ROI for Warehouse Robotics and Warehouse Management System: Key Points

  • You should see a return on investment in warehouse robotics within three to five years
  • You might notice a return on investment from a warehouse management system (WMS) within three to six months
  • To calculate the ROI of warehouse robotics, subtract the costs from the benefits, divide by the costs, and multiply by 100 to get the percentage

Warehouse robots have increased productivity by 30% across various businesses, making them a popular choice when you’re looking to enhance efficiency and minimise operational costs.

So when do they start delivering tangible financial benefits?

ROI for warehouse robotics and warehouse management systems can vary, usually spanning three to five years for robots and three to six months for WMS.

To gauge effectiveness, you need to calculate ROI.

In this guide, we will:

  • Outline the ROI for warehouse robotics and WMS
  • Share a step-by-step guide on how to calculate their ROI
  • Explain how Modula APAC solutions can help maximize your returns

ROI for Warehouse Robotics

You can expect to see a return on your investment in warehouse robotics within three to five years.

Deciding whether to invest in warehouse robotics involves multiple factors, such as industry competitiveness and market share.

While these aren’t as easily quantifiable as financial returns, they still play a key role in shaping the decision-making process.

How To Calculate the ROI for Your Warehouse Robotics

Return on investment (ROI) is a performance measure that calculates the ratio between annual benefits and investment costs.

A higher percentage indicates a greater return, making the investment more attractive.

You must assess both the costs and benefits of this technology to calculate the ROI for your warehouse robotics.

We’ll guide you through this calculation to help you make informed decisions about your warehouse automation strategy.

1. Identify the Costs

First, determine the total investment required for the robotics system, which includes:

  • Initial costs: This includes purchase, installation, and integration costs.
  • Operational costs: Maintenance, repairs, software updates, and energy use.
  • Training costs: Staff training for system operation and maintenance.
  • Example: If you purchase five robots at $50,000 each, with $20,000 for installation and $10,000 annually for maintenance and training, you will spend a total of $270,000 initially.

2. Calculate Benefits

Then, quantify the financial benefits your business will gain from the robotics system. These might include:

  • Labor savings: Decrease in labor costs due to automation.
  • Increased productivity: Enhancements in throughput or faster inventory management.
  • Quality improvements: Fewer errors and associated costs.

Example: If warehouse robots allow you to save $100,000 annually in labor, generate an additional $50,000 in profits through increased throughput, and cut $20,000 in error-related costs, your annual benefits will total $170,000.

3. Calculate ROI

Calculate the ROI by subtracting the total costs from the total benefits, dividing the result by the total costs, and then multiplying by 100 to express it as a percentage:

Example calculation:

  • Year 1 costs: $270,000 (initial investment + maintenance + training)
  • Year 1 benefits: $170,000
  • Net year benefits: $170,000 – $270,000 = -$100,000 (loss in the first year)

How Do Warehouse Robotics Deliver a Quick ROI?

Warehouse robotics can deliver a quick return on investment (ROI) by enhancing efficiency and reducing costs. Here’s how these systems contribute to achieving rapid ROI.

1. Reduce Labor Costs

Robotic systems drastically cut manual labor costs in tasks like picking, packing, and sorting.

For instance, an autonomous mobile robot (AMR) can operate non-stop across multiple shifts, potentially halving labor costs.

If a warehouse spends $500,000 annually on these tasks, implementing AMRs could save $250,000 each year.

2. Increase Productivity and Throughput

Robots operate faster and longer than humans, significantly boosting productivity and saving time.

For example, a G2P system can triple order picking speeds, directly enhancing ROI by enabling $300,000 in additional annual revenue from faster processing.

3. Minimize Errors

Robots decrease errors more effectively than humans to cut costs related to returns, rework, and inaccuracies.

To illustrate, robotic scanners can decrease picking errors by as much as 90%. If errors usually cost a warehouse $100,000 annually, this can save $90,000 each year.

4. Optimize Space

Robotics enhance warehouse space utilization, increasing storage density by up to 25% with automated storage and retrieval systems (ASRS). This efficiency can postpone or negate the need for expansion, significantly saving on real estate and operational costs.

Top 2 Robots With the Highest ROI

Various warehouse robotic types can help maximize your savings in the long run.

Below, we highlight different warehouse robots that yield significant savings and higher ROI.

1. Autonomous Mobile Robots (AMR)

Ideal for companies new to robotics and cautious of large initial investments, autonomous mobile robots (AMRs) seamlessly integrate into existing operations.

AMRs automate pallet and inventory movement, cutting labor costs and boosting facility efficiency.

By operating independently, they allow employees to concentrate on more critical activities, such as performing quality checks.

