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How to Achieve the Highest ROI in a Warehouse Automation Investment

Jennifer Maloney
November 22, 2019

Before embarking on a large scale initiative most businesses want to determine the return on investment, “ROI”. There needs to be a detailed analysis performed prior to starting the project to understand the financial savings and the operational improvements that are the critical reasons a firm is investing in automating the order fulfillment process, such as a need to ship priority orders daily, in a 2-3 hour window.  Warehouse Automation managed with the right software has the potential to vastly improve both performance and profitability of distribution operations.

Before selecting automation technologies, customers need to know: What are the business objectives?  What are the upfront costs? Cost to operate? And yearly savings based on current and future order volume growth? A prudent way to get non-objective answers to these questions is selecting a partner like the Numina Group to assist you in determining the right path.

Understanding the automation landscape

There are an increasing number of innovative technology solutions that can deliver attractive gains in productivity to the right order fulfillment operation. But without first evaluating the gains available to a Distribution Center’s operation and analyzing if the technology is the right fit, how would you know the positive effects the investment will provide your operation? Especially for a mid-size distribution center, investing in the latest generation shuttle systems and other advanced automated pick, pack, and ship technologies may have a minimal impact on ROI.

Automating your order fulfillment operation is more than selecting equipment such as autonomous mobile robots (AMRs), conveyors, voice picking and pick-to-light.  It’s determining which technology yields the greatest impact and which integrator has the application knowledge and the right software expertise to integrate the automation with your existing business enterprise resource planning (ERP) or warehouse management system (WMS).

Warehouse automation software is referred to as a Warehouse Execution System (WES) or Warehouse Control System (WCS). It orchestrates the selected automation technologies and is a crucial factor in the success of a project. Numina Group’s RDS™ is the industry’s most complete modular and scalable Tier 1 Warehouse Execution and Control System (WES-WCS). RDS integrates with any ERP/WMS System.

A knowledgeable partner enables the solution

Investing in warehouse automation leads to improved accuracy, lower labor costs, and streamlines distribution center (DC) operations. Ensuring all three happen at the highest level is the role of an automation integrator like the Numina Group.  A lean design with improved processes managed by the right blend of technologies will achieve the desired ROI. A knowledgeable integrator’s work starts in the project’s initial conception stages, well before the system purchase or go-live date. Numina Group helps businesses realize what is achievable within a defined budget through an in-depth process that includes designing and brainstorming sessions with the client to determine which technologies will drive the highest ROI within a current or new operation and how the automation will work seamlessly with the business system.

When it comes to automating a DC, the first step is to understand the current operation and processes, then evaluate the benefits obtained with incremental best practices improvements, such as, slotting, ergonomics. Also, if changes are made, evaluating what impact these changes will have on reducing non-valued touches throughout the pick, pack, and ship operations. The improved design can then be compared to the current operation’s performance and labor requirements to estimate the results achieved from the operational changes and leaner processes.

Once the initial step is completed, then the right blend of automation technologies – suited to the warehouse operations – can be determined. The combination of lean processes and enhanced automation yields far greater gains in productivity, especially in solutions that are comprehensive and holistic, and that are implemented across the entire order fulfillment operation.

What process and technology yields 99.99% picking accuracy while lowering labor costs?

Before investing in automation, we’ll consider the positive gains obtained by re-profiling SKU storage based on velocity and travel paths. These adjustments in the warehouse typically increase productivity by 10%.  With a more efficient storage and pick path in place, what operation is not eager to achieve 100% accuracy in their picking process along with a 30% reduction in labor costs? Improvements in picking are a great investment opportunity, especially since industry averages show that up to 50% of distribution labor is spent in order picking and quality and order checking activities.

During the design study the current picking process is compared to and contrasted with the improved processes to answer the following questions:

  1. Is order picking a discrete or optimized batch order process?
  2. Does the operation lack optimized order release logic?
  3. Is there Cartonization Logic to support the ability to pick and pack directly to the shipping carton?
  4. Where are the bottlenecks during the peak order processing window?
  5. How much is the labor spend in secondary QC labor and packing operations?

The goal is to use this data to understand the opportunities to drive productivity and reduce costs across your operation. Once a facility’s processes and performance data have been evaluated for potential rewards, Numina Group’s define and design team will evaluate the available picking technology to determine best the investment choices.

Warehouse Automation matched to the DC’s needs

Investing in warehouse technologies is a multi-factor decision process. Numina Group’s team of experts are well suited to assist firms in justifying advanced technologies, such as autonomous mobile robots (AMRs) and automated guided vehicles (AGVs). The latest generation of AMR’s are safe, efficient, and can increase zone picking throughput by automating the movement of pick carts with 15 or more orders at loads of up to 600lbs. Again, multiple factors will be taken into consideration in determining if AMRs or AGRs have a role within the order fulfillment operation. These factors include SKU slotting, velocity movement, pick zone travel distances, travel paths, the AMR’s weight capacity, discrete or batch picking of orders, and operator fatigue or injury from lifting and pushing loads that can approach 500 lbs. or more.

If AMR or AGV’s are indeed the right technology fit and will generate a savings in labor of 20% or more, for example, a mid-sized DC with 20 employees per shift, could still be a 3+-year ROI. However, if the company is growing at a 10-15% rate, and finding difficulty recruiting and retaining good workers due to fatigue and ergonomics issues that can be eliminated with the use of AMRs, then the investment could indeed be the best choice for the 5-year growth objectives.

Consider the factors driving your total ROI when selecting warehouse automation

Companies of all sizes have access to game-changing technologies, so finding the answers to your businesses needs takes ingenuity, creativity and experience. Consider all the above factors when embarking on the define and design process. Partnering with a warehouse design and automation specialist like The Numina Group prior to the investment selection will ensure you obtain the best return on investment, ROI.  For more information about how you can benefit by partnering with a warehouse design and automation specialist, read this blog

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