Return on Investment (ROI) Considerations

Material handling warehouses or distribution centers must balance many different areas to create a realistic Return on Investment.  Businesses large and small are concerned with their bottom line; these ROI Considerations have been outlined as a supplement to your operation's assessment.

Labor Savings 

• Standard Wages plus an industry average Burden rate of 30%
• Floor / Line Operators
• Supervisors / Managers
• Maintenance
• Quality Control
• Overtime reduction due to increased throughput
• Reduced recruiting process costs due to reduced labor force / reduced turnover
• New Hire training time can be reduced
• Throughput increases may reduce need for incremental seasonal labor
• Decreased inventory can create reduction in receiving labor 

Throughput 

• Reduced overall order cycle time / faster response time to customer
• Simplified material flow paths
• Better system reliability / more uptime
• System balancing / elimination of bottlenecks
• Less expediting
• Reduced inspection
• Reduced rework
• Capacity to handle new products
• Improved scheduling and workflow 

Accuracy 

• Reduce product stock outs due to increased accuracy
• Reduce transit costs for mis-shipments between stores and DC

Brick and Mortar Savings 

• Increased throughput lengthens the amount of time that the current facility will meet growth and throughput demands
• Saving associated with available cash that is not needed for building expansion
• Existing annual equipment budgets can be reduced
• Elimination of excessive aisle space / better cube utilization 

Safety and Ergonomics 

• Worker’s Compensation claims can be reduced due to less handling of product.  A careful review of prior claims can identify prior avoidable injury and claims
• OSHA accessed penalties / safety violations
• Reduced product handling may reduce questionable worker’s compensation claims
• Reduced noise levels
• Ergonomically designed workstations   

Inventory 

• Shrinkage can be reduced
• Effective inventory management may allow for JIT inventory practices, which reduces carrying costs.
• Damage reduction, both visible and concealed can create significant savings through reduced handling
• Fewer returns due to higher accuracy and less product damage
• Reduced replenishment
• Reduced safety stock

Image 

• Increase overall market image to both customers and suppliers.