Modex Floor Seminar
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David Schneider has presented two floor seminars each year at the bi-annual Modex Logistics Show in Atlanta before a crowd of 200+ attendees. Presentations are archived at www.mhi.org.
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Modex Floor Seminar
- 1. © 2014 MHI® Copyright claimed as to audiovisual works of seminar sessions and sound recordings of seminar sessions. All rights reserved. Sponsored by:Presented by: C/VLM Working Group Easy C/VLM Cost Justification: Calculate the true cost and ROI of carousels and vertical lifts
- 5. Easy C/VLM Cost Justification: You know that using space and resources more efficiently will improve your operations and lower your costs. An automated carousel or vertical lift module may be the ideal system for you.
- 6. C/VLM Equipment “Benefit Zone” • Short term, dynamic storage. • Highly accurate item location. • Enhanced security. • Small to medium article sizes. • Individual lots.
- 7. Easy C/VLM Cost Justification: How do you justify the cost of the capital equipment that will allow you to achieve those goals ?
- 8. Calculate R. O. I. (Return on Investment) Gain from investment - Cost of investment Cost of investment
- 9. Calculate R.O.I. $110,000 - $75,000 $35,000 .466 X 100 Revenue + Machine Cost ÷$75,000 $35,000Gain = 47% R.O.I
- 10. Calculate R.O.I. Gain from investment - Cost of Investment (AS HIGH AS POSSIBLE) - (AS LOW AS POSSIBLE) Cost of Investment (AS LOW AS POSSIBLE)
- 11. Gain from Investment Tier1: Financial Justifications •Reduce Costs •Avoid Costs •Increase Revenue
- 12. Gain from Investment Tier 2: Benefits of C/VLM •Reduced workplace injuries •Boost productivity •Increase security/ reduce loss •Improved inventory accuracy •Add reporting and analysis •Integrate with vendors/customers
- 13. Gain from Investment Tier 3: Additional Benefits • Competitive advantage • Reduced Environmental Impact • Employee retention and promotion •Enhanced image and reputation • Preparation for future growth • Image and prestige
- 14. Research Pull financial records Determine company procedures Know your hurdle rate
- 15. Research Get the inside track Know historical successes and failures Know ALL of the approvers Get everyone affected on your team Present a united front
- 16. Research Use industry statistics Don't guess, estimate or over inflate Get input internally and externally Involve vendors who may be affected Get 3rd party endorsements
- 17. C/VLM Equipment Benefits High Density and Vertical Storage •Make room for more inventory •Make room for new profit centers •Avoid new construction •Eliminate storage and transportation fees •Reduce energy costs (lights, HVAC) •Reduce workload (cleaning, safety)
- 18. C/VLM Equipment Benefits High Density and Vertical Storage $3,000,000 Building Expansion vs $600,000 Machine Investment $2,400,000 Saved 400% R.O.I.
- 19. C/VLM Equipment Benefits Enclosed Storage Offers Protection •Avoid environmental damage •Avoid disaster damage •Increase shelf life
- 20. C/VLM Equipment Benefits Enclosed Storage Offers Protection $25,000 Machine Investment Vs Avoid $1.2 Million Inventory Loss
- 21. C/VLM Equipment Benefits Enclosed Storage Enhances Security •Physical Locks •Passcode access to the machine •Passcode access to individual shelves •Passcode access to individual part numbers •RFID & Magnetic Card Reader security
- 22. C/VLM Equipment Benefits Increased Inventory Accuracy Avoids: • Overstocking • Rush charges • Missed orders • Production delays and shutdowns • Expired inventory • Wasted time searching
- 23. C/VLM Equipment Benefits Boost Productivity •Pick & Pull items faster •Batch jobs for speed •Pull the right part for the job •Combine processes together •Quick access to entire inventory
- 24. C/VLM Equipment Benefits Boost Productivity $160,000 Machine Investment vs $100,000 salary reduction $15,000 Overtime $8,000 Rush Shipping Annually
- 25. C/VLM Equipment Benefits Enhance Security •Enclosed storage •Physical locks •Passcode access •RFID •Card swipe
- 26. C/VLM Equipment Benefits Improve Ergonomics •Lift in the “Golden Zone” •Avoid climbing and stooping •Avoid slip & fall •Avoid collisions •Avoid lifting and carrying
- 27. Present your case 1. Executive summary • 2 Paragraphs • 3-4 sentences each. 1. Situational analysis • Proposed solution 1. Financial benefits • Return on Investment 1. (Steps to counteract risks)
