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.
|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|
|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