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The ROI of Automated Warehouse Solutions

Tuesday, August 21, 2018

The rising costs of order fulfillment and growing labor challenges have left more and more warehouses and distribution centers struggling to keep up. This has led many companies to consider automation as a solution to their material handling needs. While automated systems offer many great benefits to warehouse operations, at the end of the day it is all about the return on investment (ROI).

After all, automated solutions often represent huge capital investments, and warehouse managers may find it difficult to justify these expenditures to executives for project approval. While “hard” benefits like the reduction of labor may be easy to calculate, it can be more difficult to put a dollar value to the “soft” benefits of automation. Companies only reaching for the low hanging fruit for a quick payback are going to miss out on greater opportunities to improve efficiencies, reduce long-term costs and facilitate future growth.

Labor shortages and cost savings

While the most obvious factor many consider when calculating ROI is labor reduction, the cost-saving benefits of automation go far beyond simply reducing the number of staff needed to run operations. Today, many manual warehouses and distribution centers are facing a labor shortage as they struggle to find skilled personnel willing to work in a labor-intensive warehouse environment. These facilities end up running short staffed and can be quickly overwhelmed – a problem that is amplified during peak order seasons.

By implementing automation, companies can ensure they have the means to keep operations running efficiently at all times, even during peak periods. No longer needing to hire seasonal staff, pay overtime or run overnight shifts, warehouses can easily keep up with year-round order fulfillment without the traditional costs of manual operations. 

Better workplace safety

An investment in warehouse automation can also save costs by mitigating major health and safety risks posed by labor-intensive, manual processes. With automated equipment instead of humans handling and transporting heavy pallets, cases and items, staff can be relocated and assigned to safer, more sophisticated tasks. Goods-to-person picking technology, for example, eliminates the need for workers to repeatedly travel up and down isles and constantly bend to lift heavy loads. Instead, products are automatically brought directly to workers at ergonomic order-picking stations, improving worker safety and productivity.

Safer working conditions result in fewer injuries, lower accident rates and less expenditures for worker’s compensation. In addition, employees will be happier and more productive working in less physically strenuous conditions, resulting in better employee retention. 

More efficient, accurate operations

Order fulfillment speed and accuracy are more important than ever for companies to compete in today’s marketplace. The demands of e-commerce and consumer expectations for fast, reliable service are rising, and automation can be the answer to meet these challenges. By implementing robotics hardware and warehouse control software, warehouses and distribution centers can optimize the flow of goods and accurately manage inventory volumes. With more efficient operations, facilities can easily eliminate redundant processes for greater cost savings.

Automated technology also allows for more flexible orders. Customer can get exactly what they need, when they need it. With higher accuracy and shorter lead times, companies can not only increase throughput for greater profitability, but also build stronger customer relationships with faster, more reliable order fulfillment. Companies can expect a greater ROI as automation helps them efficiently meet demands, now and into the future.   

Making use of available space

Warehouse space is at a premium, and many companies find themselves running out of square footage as more products are brought into the facility during peak seasons and SKU numbers grow. Instead of large expenditures to expand a facility or build new property, automation can be implemented to make the most of the area that’s available.

An automated system that uses high-density storage can house more products using up to 50 percent less space. For example, floor-based storage on the warehouse floor with overhead retrieval can replace large conveyor sequencers and bulky aisle shelving. This allows warehouses to accommodate a higher volume and variety of SKUs and prepare for future growth, while eliminating the high costs associated with warehouse expansion.

Customized solutions for a greater ROI

Your technology solutions provider should do far more than just sell you a warehouse robot. The right partner will help you consider the factors listed above and more when considering an automated solution to optimize operations. By assessing your current processes, products, unique pain points and future business goals, an experienced provider can develop a customized automated solution and cost-return strategy that will solve current challenges and help you reach a higher, sustainable level of productivity for years to come.

By Bruce Bleikamp, Sales Manager, Cimcorp

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