- 28. Tractor and UtilityVehicle Manufacturer Application •Pick And Pass Spare Parts Order Fulfillment Solution •Six Horizontal Carousels •FourVLMs •Pick To Light •Software Cost Justification •Doubled Productivity •Recovered 83% Floor Space “We couldn’t throw any more bodies into the mezzanine zone without people tripping over each other. We were able to increase our picking productivity by over 90% and only need one worker to manage the carousel zone.” - Logistics Manager
- 29. Retail Pharmacy Distribution Application •Order Fulfillment For Retail Operations Equipment •Six Horizontal Carousels •Pick To Light •Software Cost Justification •90% Faster Picking •72% Labor Reduction “We were picking as fast as staff, shelving and technology would permit, but it wasn’t fast enough, the addition of the horizontal carousels has allowed us to meet current order demand and expand into a seasonal fulfillment program,” -Operations Manager
- 30. Equipment Manufacturer Application •Fulfilling Parts Orders For Manufacturing Equipment •ThreeVLMs •Pick To Light •Software Cost Justification •Picking 44% Faster •Reduced Labor “Before installing the VLMs, we did a time study. Our average picking time has been reduced from 4.72 to 2.64 minutes per pick, a 44% increase in productivity.” - Warehouse Supervisor
- 31. Textile Distributor Application •Wholesaler & Distributor Of Decorative Fabrics Equipment •FourVLMs With Pick to Light and Software Cost Justification •Recovered 67% Floor Space •Increased Capacity •Doubled Productivity “Picking hardware was an inefficient and labor intensive process. The VLMs allowed us to add more inventory while maintaining our 3pm order cutoff time - growing our hardware business.” - Vice President
- 32. Medical Center “We had run out of space in our central sterile storage room, and were faced with a multi-million dollar building expansion. Vertical carousels allowed us to remain in our existing space, avoiding the cost and hassle of construction. We even have room to grow in the future now.” - CSP Director Application •Central sterile storage Equipment •Eleven vertical carousels Cost Justification •Avoided $3 Million construction •Reduced overstocking •Reduced errors impacting surgical scheduling
- 33. CNC Equipment Supplier “We were staffed based on peak demand times, and even then were not able to ship all orders same day. The VLMs allowed us to reduce staff and still guarantee our customers that all orders will ship the same day. The VLMs saved us $180,000 the first year. In labor and other costs.” - National Parts Manager Application •Distribution Center Equipment •Nine vertical lift modules Cost Justification •More picks with reduced staff •Cross-check for accuracy •24hr. guaranteed shipping
- 34. Automobile Dealerships Application •Parts and Service Department Equipment •4 vertical lift modules •1 vertical carousel Cost Justification •Larger parts inventory •Specialized tool storage •Added security and accuracy “We included vertical storage as an integral part of each of our dealerships. We freed up a lot of floor space, and greatly improved the performance of the parts counter for our service departments and the appearance of the service area for our customers.” - CFO
- 35. Lawn & Garden Equipment Supplier “I can leave here at night and I know that every order is gone, and I know that every order is gone accurately.” - President Application •Distribution Center Equipment •Four vertical lift modules Cost Justification •Eliminated overtime •128sq/ft footprint freed space •Accuracy increased to 99.9%
- 36. Questions?
- 37. For More Information: www.mhi.org/as-rs Tim Archer- allan.archer@kardexremstar.com www.kardexremstar.com • Booth 9323 David Schneider - dschneider@hanel.us www.hanel.us • Booth 8417
Editor's Notes
- Good afternoon, and welcome to our seminar “Easy Carousel and Vertical Lift Module Cost Justification”. This seminar is presented by the C/VLM Product Section of the AS/RS Industry Group of the MHI. That’s a mouthful, but what it means to you is that we represent an Industry Group that is dedicated to promoting C/VLM technology as a whole. Our goal is to provide information that is applicable to any manufacturer, and help you with the overall process as well, which applies to any capital equipment purchase.
