ROI for Automated Guided Vehicle Systems

There are a number of items that should be reviewed when deciding to purchase an automated guided vehicle system and Return-On-Investment (ROI) is one of those items. This section is intended to give you some guidance as you investigate implementing an automatic guided vehicle solution for your business.

Return On Investment (ROI)

The quickest way to calculate ROI is by calculating:

annual wages per position * number of positions / price of the AGV system

The problem with this is you miss some key costs (direct and indirect) that significantly impact ROI calculations.
Direct costs: hourly wages, overtime, insurance benefits, vacation, sick time, equipment, etc.
Indirect costs: damaged product, utilities (AGVs are more energy efficient than forklifts), etc.

Return on investment example

The example listed below is intended for educational purposes. Contact your Salesperson for help calculating your potential return on investment using automated guided vehicles.

Example (using direct costs only):

ABC Company operates 16 hours a day/5 days a week and has 10 forklift drivers (5 per shift), each making $30 per hour. Employee benefits equal 30% of the base hourly rate. Overtime is paid at 1.5 times the base hourly rate and each forklift driver is averaging 5 hours of overtime weekly.

ABC Company has 6 forklifts and will not need 5 of them after the AGV system has been installed. ABC’s forklifts have a life cycle of 4 years with each new forklift costing $25,000.

Calculation inputs

A	Total Number of Positions Replaced	10
B	Annual Base Hourly Cost Per Position (burdened with benefits)	$78,000
C	Annual Overtime Cost Per Position	$11,250
D	Cost for New Forklifts (total every 4 years)	$125,000
E	Cost of AGV System	$2,000,000

Calculation results

Total Annual Position Savings (B + C) x A	$892,500
Annual Forklift Cost Breakdown (D / 4 yrs)	$31,250
Total Annual Costs (total annual position savings + annual forklift cost)	$923,750
Years to Break Even (E cost of AGV system / total annual costs)	2.1 Years

Return on investment impact over time

Year 1 ($1,076,250)

Year 2 ($152,500)

Year 3 $771,250

Year 4 $1,695,000

Year 5 $2,618,750

Year 6 $3,542,500

Year 7 $4,466,250

Year 8 $5,390,000

Year 9 $6,313,750

Year 10 $7,237,500