Cost Factors & Justification for Autonomous Mobile Robots (AMRs)
If you’re considering incorporating autonomous mobile robots (AMRs) into your warehouse or order fulfillment operation’s automation strategy, then you’ve undoubtedly got a number of questions.
You want to know about the different types of AMRs and robots that might make sense in your operation. You want to know about the various benefits (and drawbacks) that such a system might entail. You want to know how AMRs compare against other options, like AGVs, conveyor, and other types of routing and sorting systems. But perhaps, most importantly, you want to know how much AMRs are going to cost to implement and what they can potentially save you (i.e. What is the return on investment)?
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Implementing any new automation system, even one that dramatically increases your order picking productivity, reduces labor costs, and increases order accuracy requires a capital expenditure (CAPEX). It’s only by understanding the costs and savings that you will be able to develop a business case, estimated CapEx, and ROI for the project.
The CapEx costs and savings of an AMR system in order fulfillment operations is based on several factors:
- The type of AMR required to handle your product and operational requirements
- The number of AMRs required to support the required volume
- The scope of the controls and software required to manage the AMR fleet and operational requirements
Because there are so many models and types, there are no rules of thumb that can estimate the cost of an AMR system for a generic operation.
To help you determine where on the cost spectrum your new fleet of AMRs will fall, we will discuss the major factors that can impact the cost of your system.
Autonomous Mobile Robot (AMRs) Cost Factors
1. Type of AMRs (and Their Use/Application)
AMRs come in many different designs, each of which is suited to performing certain tasks. Some are designed to move cases, totes,or pallets in a piece pick or full case picking operation, while others are designed to tow a cart of some type.
The application that an AMR is designed to perform dictates its physical requirements — its size, the materials used to construct it, the complexity of its components, etc. AMRs that perform more complex tasks will typically be more complex themselves, and are often more expensive than simpler AMRs performing simple tasks. Just as the complexity of a robotic solution will impact its cost, so too will its expected size and capacity.
The cost per AMR vehicle is directly tied to the size and weight capacity it is designed to carry or pull. Those designed for larger or heavier loads are often more expensive than those that carry smaller and lighter loads, simply due to the increased component costs that go into building them.
2. Size of the Fleet
The ultimate cost of implementing a suite of AMRs in your order fulfillment operation will be heavily influenced by the number of units (individual robots) being utilized. The tasks that an AMR must perform can also affect the number of AMRs in the total system. The more time consuming the task, like putting a product away in rack or automatically picking up a cart. Larger or more complex operations are likely to need a greater number of AMRs compared to smaller or more simple operations, and more bots will by necessity require a greater up front investment of capital.
That being said, when overall costs of implementation are factored into the equation, it is very possible that implementing more bots will be more cost-effective on a per-bot basis, because the implementation costs will be spread out across a greater number of units.
3. Controls and Software
The complexity of the AMR controls and software system can be a major contributor to the cost of the system. If a system needs to manage only 5-6 AMRs while performing simple tasks, like transporting carts from the front of the facility to the back, then the controls and software can use standard functionality and require little to no modifications and customization. This can save 15-20% off the price of the total system. The number of AMRs has a direct correlation to the amount of time and labor needed to commission the system. Smaller fleets take less time to implement and larger fleets require more time.
The complexity of the software also impacts the cost. If the software system only requires routine management of AMR traffic, this standard functionality is less expensive and requires less commissioning time.
A split case order picking system that integrates AMRs and pickers with a Pick-to-Voice system, can require Warehouse Execution Software (WES) software that requires integration and coordination of order management, inventory, and order picking. This adds to the project cost with subsystem hardware costs plus development and commissioning services.
4. Ancillary Costs
In order for some AMRs to operate effectively, it may be necessary for an operation to make adjustments to other aspects of the facility. These ancillary adjustments can naturally increase the cost of implementing AMRs.
For example, if you plan to implement a fleet of AMRs specifically to transport carts of product between different zones in your operation, you won’t just be paying for the cost of the AMR itself. You will also likely need to cover the costs of modifying your existing carts or replacing them with carts that are compatible with the AMRs.