- Good afternoon, and welcome to our seminar “Easy Carousel and Vertical Lift Module Cost Justification”. This seminar is presented by the C/VLM Product Section of the AS/RS Industry Group of the MHI. That’s a mouthful, but what it means to you is that we represent an Industry Group that is dedicated to promoting C/VLM technology as a whole. Our goal is to provide information that is applicable to any manufacturer, and help you with the overall process as well, which applies to any capital equipment purchase.
- Good afternoon, and welcome to our seminar “Easy Carousel and Vertical Lift Module Cost Justification”. This seminar is presented by the C/VLM Product Section of the AS/RS Industry Group of the MHI. That’s a mouthful, but what it means to you is that we represent an Industry Group that is dedicated to promoting C/VLM technology as a whole. Our goal is to provide information that is applicable to any manufacturer, and help you with the overall process as well, which applies to any capital equipment purchase.
- If you are attending our seminar today, then you are probably already aware that using the space that you already have and utilizing your resources more efficiently is the best way to improve operations and lower your costs. You have probably also heard that a carousels or vertical lift module is a great way to do that. And you are right, and of course WE think that it is the BEST way. But before we dig too deep into why, I want to take just a minute to make sure that your needs match up with our solutions.
- C/VLM equipment is very versatile and is used in a vast array of applications, but generally speaking, they offer the most benefit within some defined parameters. I call this the “benefit zone”. Again, generally speaking, you want to consider C/VLM equipment when you are storing items for a short amount of time. Items that are constantly going into and out of storage dynamically, such as a distribution center or parts warehouse. If you need to archive something for very long-term storage and will not be accessing it often, then you really don’t need the benefts of automation. The exception to that rule can be accurate item location. Many people store personnel records, evidence, voter registration cards and other items that are not be accessed often, but it is critical that the item be located quickly and accurately if needed. It is also important to prove that they have a system that accurately tracks and records the history of items. Often hand in hand with accuracy is security. Evidence obviously, but also valuable items such as jewelry, chemicals, electronic components, CNC bits and pharmaceuticals all require a higher level of security. This can be physical, storing the items in a locked enclosure, or access control, limiting access to items to authorized personnel only. We are usually dealing with small to medium sized items, things that can be handled by an individual. We can handle some pretty heavy items with the use of cranes and lifting devices, but for the most part, we are not dealing with very large or very heavy items. For this reason, we are also usually dealing with individual items or small lots, as opposed to full crates or pallets of materials. There are of course exceptions to every rule, and there are always instances where the benefits of C/VLM extend well outside this zone, but for our purposes here today, if these parameter describe your situation, you are in the right place. If not, it doesn’t mean that C/VLM is not for you, it just means that you might require a more customized solution.
- But hopefully you see yourself squarely in the middle of our benefit zone, and your question is not what to buy...but how. How do I justify the investment into automated storage equipment? I’m not going to tell you that its easy to get your company to spend 6 figures on a storage system, but we can help make justifying the expense a lot easier. And if you have all your ducks in a row and the numbers work, then its easier for your organization to make those decisions.
- So let’s take a look at a simple ROI calculation. This is the most basic formula for determining a return on your investment. There are much more complex formulas out there, and even complex computer simulations that you can use, but for our purposes here today, this simple calculation is fine to illustrate the concept. If you can calculate the money that you will gain from an investment, and subtract the cost of the investment, you will know your net gain. Divide this net gain by the investment and you will get a percentage of ROI. Let’s take a look at example.
- Let’s say an existing customer want to purchase an item from you that you cannot produce without a new piece of equipment. The order is for 110 thousand dollars, but the equipment is going to cost you 75 thousand dollars. The purchase of that equipment therefore gains you 35 thousand dollars profit, or a 47% return on your investment. Does everyone follow me on that? This is a oversimplified example of course, it does not take into account other factors like additional labor, raw materials, electrical consumption, or time span. Was this gain achieved in 6 months or 6 years? How much is the investment depreciating during that time? What would the $75 thousand dollar investment have yielded if invested elsewhere? The point is, to get a complete picture of ROI there are a lot of other factors that need to be considered. But if your ROI is not above the point that your company considers acceptable, or if it is negative, the project will never go forward.
