Calculating Real Robot ROI
So you’ve decided to expand your operation, increase efficiency and reduce the burden on your workforce by integrating robotics. With a decision like this comes countless questions. “Will it solve our problem? Does it fit in the space we have available? What are the maintenance costs?” Yet one of the most pressing questions for anybody looking to invest in robots is without a doubt, “Is it worth it?”
The topic of robotics and ROI has been discussed at length since the emergence of functional AI, and that discussion has only grown with the rise of their implementation in the logistics industry. When considering a move as significant as investing in a robotic solution, understanding the point at which you’ll see a return is essential to making a wise decision. Figuring out your ROI emboldens you to proceed with confidence and peace of mind, something you can’t put a price on.
Determining Your Robotic ROI
Calculating robotic ROI is anything but black and white. The estimation for any given solution changes from operation to operation, but it helps to start with understanding the total purchase price and the operating costs of the system you’re seeking to integrate.
When considering the price tag, take note of the system components. If it’s a pick and place robot, how many cameras and what type of vision system does it use to calculate pose estimation? If sorting is involved, investigate the number of barcode scanners and their positioning: are they capable of reading the barcodes printed on your packages? In appraising your investment, you’ll want to be sure that the system capabilities and price are aligned with the needs of your operation.
Once you’ve determined that the system’s component list is on target for the task at hand, and you have a firm price in hand, it’s time to calculate the operating costs. What are the maintenance costs, both in terms of preventive maintenance and the rates you’ll be charged to fix unanticipated issues as they occur? Perhaps there’s a plan you can purchase that includes scheduled preventive maintenance and/or a bundled price for upkeep fees.
ROI largely depends upon the labor savings a robot provides by fulfilling a job that’s otherwise done by human operators. Employing a robot allows you to reallocate operators, so that they can perform tasks that are generally more creative and fulfilling than those that a robot can satisfy. Doing a move like this may help your labor retention rates, thereby reducing the costs of recruiting and training.
Most robotic solutions perform the work of at least one or more full time employees. If the function that the robot performs is conducted over multiple shifts per day, you now have that variable to consider in your equation. The same is true of weekend shifts.
The “All In” Costs Of Operating Manually
When you think about operator costs, it’s important to consider the “all in” costs, which include salary and benefits, plus the costs of hiring, training and managing. For a truly comprehensive accounting of labor costs, you may want to consider workers compensation and liability insurance, especially pertaining to jobs that are stressful and/or dangerous, like repetitive lifting and stacking of heavy boxes.
Most Dorabot customers don’t have an exact figure for the annual “all in” cost per operator, but have a general understanding of an approximate figure that is conservative in nature – meaning that the full burden of cost is at least that much.
With a basic understanding of the annual labor costs and the number of operators required to perform the duties that a robotic solution can deliver, you have what you need for a comparative cost to the price of the robot.
Here’s an example: If a robot sorts to 100 destinations at a rate of 1,000 parcels per hour and the equivalent repetitive tasks require two human operators to complete, then we have a benchmark. If this sortation task is performed two shifts a day, five days a week, then you can estimate that fulfilling this sortation task requires no less than four full time operators annually (it takes a bit more because of sick days and PTO), but close enough for a rough comparison. If the “all in” cost for each operator is $50,000 annually, then the annual labor cost being considered is $200,000. If you only consider these labor costs, then a robotic sortation system that costs $400,000 (including operating costs) would provide a two-year ROI.
Another measurable ROI factor to consider include the ability to increase revenue due to faster production speed or greater throughput. Another may be tied to accuracy improvement. If your robot’s ability to correctly sort, or pick and place, exceeds the accuracy metrics of your current operation, how does that affect customer satisfaction and/or profitability?
It’s also important to keep in mind that the true ROI extends beyond that which is easily measurable. One such benefit is boosting employee spirit. Old school concerns about employees feeling like they’ll be replaced by robots are most often misplaced; the reality is that employees working in environments that include automated solutions are frequently encouraged and optimistic about improved opportunities for growth. Additionally, robots reduce stress for managers because of their reliability; they supplement workload and contact the results of periodic staff shortages. Another benefit is the company’s ability to market the adoption of robotics as indicative of a tech savvy, improvement-focused culture. If you think about the dynamics of your workforce, you’ll likely identify other such benefits. Think of these as bonus ROI.
Dorabot Accelerates Robot ROI
Although it differs for every case, the average ROI for robotics in the logistics industry is about 5 years. Dorabot’s customers frequently realize ROI around 2 years. Busier customers can see a sub 2-year ROI.
Take one recently developed solution for example, a system that integrates a DoraPalletizer robot cell with Gorbel’s extendable powered conveyor system, DeStuff-it. For a certain 3PL customer, the process of fully manual container unloading and palletizing usually required 6 or 7 operators, with 2 unloading from inside the container and 4-5 operators doing the palletizing and pallet swapping. Our integrated solution easily lowers the labor overhead to just 2 operators, efficiently loading 6 single SKU pallets simultaneously.
If the customer chooses to add autonomous mobile robots (AMRs) for pallet swapping, non-stressful container unloading can be achieved with less than one single operator. For this customer, the ROI extends beyond labor savings. Their robotic system allows them to add a shift and unload more containers each day, without adding labor costs.
Other savings include hiring, training, turnover and health & safety costs. Also, there are the benefits associated with process improvements: enhanced peak volume capabilities, safety improvements and a reduction of missorted packages are chief among them.
With a higher ROI and a variety of potential solutions to explore, Dorabot has the potential to quite literally help your operation reach its future state faster.
Ready to see what your return on investment looks like? Let’s discuss it.