This article is from an interview with Stanislas Normand, managing director at Exotec North America.
Implementing large-scale warehouse automation is a critical decision that demands a solid business case and clear ROI. The first crucial step: Assemble the right operational data. This information serves as the foundation for identifying inefficiencies and justifying the investment, ensuring resources are effectively allocated.
We spoke with Stanislas Normand, managing director at Exotec, a mobile automated storage and retrieval systems (ASRS) provider, to get his insights on the KPIs and data points supply chain leaders should analyze to build a compelling ROI for automation. Here is our conversation.
Can you list the data points supply chain leaders should be analyzing to build the business case for automation?
To build a strong business case for automation, supply chain leaders need to dive deep into the data pool and come up with the key metrics that matter. This includes evaluating current operational efficiency metrics such as order accuracy, processing times and inventory turnover, along with labor utilization and associated costs. Additionally, they should assess order and inventory data, space utilization, and the potential for seamless integration with existing systems like Warehouse Management Systems (WMS) and Enterprise Resource Planning (ERP).
To make sure your new automation hits the mark, you’ve got to keep things aligned with the company’s big-picture goals, stick to safety and compliance rules, and nail down the project scope. That’s how you ensure your new automation solutions are tailored to meet specific needs, enhance operational efficiency and support the overall supply chain strategy.
Can you explain why these data points are important?
These data points are your roadmap to success because they provide a clear, measurable picture of your current operational performance and identify areas where automation can have the most significant impact. For example, by analyzing order accuracy and processing times, you can pinpoint inefficiencies in your current workflows. It’s like having a GPS for efficiency, showing exactly where automation can step in to streamline processes, cut down errors and boost customer satisfaction.
Where does this data reside and how can it be accessed?
To get the best out of this data, start by making sure all your systems are on the same page. It's crucial to have a centralized data repository or data warehouse that aggregates information from the WMS, ERP, LMS (labor management system), OMS (order management system) and other sources. This allows for real-time data access and ensures consistency. Using data analytics platforms like Tableau, Power BI, or custom BI solutions will make it easier to provide a unified view of key performance indicators.
Beyond these data points, what qualitative data can supply chain leaders consider that helps build the automation business case? What else should be taken into account?
It’s a good idea to start by gathering employee feedback from frontline workers, supervisors and managers. Their insights can reveal pain points in current processes, such as bottlenecks or safety concerns, that aren't always evident through metrics alone. Understanding the perspective of the workforce can also highlight potential areas where automation can improve job satisfaction by reducing repetitive or physically demanding tasks.
Customer feedback is another valuable source of qualitative data. Analyzing customer comments, complaints or satisfaction surveys can shed light on service areas that need improvement, such as order accuracy, delivery times or packaging quality.
Vendor and partner feedback is also crucial. Talk with key suppliers and logistics partners so they can shed light on how your current processes impact the broader supply chain network. Their perspective can reveal collaboration opportunities or constraints that automation might address, such as reducing lead times or improving supply chain visibility.
Finally, keep an eye on industry trends and competitor benchmarks. Knowing how the big players are adopting automation gives you strategic context — and maybe a few ideas to stay ahead of the game. It helps to identify where automation can offer a competitive advantage or mitigate risks, such as labor shortages or rising operational costs.
Who is responsible for building this case?
Building the business case for automation typically falls to the supply chain or operations leadership team. A critical aspect of this role is coordinating key stakeholders, such as the IT department, finance team, HR and warehouse operations to ensure alignment with technological capabilities, budget constraints and workforce considerations before presenting to executive leadership.
Who are the internal decision makers and what are they typically looking for?
The biggest internal decision makers for warehouse automation typically include the CEO, COO and CFO. The CEO and COO are looking for how automation aligns with the company’s strategic goals, long-term growth and market competitiveness. They want assurance that automation will drive efficiency, scalability and enhance customer satisfaction. The CFO will be focused on the initial investment, ROI and long-term cost savings. They need a clear cost-benefit analysis that shows both immediate and future financial impacts.
How does a WMS come into play when building this case?
A WMS is your best friend when building the business case for automation. It provides detailed data on a wide range of key operational metrics such as inventory levels, order accuracy, processing times and space utilization. This data is gold for identifying current inefficiencies and areas where automation can add value. By analyzing WMS data, supply chain leaders can quantify the potential improvements automation can bring, such as faster order processing, reduced errors and optimized inventory management.
Dig into historical data to spot trends, like peak periods or recurring bottlenecks, to forecast how automation can address these challenges and improve long-term efficiency. Establishing a performance baseline using WMS data allows you to compare how automation can enhance key metrics, forming a solid foundation for calculating potential ROI. Use this data to simulate various automation scenarios, estimating gains in efficiency, accuracy and cost savings. Ensure the WMS data is integrated with other systems like the ERP and LMS to get a comprehensive view of how automation will impact the entire supply chain.