- Your goal is to get the gain from your investment as high as possible, and keep the investment in equipment as low as possible. This gives the best rate of return. So how do we maximize our investment dollars? Well, it’s kinda like saving money on gasoline. There isn’t much you can do to lower the cost of fuel, but you have a lot of options to make your car more fuel efficient, so that is where you concentrate your efforts. It’s the same with C/VLM equipment. There is a certain amount of money that is required for a large, automated storage system. You can work with all of the manufacturers represented here and within the MHI and negotiate your best price, and you certainly should, but we’re going to show you that C/VLM equipment opens up many more factors on the other side of this equation. With that, I am going to turn the presentation over to....who will walk you through the how to get that gain from your investment as high as possible.
- Thanks David. My name is...... OK, so you want to maximize the gains part of the equation and also minimize spending money on things you don’t need to keep the investment side of the equation in check. The best place to start is by looking at your current way of doing things, and finding everything that could be improved. We separate this step into three tiers, beginning with financial considerations. Like it or not, the bottom line is always what matters the most to the powers that be. There are some exceptions to that rule, and we will look at those, but in most cases its going to come down to money. Investing in C/VLM equipment can help your company’s bottom line in many ways, but they all fall into one of three categories. The first is Reducing Costs. This means lowering your operating costs as a direct result of switching to an automated storage solution. We’ll take a look at how both labor and resources come into play here. The second Avoiding Costs. This means that by going to a C/VLM solution, you avoid an even higher cost such as new construction. The third is Increasing revenue. This means that the use of C/VLM equipment will help to bring more business through better customer service or increased production capacity. We’ll take a look at all three of these categories in more depth in just a minute, but as we go on, consider your situation and see if you can come up with a need in each of these categories. The more reasons you have and the more it impacts the bottom line, the easier it will be to justify an investment. Most of these are going to be pretty obvious to you, and this is where a lot of people make the mistake of stopping. Don’t. There is a lot more to consider.
- Our second tier is the side benefits of using C/VLM equipment. While we are not considering them solely financial benefits like the first tier, the reality of course, is that they are. Take a look at the first one for example: a reduction in workplace injuries. That is certainly a benefit to anyone working at your facility right? No one wants to suffer back injuries from carrying heavy equipment! I am sure that all of your employers want to maintain a safe workplace because they truly care about their employee’s safety, but safety also has a direct impact on the bottom line. OSHA violations, lost time, safety barriers, training...these all cost money. If you can create a safer workplace, you are providing a benefit to your employees and to your accounting department. The great thing about C/VLM systems is that they offer so many benefits. How about greater productivity? If you can get more done in less time with fewer people, you start lowering labor costs, eliminate overtime pay, you can accept more orders...heck you can even save money by turning out the lights and HVAC at 5 and going home! The same goes for security. How much are you loosing to theft annually? And not just intentional theft, but how about machine operators who grab an extra bit just in case? Then they forget to return it or forget to remove it from inventory. These things add up and over time, can cost a company a lot of money. C/VLM units can help put a stop to shrinkage in many forms. And what about increasing your inventory accuracy? If you knew exactly what you have, how many, and where it is at all times, would that help you to reduce costs? Who here has placed a rush order from a supplier because you thought you had something in stock, but when an order came in, you can’t locate it or don’t have it. In fact, having an effective inventory management system can lead to so many benefits. Would your customers benefit from checking your stock levels? Or even ordering electronically 24/7? What could you do if you could track their ordering patterns and history? Could you be proactive and start suggesting items to them? Helping your customers do business with you is a benefit that has immediate financial benefits! This tier presents a lot of opportunities to get that gain from investment as high as possible. And these are tangible benefits that you can put hard numbers to. And I don’t mean to minimize the direct benefits here. If your company has had an issue with workplace injuries in the past, they may consider that reason enough to invest in C/VLM equipment...even without a financial payoff. Companies invest in C/VLM as part of a commitment to the environment, to the ADA, to aesthetics. It’s not always about money. And we’ll take a look at that in our next section.
- The third tier are benefits that have a less obvious financial benefit. This includes things like your company’s image and reputation, gaining a competitive advantage or preparing for future business. We know that they will benefit the company in some way at some point, but may not be able to put hard figures to them right away. Thus is why people often overlook these benefits, bit I’m telling you that they can make a difference. Remember, the larger that gain is, the higher your percentage will be! So this is an area where you can add some frosting to the cake. Are there any questions?
