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Sponsored by: Presented by:

C/VLM Working Group

Easy C/VLM Cost

Justification:

Calculate the true

cost and ROI of

carousels and

vertical lifts

Horizontal Carousel

Vertical

Carousel

Vertical Lift

Module

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.

C/VLM Equipment “Benefit Zone”

• Short term, dynamic storage.

• Highly accurate item location.

• Enhanced security.

• Small to medium article sizes.

• Individual lots.

Easy C/VLM Cost Justification:

How do you justify the cost of the capital equipment that will

allow you to achieve those goals ?

Calculate R. O. I. (Return on Investment)

Gain from investment - Cost of investment

Cost of investment

Calculate R.O.I.

$110,000

- $75,000

$35,000

.466

X 100

Revenue +

Machine Cost ÷$75,000

$35,000 Gain

= 47% R.O.I

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)

Gain from Investment

Tier1: Financial Justifications

• Reduce Costs

• Avoid Costs

• Increase Revenue

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

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

Research

Pull financial records

Determine company procedures

Know your hurdle rate

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

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

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)

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.

C/VLM Equipment Benefits

Enclosed Storage Offers Protection

• Avoid environmental damage

• Avoid disaster damage

• Increase shelf life

C/VLM Equipment Benefits

Enclosed Storage Offers Protection

$25,000 Machine Investment

Vs

Avoid $1.2 Million Inventory Loss

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

C/VLM Equipment Benefits

Increased Inventory Accuracy Avoids:

• Overstocking

• Rush charges

• Missed orders

• Production delays and shutdowns

• Expired inventory

• Wasted time searching

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

C/VLM Equipment Benefits

Boost Productivity

$160,000 Machine Investment

vs

$100,000 salary reduction

$15,000 Overtime

$8,000 Rush Shipping

Annually

C/VLM Equipment Benefits

Enhance Security

• Enclosed storage

• Physical locks

• Passcode access

• RFID

• Card swipe

C/VLM Equipment Benefits

Improve Ergonomics

•Lift in the “Golden Zone”

•Avoid climbing and stooping

•Avoid slip & fall

•Avoid collisions

•Avoid lifting and carrying

Present your case

1. Executive summary

• 2 Paragraphs

• 3-4 sentences each.

2. Situational analysis

• Proposed solution

3. Financial benefits

• Return on Investment

4. (Steps to counteract risks)

Tractor and Utility Vehicle Manufacturer

Application • Pick And Pass Spare Parts

Order Fulfillment

Solution • Six Horizontal Carousels

• Four VLMs

• 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

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

Equipment Manufacturer

Application • Fulfilling Parts Orders For

Manufacturing

Equipment • Three VLMs

• 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

Textile Distributor

Application • Wholesaler & Distributor Of

Decorative Fabrics

Equipment • Four VLMs 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

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

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

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

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%

Questions?

For More Information:

Gary Forger, AS/RS Managing Executive, MHI

Email: gforger@mhi.org

Website: http://www.MHI.org/AS-RS