Investing in the right type of warehouse equipment can have a big impact on productivity and efficiency. That’s why equipment manufacturers use selling points like TCO and storage density as potential benefits. Listening to one of these sales pitches can be a polarizing experience, especially when all of the provided information sounds enticing, but also, a little too good to be true.
Business leaders must assess these investments through a “big-picture” lens. Even if you are 100% certain that the integration of a particular technology will have a positive effect on your warehouse’s throughput, there are other factors to consider. Namely, your current capacity for upfront costs and how it affects the ROI, safety considerations and, of course, whether changes to your infrastructure are necessary to accommodate new equipment.
Because it’s easy to get distracted by shiny new object syndrome, we’ve compiled a simple-to-follow guide that serves as a helpful reference point when you’re getting ready to bring in new equipment.
In this guide, we’ll discuss:
- Identify processes where there’s room for improvement
- Important cost and ROI considerations
- Getting to know the training requirements
- Assessing possible physical infrastructure and staffing changes
- Planning for shifts in productivity
- Further reading on warehouse equipment selection tips
Identify processes where there’s room for improvement
Before making any investment decisions, the first step is to identify where there’s room for improvement. Examine things like the flow of products through the facility, your warehouse layout, storage systems, traffic patterns and picking processes. Then, analyze your metrics related to these processes, establish a baseline and compare them to industry benchmarks.
Identifying shortcomings is an important step because it allows you to focus on making targeted investments that can bring your warehouse up to speed. Investing in the latest warehouse innovation might feel good, but if it’s focused on a process where you only stand to make marginal gains, it makes little financial sense. For instance, if it’s space you need, investing in a massive conveyor system that’s going to take up valuable square footage probably isn’t the smartest investment. On the other hand, a new shelving system that allow you to store more inventory in your existing space is a strategic investment in such a scenario.
The areas where your operation is falling short of industry benchmarks are where you stand to make the biggest gains. By investing in the right equipment and technology to streamline those processes, you can see drastic improvements that can have a big impact on the bottom line.
Important cost and ROI considerations
If you’re a prudent and frugal manager, the very first thing that jumps out to you on that warehouse equipment product spec sheet is the cost. If the sticker price seems like a real bargain, you might be inclined to make the investment right away. On the other hand, the cost might seem so high that it’s laughable. How could you possibly justify spending that much money to executive leadership?
When you find yourself grappling with a number, you must bring clarity to the conundrum by calculating your return. The first step in doing this is to calculate your expected gain from each dollar invested by coming up with an anticipated ROI.
You can do this by dividing the net income by the total cost of investment. Of course, the net income is just an anticipated one at this point. To get a range of possible outcomes, simply perform the calculation twice using low- and high-end income projections.
If you’re replacing existing equipment with new technology, then you should consider the value of those assets as well. For instance, if your existing warehouse equipment is in good working order, consider selling it to offset your investment in new equipment.
As you can see, the “cost” of a new piece of equipment goes much further than the initial dollar signs. Your considerations must also include:
- Your anticipated ROI
- Insight from your financial and/or planning teams
- Potential for recouping costs from the sale of existing assets
Getting to know the training requirements
After you’ve crunched the numbers, it’s time to start delving into the logistics, namely, the impacts of onboarding new technology. There are several factors to consider here, as well, such as productivity and changes to physical infrastructure. That said, one of the most important considerations is how the change will affect your workforce.
Chances are you’re considering an investment in new warehouse equipment for predictable reasons. Perhaps your existing technology is verging on being irrelevant or incompatible. Maybe productivity is suffering, so you’re weighing the benefits of warehouse automation. Or, maybe regulatory requirements are making it necessary to update your equipment.
Whatever the issue may be, you must factor in the amount of time that it takes to train your associates on this new technology — even if the technology only takes minutes for associates to master. This is the point when it’s smart to ask as many questions as possible to the manufacturer regarding onboarding. Here are some things you will need to know in order to come up with the most accurate prospective training schedule:
- Do the vendor offer training services? If so, is it in-person/on-site? Does it come standard with an equipment purchase or at an extra cost?
- Does the vendor provide support? Is it 24/7?
- What is the average amount of time that it takes an associate to learn the technology? Do you have any case studies or data to back that up?
- Is a special license required for the operation of the equipment?
- Does the technology require special training for IT to operate/maintain? If so, how long does it usually take to master?
- Are there any safety compliance issues associated with the equipment? For instance, OSHA-mandated training?
- Is the equipment expected to require continuous education due to software/app upgrades, etc.?
Once you’ve asked those questions, it’s time for you to go a little bit deeper, by way of some quick internet sleuthing. If the equipment or technology that you are considering is a relatively common one, there should be a solid number of reviews across various industry-specific publications. Look for unbiased sources and reviewers without incentives to sway opinions.
