The Satellite Review Magazine The Satellite Review Magazine Vol 1 | Page 31

Automated Warehousing Systems (cont.)
This reduces the slab size and can allow the storage facility to remain on an
existing property. If an existing building is to be retrofitted with automation,
increases in density can often achieve 30 percent to 50 percent more storage.
2. Labor Requirements: Calculate the labor required to operate the facility.
Worker productivity in environments with automation technology is often
significantly higher.
3. Inventory Accuracy and Control: Look at inventory accuracy and the
level of control needed to manage it. Do employees requiring inventory
management information know what is on hand and where it is located at
all times? An automated system ensures accurate inventory control on a
real-time basis.
4. Equipment Shifts: Lastly, assess the number of shifts the equipment is
running per day. Typically, automated systems require a 2-shift operating
period. This is logical, as any machinery must be properly utilized to be
justifiable.
Perform the justification of an automated system using discounted cash flow
capital budgeting techniques. When using straight payback methods, the time
value of money is rarely taken into account. To compound the problem, the
benefit of having the automated system operate for its anticipated life of more
than 25 years is ignored.
Fortunately, determining the Net Present Value (NPV) and the Internal Rate
of Return (IRR) is easy with today’s spreadsheet programs. These figures
should indicate if there is an appreciable justification for the initial cost
difference associated with installing an AS/RS versus building a conventional
system. Compare both of these by establishing cash flow differentials, and
then apply the cost differential to the cash flow benefits.

FINAL CONSIDERATIONS
Automated warehouse systems have clear advantages over conventional
systems. In addition to reducing the overall footprint and cube, which can
lead to building cost reductions, AS/RS technologies offer many long-term
benefits, including increased productivity, enhanced inventory accuracy and
control, and reduced energy costs. These attributes will position your
company for growth and profitability for years to come.

www. WestfaliaUSA.com

The Satellite Review

31