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  • 1. AMHS – ROI 2009 Update Automated Materials Handling Systems Return on Investment Study in Massachusetts Presented at American Library Association - 2009 – Chicago Greg Pronevitz, Northeast Massachusetts Regional Library System
  • 2. Copy of Presentation and Related Information
    • www.nmrls.org/greg/ala2009
  • 3. Special Thanks
    • Massachusetts Regional Administrators
    • Lori Ayer, Galecia Group
    • Melissa Stockton, QuipuGroup
    • These consultants did statewide analysis of delivery workflow and sorting and they contributed many suggestions regarding options for automation.
  • 4. Why We Looked at Automation
    • Volume Increase
      • Patron-Placed Holds
    • Dissatisfaction with service
      • High costs
      • Delays
      • Missorts
    • Impressed with tours
      • King County Library System
      • http://www.youtube.com/watch?v= 4fq3CWsyde4
      • Seattle Public Library
  • 5. Our Second Look
    • Labor Savings at Libraries
      • Efficiency
      • Ergonomics
  • 6. Specifications - Unchanged 2008 & 2009 Hybrid – Barcode + RFID Overnight Turnaround Compatible Containers
  • 7. Specification Changes 2008 – 3 Regions 2009 - Statewide Sort Site Proximity One Statewide Sort Site 285 Libraries 646 Libraries and Branches 6 ILS’s 9 ILS’s 31,000 items per day 50,000 items per day
  • 8. Benefits of Automation
    • Labor Savings at Libraries
      • End to
        • Labeling outgoing items
        • Presorting
        • Packaging/Bundling
      • Reduce mis-sorts
      • Potential for
        • Live tracking data
        • Tote level check in
        • Improved containers
        • Gentler treatment
        • Sorted by return/hold/branch
  • 9. Benefits of Automation
      • Regional System Benefits
        • Centralized management
        • Lower costs?
  • 10. Risks of Automation
    • Ownership
      • Cost
      • Maintenance
      • Power outages
        • Need back up process
      • Centralized management
        • All eggs in one basket
  • 11. Costs and Requirements of Automation
    • System cost
    • Maintenance costs
    • Labor costs
    • Management costs
    • External barcode/RFID
    • Container standards
    • System connections (CIP2)
  • 12. Return on Investment - ROI
    • System cost + Operating cost compared to optimal Manual sorting operation costs
  • 13. Current Costs in Massachusetts
    • About $14 per hour for sorters
    • Sorting Rate of about 400-500 items/hour
    • or 3.5 cents per item
    • .035 x 13 million = $455,000
    • Outsourced to various courier companies
    • Bundled with
      • Transportation
      • Facilities
      • Vendor profit
  • 14. ROI Case Study for 3 Regions
    • AMHS with 4,000 and 8,000 items per hour throughput
    • Manpower Requirements
    • Facilities Requirements
    • Other Considerations
  • 15. Labor Savings
    • Optimal Sorting Costs $285,000
    • 8,000 per hour AMHS $226,000
    • Difference $59,000
    • Difference will increase with cost of labor
    • What is the cost of the system, facilities and other variables?
  • 16. System, Facilities, Set Up Costs 2008 Estimates – Over $300,000 per year Needs Start-Up One Time Costs Ongoing Year One Year Two System Costs         Purchase/Lease/Loan         Loan $1 million for 5 years at 8% 0 245,000 245,000 245,000 Installation, Shipping, Training 7,000   7,000   Maintenance Agreement at 5% 5,000     5,000           ILS Work         CIP Licensing or advanced RFID $1,000 x 6 systems   6,000 6,000 6,000 Misc. tbd   tbd tbd           Facilities Costs 10,000 sq ft x $8         Purchase/lease   80,000 80,000 80,000 Utilities/Upkeep/Taxes   9,000 9,000 9,500           Facilities Preparation         Build Out tbd   tbd    Power Installation 5,000   5,000   Networking 3,000   3,000   Computer Equipment 4,000   4,000   Furniture tba   tbd             Totals     $359,000 $345,500
  • 17. Labor Costs for AMHS at 4,000 and 8,000 items per hour Throughput (estimate)     Items per Hour Cost per Day Items per Hour Cost per Day   Staffing 4,000   8,000   Salary/Benefits Hourly Operating Hours - 40,000 items/day 10.00   5.00       No. Staff   No. Staff     $12 Loaders 1,000 per hour per person 4.00 $480 8.00 $480 $12 Staging 40 item totes at 50 per hour per person 2.00 $240 4.00 $240 $30 Mangement/Minor Maintenance 1.00 $300 1.00 $150   Labor Cost per Day   $1,020   $870   Labor Cost per Year 260 days   $265,200   $226,200
  • 18. Current Labor Cost (estimates)     Current Items per Hour Cost per Day Optimal Items per Hour Cost per Day   Staffing 450   550   Salary/Benefits Hourly       6.66   $14 Sorting & Staging at 450 per hour per person 88.88 $1,244 72.72 $1,018 $40 Mangement/Minor Maintenance 2.00 $80 2.00 $80   Labor Cost per Day   $1,324   $1,098   Labor Cost per Year 260 days   $344,323   $285,501
  • 19. Other Costs Bar Codes/RFID Equipment (Barcode Printers) Supplies   Library Needs RFID readers Bar Code Printers Supplies   Containers Vehicle upgrades
  • 20. Does this ROI work?
    • Labor $265,000
    • + System/Facilities $345,000
    • = $610,000 per year
    • vs.
    • Optimal Labor Costs
    • $265,000 per year and vendor provides facilities
    • However, there are other savings
  • 21. Per Transaction Savings in Libraries
    • 5 seconds X 13 million items per year =
    • 65 million seconds =
    • 1,083,333 minutes =
    • 18,055 hours X $16 =
    • $288,888 labor savings in libraries per year on delivery transactions
    • Don’t forget non-ILL circ transactions
    • RFID might save more
  • 22. AMHS Variables
    • AMHS benefits increase with cost of labor
    • Vendor facilities costs are buried and could change
    • AMHS technology improvements could require less manpower
  • 23. New Direction
    • Decision to seek long-term Public/Private Partnership(s)
    • Avoid purchase/lease of AMHS
    • Request for Information (RFI) issued July 7, 2009
    • Responses due August 17, 2009
  • 24.
    • Contact:
    • Greg Pronevitz, Northeast Massachusetts Regional Library System (NMRLS)
    • 978-762-4433 [email_address]
    • Copy of presentation:
    • www.nmrls.org/greg/ala2009
    Thank you