Savings for both direct (hard) and indirect (soft) cost elements should be considered when preparing a return on investment justification for a guided vehicle system. Typically the direct cost savings are easier to quantify. These direct cost savings include labor savings, elimination of the costs related to product and plant damage caused by material handling, and saving the costs associated with fork trucks (e.g. training, OSHA compliance, maintenance, vehicle purchases/leases, etc.). The indirect cost savings are more difficult to qualify. These savings include improved safety, increased efficiency, and improved inventory accuracy.

Direct Cost Elements

The reduction in labor costs is a relatively straight forward calculation. It is simply the number of operators times the hourly rate times the number of hours worked per year. In using the hourly rate, you should use the fully burdened rate which includes all benefits, holidays, vacations, etc.

The reduction in damage with guided vehicles vs. manual handling is usually significant. This calculation should include damage to product, racks/containers/totes, plant structure, and plant equipment (conveyors, lifts, etc.).

The lift truck costs should include the purchase/lease costs, maintenance costs, operator and maintenance training costs, and costs for maintaining the OSHA records for compliance. The calculation should also take into account the fact that the average life for a guided vehicle system is much longer (20 years) than a lift truck.

Indirect Cost Elements

The increase in inventory accuracy comes from the fact that the guided vehicle system tracks the movement of product. This tracking will reduce material costs, expediting charges and "redo" orders (required to replace lost product).

Automating the material handling process increases operations efficiency over manual material handling. This increase in efficiency is the result of more timely delivery of material which reduces downtime of the downstream processes (people or machinery waiting for that material). Typically, automating a manual process produces at least a 10% increase in efficiency.

Finally, the guided vehicle system will increase plant safety. The value placed on this increase in safety can vary widely depending on many factors at the specific installation (e.g. insurance rates, lost days due to accidents, OSHA fines, etc.).