Finance · 7 min
How to calculate the ROI of warehouse automation
A good business case is built on four savings: space, labour, errors and energy. Here is a simple method you can use yourself.
Step 1: Space savings
Multiply the square metres you free up by your rent or building cost per m² per year. Freed space can also be used for production or new product lines, which is often worth even more.
Step 2: Labour productivity
Compare current lines picked per hour with the expected rate (typically 2–3× higher). The difference in working hours multiplied by the hourly cost is your annual labour saving.
Step 3: Error costs
Count the yearly number of mis-picks and the average cost of each (return, re-delivery, administration). Automation typically reduces errors by 70–90%.
Step 4: Energy and other effects
A smaller heated or cooled area, less damage to goods and fewer accidents complete the picture. Add these up and divide the investment by the annual savings – most of our scenarios show payback within 2–4 years.
Want to apply this to your warehouse?