Autonomous mobile robots (AMRs) stand to save companies in many ways. The most widely talked about and reported on is labor costs. While the savings in labor costs is huge, AMRs also offer large savings on error costs.
The cost of an error is often overlooked or underestimated, but it shouldn’t be ignored, and it certainly doesn’t need to be taken as a given that errors should be expected. While some sources state that picking error rates range from 1%–3% at a cost of $50–$300 per error, or an 11%–13% hit on overall profitability, only you can determine how it’s effecting your business. But when you consider the cost of a picking error, it’s imperative that all factors are taken into consideration when determining the cost of said error.
In the best of scenarios, the error is corrected before it’s shipped out. In this case, “only” time and manpower are wasted. Time that could be spent in fulfilling more shipments and labor costs on the extra people needed to review each order to ensure errors are caught.
But what if that shipment makes it through the final check and is only noticed when the customer opens their package to be surprised with a pair of shoes one size too small? Just about every time, the customer will be wanting to return the item, and sometimes exchange it for the correct size. If the customer wants to exchange the pair of shoes, now at the very least, the company adds on the time and labor costs associated with receiving the item, picking the correct size, and finally shipping it again. On top of that, customer service reps are being paid to help the customer in hope they didn’t lose their business.
This brings us to the last, worst case, and often likely scenario. The customer, for whatever reason, chooses to return the shoes, look elsewhere, and loses trust in the company’s ability to fulfill their demands. Now, the company is spending money on all the same things as in the previous scenario without any revenue from the purchase. Not only is the company shelling out money for nothing, but it also takes a hit on its reputation, thus losing out on potential future sales from the customer and anyone they speak to about their experience with the company.
Errors, particularly picking and sorting errors, can become a thing of the past if we continue to upgrade operations with the best technology available to us. Right now, one of the easiest ways to address these issues is with AMRs.
How AMRs Reduce Errors
AMRs reduce error rates both directly and indirectly. At their most basic, AMRs aid the workers by always going to the correct place for every pick. Now the employee only needs to think about which good is the correct pick for that particular order and they need only look at their handheld device or a screen directly on the AMR for confirmation. Some AMRs are equipped with barcode scanners, or other similar scanning technology, for the worker to scan each item as they go. In this way the worker knows right away if they’ve made a mistake and can quickly correct it on the go, thus eliminating the chance of it being caught later and needing to go back and find the correct item.
Indirectly, through the sheer volume that each employee can now get through, AMRs free up workers’ time, allowing them to focus on other and more important tasks. Current employees can be repurposed to help in customer service, quality assurance, etc. to add value to the customer experience. Furthermore, workers no longer need to haul heavy objects from one place to another or walk long distances over and over. With a more energetic workforce that can stay alert throughout the day, the error rate will naturally decrease.
Does it Actually Work?
The world’s largest cosmetics company was facing complicated picking processes that led to high error rates at its Suzhou warehouse in China. The warehouse mainly deals in B2B fulfillment requiring large pallet and case-picking workflows, shipping out a daily average of over 25,000 boxes in a picking area of about 53,800 square feet. In order to simplify the process and increase accuracy, the company decided to go with a ForwardX Max solution. After the solution was implemented, the warehouse is processing over 20,000 orders per day with 99.99% accuracy and 100% of the orders are going out on time.
DHL partner, SF Supply Chain China, has a distribution warehouse that handles about 1,000 SKUs and serves over 400 stores. Prior to implementing AMRs, the warehouse used traditional manual picking methods with paper pick lists and manual carts. Employees covered large distances every day, and the error rate led to significant financial loss. In late 2019, the warehouse decided it was time to make a change. They chose a ForwardX Flex solution consisting of 5 Flex-300 S AMRs with custom built racking and f(x) Fleet Manager to serve about 100 stores to start. After only 2 months, the results were obvious. The warehouse introduced 15 more AMRs to bring the total to 20 serving over 400 stores. SF Supply Chain China reduced its error rate by a whopping 90%.
Don’t Accept Errors as the Norm
Even a relatively small rate of errors at 1% can have large, lasting effects on profitability. AMRs can work together with your existing workforce to bring your error rates down by a considerable amount. Consumers trust brands and businesses that deliver on their promises. With ecommerce, the most basic expectation is that the right item is delivered on time. In the traditional brick and mortar shop, it’s that the item they’re looking for is there. Let picking, sorting, and shipping errors become a thing of the past for your operations, and don’t miss out on the profits that come with being trusted.
Learn how ForwardX Robotics can make your operations faster, stronger, smarter at www.forwardx.com.