2. Goods-to-Person Robots

Warehouse robots deliver inventory to stationary pickers in the goods-to-person approach, eliminating non-essential movement and significantly reducing labor.

This system also maximizes by compactly storing more SKUs, enhancing order accuracy, and driving further cost savings.

Warehouse Management System (WMS) ROI Timeline

You can typically expect to see an ROI from implementing a warehouse management system (WMS) within three to six months.

More significant improvements and ROI accrue over three to 12 months as processes are streamlined.

How To Calculate Your WMS ROI

Here’s a step-by-step guide:

1. Determine the Costs

The first step in calculating your WMS’s ROI is to assess the implementation costs.

These include:

  • Software licensing fees: The cost to purchase or license the WMS software.
  • Implementation costs: Expenses for installing and configuring the software and any necessary hardware or equipment.
  • Training costs: Expenses for employee training can include initial sessions and ongoing support for proficiency.
  • Maintenance costs: Ongoing expenses for maintenance and support, including software updates and technical support.

2. Acknowledge the Benefits

The next step is to recognize the benefits of using a WMS, which include:

  • Increased productivity and efficiency: A WMS streamlines specific tasks such as inventory tracking and order processing.
  • Reduced errors and waste: A WMS minimizes errors and waste by automating inventory updates and offering real-time stock visibility, preventing overstocking and understocking.
  • Improved accuracy: A WMS provides detailed inventory and order data, enabling precise decision-making and operational adjustments.
  • Better customer service: A WMS streamlines order fulfillment, shortens delivery times, and ensures reliable tracking, boosting customer satisfaction.

3. Calculate Your WMS ROI

ROI = [(Benefits – Costs) / Costs] x 100

For example, if your WMS implementation costs $100,000 and provides $400,000 in benefits over three years, you would calculate the ROI as follows:

ROI = [($400,000 – $100,000) / $100,000] x 100

ROI = [($300,000) / $100,000] x 100

ROI = 300%

This calculation indicates that for every dollar invested in your WMS, you can expect to receive three dollars in return over a three-year period, highlighting a substantial return on investment.

Which Industries Should Invest in Warehouse Robotics and WMS?

Industries that benefit most from warehouse robotics and WMS typically involve high-volume operations or demand precise and rapid handling, such as:

1. ECommerce and Retail

The surge in online shopping requires faster order fulfillment and precise inventory management.

For example, Amazon employs robotics and advanced WMS to sort packages and manage inventories, drastically reducing delivery times.

2. Manufacturing

Robots automate material and component movement, streamlining supply chains, while WMS enhance inventory control and workflow efficiency.

3. Pharmaceuticals

Robots sort pills, package medications, and handle delicate materials in pharmaceutical facilities to ensure accuracy and reduce contamination risks.

On the other hand, warehouse management systems optimize storage layouts, improve inventory tracking, and boost distribution speed and efficiency in pharmaceutical facilities.

4. Food and Beverage

Automation ensures consistent quality control, manages perishable goods, and enhances packing and shipping operations.

In dairy factories, robots and WMS streamline operations from bottling to packaging, enhancing product handling and ensuring optimal storage conditions.

5. Automotive

In the automotive industry, warehouse robots excel in performing high-precision, repetitive tasks such as welding, painting, and assembling small parts, further decreasing errors.

These technologies also accelerate engine and chassis assembly, boosting production efficiency by ensuring components are available when needed.

6. Third-Party Logistics (3PL)

3PLs leverage robotics to enhance the accuracy and efficiency of picking and packing processes across various industries.

For example, logistics companies utilize robots and WMS to automate picking and packing, improve inventory accuracy, and expedite order fulfillment globally.

Maximize Your ROI With Warehouse Automation

At Modula APAC, we transform warehouse operations by maximizing space utilization, boosting precision and productivity, and enhancing safety, among other advantages.

Modula Vertical Lift Modules (VLMS)

Our offerings include the Modula  Vertical Lift Modules (VLMs), ideal for warehouses with high ceilings.

These automated storage and retrieval systems efficiently manage large inventories and swiftly deliver items with just a click on the Copilot controller.

These intelligent storage systems efficiently house vast inventories and promptly fetch items with a mere click on the Copilot controller.

These VLMs come with optionals, such as automatic doors and telescopic bays to improve accessibility and speed up the retrieval process.

Modula Warehouse Management System (WMS)

Modula offers a variety of advanced warehouse management software solutions that provide remote support and analytics solutions to different organizations.

These software packages are easy to install and integrate seamlessly with our customers’ existing ERP, MRP, WMS, and DMS platforms.

Whether you’re aiming to refine your inventory processes, boost storage efficiency, or enhance order accuracy, Modula’s ASRS and WMS solutions can help meet your needs and propel your business to success.