Reach out to members of your trusted inner circle or pose a question in an industry-focused discussion group or forum. Hopefully, someone who already has experience introducing and working with the product or similar technology will provide you with candid insight.
Assessing possible physical infrastructure and staffing changes
Now that you’ve (hopefully) gotten all of the info you need to anticipate onboarding and training needs, it’s time to assess possible physical infrastructure and staffing changes. First, let’s take a look at possible physical infrastructure shake-ups.
If you were to invest in our collaborative mobile robot, Chuck, there would be no need to switch-up any of your current infrastructure. Designed for simple integration, requiring no racks, bolts, or shuttles to get started. Collaborative robots use sensor technology to navigate around obstacles, moving easily around humans and other equipment. And, it’s a flexible investment that you can easily scale up and down to accommodate shifts in demand. Warehouse operators can rent more robots during peak seasons, such as the holiday shopping season, and then return them when demand returns to normal.
Warehouse equipment that requires major, permanent changes to your physical infrastructure simply can’t offer that flexibility. For example, let’s say you are considering new conveyor or shuttle systems. If this is the case, you must first consider your warehouse’s existing physical infrastructure. This is just one example, but it is applicable to many others, too. Here are some of the questions you should ask about how new warehouse equipment will impact your existing infrastructure:
- Are there specific safety standards related to the equipment? If so, are there currently any elements in the warehouse that may compromise compliance?
- Is the proposed location for the equipment easily accessible? In other words, will it decrease or add to walking time for your associates?
- Are there any weight/height restrictions that might make integration difficult with your existing physical infrastructure?
- If regular cleaning/maintenance is required, do you have the space you need for easy disassembling and/or repair? If not, how many productive hours will be lost doing so?
Without first asking these questions, you may be unknowingly making an investment that could cost much more than you bargained for in the long run.
Now, let’s talk about the issue of possible staffing changes that might stem from the introduction of new warehouse equipment. If the technology is automated or has the capacity to work at speeds that your human workers can’t, then this might affect the schedules/employment of your workers.
The mistake that many leaders maker here is to wait until after they have integrated the technology to propose the necessary staffing changes. It’s smart to plan ahead and have a staffing schedule ready to go when onboarding is complete and the equipment is fully integrated into your facility and workflows. This is just one of the many ways you can make the transition a seamless one.
Planning for shifts in productivity
Last but not least, is the subject of productivity. In all likelihood, you’ve chosen to invest in new equipment to streamline processes in your warehouse. Hopefully, the investment will also increase productivity, something that all operations can benefit from these days. Increases in productivity can, of course, help you recoup your investment. If things go as planned, having data that proves gains in productivity can help you easily garner support for future expansions or other investments.
Another thing to think about is how you and your team members will handle a shift in productivity. It’s not enough to say that processes will “go faster,” and then call it a day. You should have an established baseline of various productivity metrics so you can make reasonable predictions about future output and accurately measure gains.
This can be done in a number of ways. Typically, the manufacturer will have data on the equipment’s throughput. For instance, our customers at 6 River’s are benefiting from rates of up to 200 UPH. If you’re investing in 6 River Systems’ collaborative mobile robots, then you’ll compare your current throughput with what’s possible with Chuck and plan accordingly.
There are a host of other factors that could affect productivity that must be considered, too. Among these are:
- The exact amount of time it takes for deployment: Will other processes need to be halted until new equipment is up and running?
- Changes to physical infrastructure: If drastic changes are needed to your existing infrastructure, your associates will need time to acclimate to these changes. How will this transitional period impact efficiency?
- Maintenance/servicing requirements: How often is maintenance recommended, and will it compromise your overall throughput?
Remember, the power is in your hands when you’re shopping around for new equipment. Be an informed buyer and always take advantage of any free demos and/or trials so that you can do your own rigorous assessment of capability before you commit to a purchase.
Further reading on warehouse equipment selection tips
For even more tips and tricks on strategic warehouse equipment selection, calculating ROI and running a lean yet efficient warehouse operation, visit the following resources:
- 2018 Warehouse/Distribution Center Equipment Survey: Automation & Robotics Lead Robust Outlook
- A Hybrid Approach for Selecting Material Handling Equipment in a Warehouse
- Return on Investment Calculator
- Calculating ROI to Realize Project Value
- How to Cut Costs When Replacing Warehouse Equipment
- Considering the Costs of Warehouse Automation
- Warehouse Labor: The ‘Real’ Cost of a Warehouse Associate
- 8 Tips to Reducing Warehouse Costs
- Planning a Cost-Effective Warehouse
- How to Calculate Warehouse Storage Costs
- Ways to Reduce Warehouse Labor Costs