Return on Investment (ROI) Considerations
Material handling warehouses or DCs 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.
|