- So how do we fill in some of these blanks? And how do we ensure that we are presenting information that is relevant to our audience? The answer is that you have to do your homework. Research is a critical part of any cost justification. You have to have facts and figures to back up your claims. The best place to start is with your own accounting department. You have to know what your current way of doing things is costing you, and you have to dig deep. For instance, you probably know what the people in the warehouse are making per hour, but reducing staff from 5 to two FTEs has a much larger impact than salary. There are costs associated with recruitment and training - especially in areas of high turnover - there are uniforms, insurance, benefits, overtime pay, workmen’s comp, and much more. It is important to get the FULL picture of what having an employee on the floor pulling parts is actually costing the company. You would be surprised at how many companies have never calculated the real cost of having someone stocking shelves and pulling parts. Consider this as well. A warehouse full of shelves must be lit, possibly heated or cooled, protected from the elements, kept clean to prevent slip & fall injuries, and you have to provide ways to access high shelves like forktrucks or ladders, and you have to keep employees safe when working up high so you are dealing with fall arresting equipment and OSHA-mandated training and updates to the equipment. People assume that these costs are just part of doing business and they often don’t consider them in their calculations, but they can make a HUGE difference to the bottom line. Imaging one small area that is the access point to your entire inventory. That one area is much easier and cheaper to keep safe and clean, and you eliminate people having to climb, carry items and dodge forktrucks. So dig deep and get all of the numbers. We’re going to show you all of the ways that a C/VLM system can benefit your organization, and all of those benefits carry a financial reward. You need to know your company’s procedures and hurdle rate. The hurdle rate is what we mentioned at the opening, an acceptable minimum ROI. You have to meet that just to be considered, but keep in mind that you might be competing against other departments, a down economy, conservative product planners...so the more attractive your ROI is the better your chances are. Knowing your company procedures simply means that you go through the proper channels, using the proper methods, and you know the fiscal calendar so you are not presenting something too early or too late in the year.
- We also recommend getting as much of an inside track as possible. Research other projects that have been approved or denied and find out all of the people who are involved in approving a decisions. You should know how everyone will be affected by new equipment and procedures, including maintenance and HR. Their bottom line may benefit as well, so getting them on your team could really help. You also don’t want to do all of this work, only to have the entire project derailed because someone was not in the loop and voices an objection at the last minute. Get everyone together and present a united front. Show them how C/VLM equipment will make their lives easier directly and indirectly and they will help you advocate for the investment.
- Finally, make sure that you are not presenting this information in a vacuum. The numbers might look good for your company, but has it worked elsewhere? This is where industry groups like the MHI can really come in handy. We can help with case studies and references, industry studies, ROI tools and statistics. This allows you to show examples of other successful installations. Many times, companies will work with a company similar to their own who has gone through the process in the past. They travel to their facility, see their equipment in action, interview the parties involved and get an external endorsement. This can be very beneficial in convincing people that not only do the financials make sense, the system already works and is successful elsewhere. You can also bring your vendors and suppliers into the equation, along with your customers. The benefits of a C/VLM system often extend to them, making you a preferred supplier or granting you preferred customer status. That can lead to lower costs and larger orders. Any questions regarding the research phase? Now that you know what research you have to do, and what figures to collect, the next part is to add up all of the financial gains that you can get from your investment. This is where the benefits of C/VLM equipment really start to pay off because the affect so many different areas. With that, I will turn it over to...
- My name is.... We have touched on several benefits already, and mentioned several ways that automated storage and retrieval systems in general and carousels and vertical lift modules specifically can bring benefits to your organization. In this section, we want to show you as many ways as we can to use C/VLM systems to boost that gain from your investment side of the equation. The most popular benefit, and the one that most people are familiar with, is High Density Storage. C/VLM equipment eliminates the need for access aisles between rows of shelves, and reduces or even eliminates the dead space between fixed shelves. Vertical Carousels and VLMs store vertically as well, making use of unused overhead storage to free up existing floor space. This frees up a great deal of floor space, meaning that you can consolidate your inventory into a smaller area and free up space for other uses. This avoids the cost of a building expansion, or relocating to a larger facility, or paying to store offsite and transport materials back and forth. The space you free up can be used to add additional production centers, customers services, additional inventory or other things that generate revenue. Automation brings requested items directly to the user at the touch of a button, so the bulk of the storage space does not have to be readily accessible. This eliminates the need to heat and light the space, and the need to keep it safe and clean for human occupation. This not only reduces the energy consumed, but the workload of maintaining the space. How much money could you save if you could stop lighting, heating, ventilating and cleaning your warehouse?
