The proliferation of new technology and equipment available to companies in manufacturing as well as the logistics and distribution sectors is staggering. Much of it promises to increase productivity and reduce labor hours, but does it? Let’s take a closer look at some of this exciting new equipment and technology in the material handling field:
- Pick and Place Robotics
- Autonomous Mobile Robots (AMR)
- Automated Guided Vehicles (AGV)
- Automated Storage & Retrieval
- Vertical Lift Modules (VLM)
- Light-directed picking
- Voice-directed picking
Although these new systems may just seem like shiny new toys, in many cases, they’re the future of successful businesses. But to get them in the budget, the true test is expected return on investment (ROI) and how they can help your bottom line.
Proving the ROI
The ROI for a new system or piece of equipment can be cost-justified in several different ways. It all depends on what the particular need is and how that need is fulfilled. Here are a few of the solutions that our customers found these new technologies offer:
- Reclamation of floor space – Reclaiming floor space in a distribution center through an AS/RS or VLM may enable you to increase the number of SKUs or have the space to bring on a new client. Recovering floor space in a manufacturing facility can help you to decrease the space needed to store raw material or WIP and allow you to incorporate more manufacturing equipment.
- Reduce labor hours – The introduction of AGVs, AMRs, AS/RS and VLMs are true goods to picker solutions. These technologies allow the picker to stay in their pick zone and have the equipment deliver the product to them and direct their picking/replenishment activities.
- Increase picking speed – By bringing the goods to the picker, you significantly reduce the mean-time between picks. With the right equipment and software, typical pick rates rise from a norm of 50 lines per hour to as much as 250 or more.
- Decrease picking errors – Light-directed picking visually points the picker to the correct slot, shelf, or location to make the next pick. Scan verification of the SKU before the pick greatly increases the pick accuracy as well. Picking errors are very expensive when you aggregate the costs and loss of customer satisfaction associated with them.
- Security and cleanliness – AS/RS systems and VLMs allow you to maintain the security of your product by only allowing access to predetermined and authorized operators. VLMs also provide a clean storage location as the product is stored inside of a sealed system.
- Ergonomics – Robotics, Cobots, AS/RS and VLMs deliver product to the operator at a predetermined height eliminating the need for the operator to bend, stoop or reach for an item.
Strategic Investments in Automation Look Bright
According to a recent automation survey, The State of Materials Handling Automation, conducted by Peerless Research Group on behalf of Modern Material Handling, automation spending is on the rise. Among the key factors when shopping for new systems, 81% of respondents said the total cost of ownership, ROI, unavailability of labor and maintenance costs played crucial roles in their selection process.
The long-standing benchmark for seeing ROI has often been 18 months: if the project or item was expected to pay for itself in that time period, it typically received funding and approval. However, the recent rise in automation is allowing companies to make longer-term investments as they see future benefits of equipment and technology. This forward-thinking mindset is allowing companies to approve projects that may push the ROI out to 24-36 months.
Although it’s difficult to put a number on the benefit and ROI that soft costs like ergonomics, better organization and security provide, these can quickly turn to hard costs when you factor in workers compensation, missed work days, and inventory shrinkage. Either way, they’re essential to organizations who value their product, their process, and their employees.
Identifying the need, highlighting the equipment and technology to fulfill that need, and quantifying the benefits and results allows for a proper, accurate and appropriate planned ROI. Need help getting started? Contact an experienced systems integrator today.