performance indicators or more commonly referred to as KPIs. The KPIs we have established are how we measure both our company’s performance and the performance of our teammates. The three KPIs I will talk about today and we will discuss on a continuing basis as we measure are measures that most significantly impact profitability and customer satisfaction. These are inventory accuracy, throughput and on time in full.