- My name is.... We have touched on several benefits already, and mentioned several ways that automated storage and retrieval systems in general and carousels and vertical lift modules specifically can bring benefits to your organization. In this section, we want to show you as many ways as we can to use C/VLM systems to boost that gain from your investment side of the equation. The most popular benefit, and the one that most people are familiar with, is High Density Storage. C/VLM equipment eliminates the need for access aisles between rows of shelves, and reduces or even eliminates the dead space between fixed shelves. Vertical Carousels and VLMs store vertically as well, making use of unused overhead storage to free up existing floor space. This frees up a great deal of floor space, meaning that you can consolidate your inventory into a smaller area and free up space for other uses. This avoids the cost of a building expansion, or relocating to a larger facility, or paying to store offsite and transport materials back and forth. The space you free up can be used to add additional production centers, customers services, additional inventory or other things that generate revenue. Automation brings requested items directly to the user at the touch of a button, so the bulk of the storage space does not have to be readily accessible. This eliminates the need to heat and light the space, and the need to keep it safe and clean for human occupation. This not only reduces the energy consumed, but the workload of maintaining the space. How much money could you save if you could stop lighting, heating, ventilating and cleaning your warehouse?
- The mere fact that inventory is stored within some sort of enclosure provides many benefits. The enclosure helps to protect items from the local environment, including exposure to sunlight, airborne particulates such as dust and metal shavings, and even impact damage form forklifts or passersby. This also extends to damage from disasters, which could be spills or waterline breaks, or even sprinklers going off. The protection of an enclosure can also help to increase the shelf life of certain types of inventory, and most systems can be outfitted with environmental controls to control humidity, filter particulate matter, circulate fresh air, and even turn storage units into refrigerators and freezers. This is a great way to combine needs into a single unit, compared to adding storage inside a refrigerated room where staff has to be exposed to the cold.
- The mere fact that inventory is stored within some sort of enclosure provides many benefits. The enclosure helps to protect items from the local environment, including exposure to sunlight, airborne particulates such as dust and metal shavings, and even impact damage form forklifts or passersby. This also extends to damage from disasters, which could be spills or waterline breaks, or even sprinklers going off. The protection of an enclosure can also help to increase the shelf life of certain types of inventory, and most systems can be outfitted with environmental controls to control humidity, filter particulate matter, circulate fresh air, and even turn storage units into refrigerators and freezers. This is a great way to combine needs into a single unit, compared to adding storage inside a refrigerated room where staff has to be exposed to the cold.
- Because items are not sitting exposed on shelves, access is naturally restricted. This helps to eliminate losses from deliberate theft, but also shrinkage related to staff accidentally taking the wrong items, moving items to unrecorded locations, or taking additional items “to be safe” and not returning them. The security offered naturally by putting everything inside an enclosure can be expanded upon in applications were security is a greater concern. A physical lock and key is provided on most systems, allowing the system to be closed up at night or when not in use. During operating hours, it normally takes some form of password or access code to access the machine, restricting access only to authorized users. This can be applied to the machine as a whole, certain parts of the machine, or even down to individual part numbers. Electronic security systems already in use can be extended to C/VLM equipment, integrating RFID cards or Employee-ID swipe cards.
- One of the greatest benefits of C/VLM equipment is the increase in accuracy you get over your inventory. All systems include some form of inventory management, and most offer very advanced capabilities. Most will easily integrate with existing WMS and ERP systems as well. By knowing exactly what you have, in what amount and where it is, you can increase efficiency and really save money. How many of you carry excess inventory because you’re not sure what you have? And how often are you paying rush charged to get items in that should have been on the shelf? Or missed out on an order because you didn’t have what you needed in stock? Has the production line been stopped because you ran out of something? Or the CNC machines silenced because you can’t locate a bit? How much do production delays cost you, and how often are they happening? This also affects your customers. Have you lost a customer because of mistakes or delays in their orders? Have you lost product because it was stored past its useful service life or expiration date? Your accounting department should have figures for this, and if they don’t, you should be calculating it or making educated estimates.
