As An Entry Point to Automation, AGVs Deliver Significant ROI
By: Scott Matlock, Contributor
It is widely accepted and understood that automation is a foundational aspect of digital transformation, using digital technology to create new or modify existing business processes to adapt to shifting marketplace requirements. But many businesses are at a crossroads, trying to figure out where to start or how to make the wisest investment. Because of their quick returns, scalability and flexibility, automated guided vehicles (AGVs) are an excellent place to start.
AGVs have been in use for decades – they’re a proven technology that has benefited from years of continuous innovation. These driverless vehicles automate a wide variety of repetitive transport and material handling tasks that traditionally require manual labor.
Today’s AGVs come in many sizes and custom configurations to accommodate a wide range of load sizes and handling needs. Businesses have plenty of options for building a reliable AGV system that balances price and performance.
A Deep-Dive AGV Cost-Benefit Analysis
It’s commonly acknowledged that AGVs help businesses save money. What everyone wants to know is – how much and how quickly?
To answer these questions, most people come up with a hard number that weighs the total cost of the AGV system against the labor and manual equipment it can replace. This is an excellent place to start, but it doesn’t tell the whole story. If you make your decision based on this number alone, you’re probably underestimating the total return on investment (ROI).
This article walks through basic ROI calculations, as well as the operational and financial benefits that tend to be overlooked. Some of these benefits are easily quantifiable and can be estimated based on historical data. Other benefits are less immediately tangible and must be evaluated with future business goals in mind.
Immediate Financial Benefits of AGVs
A basic calculation for a greenlight project ROI looks like this hypothetical example, which is based on replacing four manually operated forklifts with fork-style AGVs (a.k.a. driverless forklifts).
Already, we start to see a favorable ROI, but there are additional hard savings that are still unaccounted for, such as:
- Reduced workplace accidents. Driverless forklifts eliminate human error opportunities, making them much safer than conventional forklifts. According to National Safety Council data, conventional forklift accidents are a leading cause of work-related deaths and severe injuries. The average forklift injury causes 16 days away from work, significantly impacting productivity and employee retention in already labor-strapped industries.
- Fewer materials damaged in transport and handling. Forklift mishandling is the leading cause of pallet damage. Pallet damage leads to expensive material losses, operational disruptions, equipment problems, and facility damage. Automated forklifts don’t make the same judgment errors as human operators and are associated with much lower rates of pallet damage.
- 24/7 production capabilities. Like other forms of automation, AGVs make it more affordable to run round-the-clock production. They also consistently achieve uptime rates as high as 99%. This allows an AGV system to accomplish more than the conventional system it replaces.
One more hard financial benefit to note – this calculation presents ROI as a short-term year-one consideration. In reality, the benefits are much longer lasting. AGVs are depreciable assets, while human employees are not. AGV systems last for years and require minimal capital expenditure after the initial investment, so value increases year-over-year when properly serviced and maintained.
Long-Term Operational Benefits of AGVs
So far, we’ve discussed the financial benefits of AGV systems that businesses begin to see immediately. AGV technology is also future-friendly – it provides an ideal high-value entry point to full automation and paves the way to easier and more efficient facility updates down the road:
- System flexibility. AGV systems are modular by nature, and they are available with multiple types of navigation technology. This allows facilities to start with a small number of vehicles and systematically scale up as needed. AGVs can be easily integrated into both new and existing facilities, and they support a high level of reconfiguration as operations grow and change.
- Space savings. Depending on the type of AGV, vehicles can interface directly with other systems, maneuver in tight spaces and underneath or around other equipment and perform in close proximity to people. This flexibility saves businesses money through space optimization and the ability to create unique transportation routes.
- Protection against the skilled labor shortage. The skills gap hurts industrial productivity and profit margins, and there’s no sign of it letting up. AGV systems reduce the overall volume of workers needed. They also transport hazardous materials and work in demanding, harsh environments, freeing people to work in more favorable settings.
- Integration with other automated material handling systems. AGVs can interface directly with other automated solutions, including automated storage and retrieval systems (AS/RS) and goods-to-person (G2P) workflows. WMHS
Scott Matlock is USA General Manager, Logistics & Automation division, for Murata Machinery, a logistics & clean room automation forerunner and a world leader in machine tool and fabrication technology (www.muratec-usa.com). Murata Machinery USA offers one of the most comprehensive portfolios of tested AGV solutions on the market. The company also assists in determining system cost and ROI, the number of vehicles required, and evaluating how your proposed system will integrate with your existing footprint and supplement your workforce.
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