Advice from true warehouse experts
Issue link: https://resources.pathguide.com/i/881612
PathGuide Technologies ● 22745 29 th Drive SE, Suite #150, Bothell, WA 98021 ● www.pathguide.com ● clientservices@pathguide.com Performance and reliability were so poor that the system was abandoned at a significant loss. In hindsight, this would have been a really bad investment even if it had worked perfectly. Prior to the automation, there were 20 warehouse workers with annual wages and benefits totaling $600,000. Assuming that the automation enabled the workforce to be cut in half for a saving of $300,000 per year, the five-year return on investment would still have been minus 19%. Calculating the ROI for physical automation depends on the number of lines and pieces to be processed and the level of productivity prior to and after automation. Automation is often touted as a tool to help lessen the impact of employee churn or general labor shortages. While it is true that automation can help stabilize the workforce in markets where there is a lot of volatility or turnover, the issue of turnover typically arises because of unsatisfactory compensation and benefits. If automation were to result in a 40% reduction in headcount, and wages and benefits were increased for the remaining employees, the organization is likely to benefit from less volatility. There are a number of processes a company should adopt before installing an automation system. The first step is to assign a specific person or team that will be responsible for handling the implementation and selecting the functionality that will be needed. This team should then be involved in all aspects of the planning and process creation. Companies that delay during this step may find themselves struggling to make a quick hiring decision and having the team trained and ready. When choosing the right solution, the team should also factor in other costs besides the price of the solution, such as long- term maintenance and repair costs and the cost of potentially adjusting the floor layout and other areas of the warehouse to accommodate the new solution. If the company plans to eventually expand its warehouse footprint, it should choose a system that will accommodate these expansion needs. Another important step is to put together a viable support plan that will provide adequate training and technical support to all staff. This will help the implementation process run smoothly.