- A boost in productivity is one way that C/VLM equipment can really make an immediate impact. Pick and place times are reduced, often dramatically, allowing you to fill orders faster, turn over machines faster, speed up assembly, whatever you need to do to get more done in a day. For example, you can send complete batch jobs to the machines and pull all parts required for an assembly or a maintenance service at once. This saves time when pulling inventory from stock, but also saves time spent returning to the warehouse to retrieve things that you forgot. Increased productivity allows you to do more business, service a larger customer base, carry more lines and it can avoid costs related to overtime, rush charges and taking inventory.
- A boost in productivity is one way that C/VLM equipment can really make an immediate impact. Pick and place times are reduced, often dramatically, allowing you to fill orders faster, turn over machines faster, speed up assembly, whatever you need to do to get more done in a day. For example, you can send complete batch jobs to the machines and pull all parts required for an assembly or a maintenance service at once. This saves time when pulling inventory from stock, but also saves time spent returning to the warehouse to retrieve things that you forgot. Increased productivity allows you to do more business, service a larger customer base, carry more lines and it can avoid costs related to overtime, rush charges and taking inventory.
- Security can be pre-requisite for many installations, not just a benefit. If you are storing weapons for example, the financial loss of having them stolen may pale in comparison to other possible outcomes. This is one area where the financial benefits can be secondary, and a C/VLM system is chosen primarily for it’s inherent security. C/VLM systems are inherently secure because everything is enclosed within the system and difficult or impossible to reach, unlike an open shelf. Even horizontal systems can put the bulk of the system in a secure room, with a access point that can be secured by closing and locking a rolling door. In additional to the physical lock on the system, passcode access can be added so that a code or password is required to access the system. This prevents unauthorized users to get to the shelves that they are not permitted to have access to. You can even incorporate RFID chips or swipe-card readers for higher levels of security. The financial benefit here is obvious...everything that you buy gets sold or contributes to your profit in some way. But it’s not always deliberate theft that we are stopping here. Often, items are simply put away in the wrong place and are effectively lost. Or they are not recorded as being removed from inventory, or put into inventory, or an authorized user takes the wrong amount. These all result in not having the product that you need when you need them, so enhanced security and tracking is a great way to reduce shrinkage.
- Ergonomics is another area where the financial rewards often are secondary to the physical benefits. Since product is delivered to at an ideal height, users eliminate stopping and bending and climbing and stretching to retrieve items. Work is done in the ideal “golden zone”, helping to prevent lower back strain and repetitive stress injuries, as well as slip and fall injuries since your staff no longer has to walk through rows and rows of shelves. This also helps to prevent injuries from forklifts, push carts and dropped items.
- I hope you we shown you a list of ways that a C/VLM system can benefit your particular situation. If you would like to discuss the particulars of your application, we will have time for questions after the presentation, and we are happy to stick around after our time slot is over. Before I open it to questions however, I would like to close with one last tip for you. Once you have done all of this work and research, you want to make sure that you present it properly. That means taking the time to put it into a professional format that can be submitted and distributed. This ensures that your message is well presented, easy to read and understand, and has all of the supporting arguments clearly outlined. There are lots of available resources and templates out there, and even companies that can assist you in writing a submittal, so I urge you to do a little research and lear how to properly draft a proposal or have someone do it for you. A successful proposal usually consists of three parts, beginning with an executive summary. This should only be 2 paragraphs, about 3-4 sentences each. This is your elevator speech, and in a larger organization it may be the only thing that people read before denying it or approving it and sending it on down the line. The second part is the situational analysis, where you lay out all of the issues that you are currently facing, the opportunities that you are missing, and the C/VLM system that you are proposing as a solution. The third part is the financial benefits, where you present the hard figures to support your argument and calculate the return on investment. Hopefully by now, this part will be easy and your equation will have a very positive percentage of ROI. You should also prepare to counteract any potential risks. Every investment comes with some inherent risk, so it is better to address them up front and have a plan to deal with them. Going back to our original example, if the customer who was to place that 110 thousand dollar order cancelled after you invested in the equipment, you would have protected yourself by getting payment in advance, or a cancellation fee, or having other potential customers in line already to make use of the equipment.
- Questions?