If the system uses AMRs that pick up and drop off on a conveyor system, the conveyor system and controls will need to be added to or modified. If the AMR system is used to sequence or sort loose product, there can be racks, conveyors, platforms, and chutes. While easy to overlook, these ancillary costs will impact the overall cost of your system and should be considered during the budgeting process.
Justifying the Cost of Implementing AMRs for Your Operation
In considering autonomous mobile robots for your operation, it’s important to keep in mind not just the cost factors, but also the cost justification for such a system. For many operations, AMRs have the potential to drive revenue and reduce costs in both obvious and less-than-obvious ways.
Below are a number of ways that AMRs can prove their value to your operation.
1. Flexibility and Scalability
Most AMR fleets can be deployed in a modular nature, allowing an operation to efficiently use capital by only investing in as many units as is necessary at any given time. It is then generally easy to expand the fleet at a later date once proof of concept is achieved, or when demand and volume increases to a point that justifies more units.
2. Reduced Labor Costs
The most obvious cost-saving benefit offered by AMRs is the fact that they reduce labor costs through a number of AMRs.. Depending on the application they are being used for, AMRs can either completely replace unskilled labor (as is often the case when they are utilized to transport product) or complement laborers to make them more efficient and productive (as is often the case when they are utilized in picking operations).
3. Increased Safety and Reduced Accidents
Humans get fatigued. They get hungry. They get distracted. And when this happens, they make mistakes—mistakes that cost money. Accidents can cost operations thousands of dollars a year in the form of shrink, damaged equipment, and even potentially lawsuits (in the event that an employee is injured).
AMRs increase workplace safety and reduce the risk of accidents from occurring by removing the human element. Simply put, AMRs don’t get tired, hungry, fatigued, or bored completing monotonous tasks. Packed to the gills with sensors and cameras, AMRs can interpret and understand their environment, effectively traveling within a facility without colliding with obstacles such as product, infrastructure, or people.
4. Less Expensive Than Many Fixed Systems
Fixed systems like conveyors and sorters have their benefits. But they can also be costly to implement, depending on their size and complexity. Additionally, they eat up floor space that could be used for other purposes, sometimes forcing an operation into a larger facility, which brings with it its own set of increased costs (overhead, property taxes, utilities, etc.).
Fixed systems also take much more time to implement than AMRs. As a point of reference, some more complex systems (like a goods-to-person solution) could take up to a year or 18 months to fully implement. By contrast, AMRs can be deployed relatively quickly—within as little as four to six weeks in some cases (depending on the specifics of the operation).
Know What to Expect
If you are considering implementing AMRs in your operation, it’s important to have a clear picture of the factors that will influence the cost of the system—as well as the factors influencing your ROI on that investment.
Only then will you be able to determine whether or not the investment makes sense for your operation. A trusted systems integrator can help you estimate the costs of implementing such a system, and offer guidance in determining whether or not it is truly the best automation strategy for your needs.
- Romaine has spent over 30 years involved with organizations looking to optimize their distribution, manufacturing, and warehousing operations. Focusing on the customer’s processes, automation and business model, Romaine has helped dozens of organizations improve profitability by reducing labor, floor space, errors and inventory while improving accuracy, inventory turns and cut-off times.
Within the industry trade association, MHI, Romaine has taken numerous leadership positions including: Chairman of the Automated Storage & Retrieval (AS/RS) Group, Chairman of the Order Fulfillment Council of America, Chairman of the Warehouse Execution Systems Group and was one of the originators of the Carousel and VLM Product Section Group. He has also spearheaded the efforts to create the first ANSI industry safety standards for horizontal carousels.
Romaine is a frequent editorial and information contributor to hundreds of publications, blogs and online publications and has been a speaker at dozens of Supply Chain, Logistics, Lean and Facility organizations and functions. Just a few include the Parcel Forum, Institute of Industrial Engineers (IIE), Promat, North American Material Handling, Modex, National Mfg Week, Southern California Plant Operations, NJ Material Handling Assoc., Applied Ergonomics, Warehousing Education & Research Council (WERC), Lean Manufacturing Conference, Council of Supply Chain Management Professionals (CSCMP), NeoCon, Health Information Distribution Association (HIDA), National Catalog & Operations (NCOF), CSCMP and more.