5 AGV Value Drivers the Boss should know

Posted on 17th August 2016

Automated Guided Vehicles Market

The decision to go for AGVs isn’t straightforward for organizations.

Doing away with an existing material handling practice in the favor of a new upcoming intervention is a long evaluation process spread across months.

At times, it is natural for the decision-making committee, to overlook the value proposition of the AGVs. In this post, we make a case for 5 such drivers that could help in an AGV evaluation, after a study of the 2015 MHI annual industry report.

In 2015, Deloitte and MHI (Material Handling Industry) – a leading trade association for the material handling, logistics and supply chain industry – teamed up to release a research report titled “Supply chain innovation – Making the impossible possible”.

The 2015 MHI Annual Industry Report is based on an in-depth global survey conducted in late 2014, which involved more than 400 supply chain professionals from a wide range of company types and industries. The majority of participants (57%) are executives holding the role of CEO, Vice President, or General Manager. The companies include manufacturers, distributors and other service providers. The surveyed companies range in size from small to large, with half reporting annual sales in excess of $100 million, and 11% reporting annual sales of $10 billion or more.

The highlight of the report was the detailed study of the impact of Eight technologies redefining the future of supply chains. One such technological intervention involved Automated Guided Vehicles (AGV).

Value Drivers

The report documented the following value drivers for AGVs.

  1. Increase in Productivity – Reduce manual effort, including searching for goods in the picking process, which increases overall workforce productivity by focusing humans on higher-value tasks. ( VE commercial vehicles increased productivity with our engine assembly AGVs)
  2. Faster process – In high-demand, high-velocity omni-channel environments, automation can drastically reduce the pick, pack, and ship times to better meet customer demand. ( Asian Paints reduced time in their material handling process with our Roller Bed AGVs)
  3. Increased warehouse efficiency – Automation helps reduce operating costs, space utilization, and energy efficiency (reduces the need for lighting).
  4. Improved control – Inventory accuracy can improve as human error is removed from the process.
  5. Improved safety – AGVs can help take people out of hazardous environments. It also can help to eliminate laborious jobs where the risk of injury, whether immediate or over time due to repetition, is very high.

Statistics

The MHI report also featured a few case studies that present the benefits arising from using AGVs.

  1. Warehouse efficiency – Doubled
  2. Improved storage capacity — 80% better
  3. Picking time — 75% improvement
  4. Perfect inventory accuracy — 100% (zero defects in cycle counts)
  5. Lower energy costs — reduced need for lighting
  6. Zero safety incidents — versus three per week in traditional warehousing operations
  7. Improved security — No pilferage

Costs and ROI

While the MHI report did not talk about costs and ROI of AGVs, we thought it would make sense to include it, in this post.

Looking at the entire lifecycle cost associated with material handling, significant cost savings could be generated using automated guided vehicles. ROI for AGV range from 2-3 years depending upon wages, geography, number of shifts, etc

Do you see any more value drivers that may be specific to your industry?

Check your ROI

Topics:   Automated Guided Vehicles.