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    AGV Systems in Warehouses: Benefits and Cost Savings

     

    One of the most crucial elements for achieving a transparent and effective supply chain is warehouse efficiency.

    Whether accomplished through strategic wave picking or automation tech, fulfillment centers seek effective solutions for optimizing their logistics processes. A growing trend is investing in an AGV or Automated Guided Vehicles. These systems are by no means a new invention. But thanks to recent innovations, they are experiencing a resurgence in popularity.

    The vehicles have been shown to handle a sizeable amount of varying tasks, quickly and efficiently. Tasks that would normally take many hands and several hours of manual labor, an AGV can do in half the time, depending on the task, of course.

    However, most businesses need a bit more motivation to find and allocate the funds outside the generic' "It'll improve our warehouse efficiency," statement.

    So, if you're still on the fence about investing in and integrating an AGV in your warehouse, you may find this article quite helpful in justifying the expense.

    In this blog post, we'll be outlining a few important areas where AGVs can be a huge help to a fulfillment center or warehouse operation.

    Reduced Labor Expenses

    Anytime you're removing human labor from warehouse operations, you'll see a reduction in payroll expenses.

    The inclusion of automated guided vehicles essentially eliminates a few employee positions. Once programmed, an AGV can efficiently move freight throughout the warehouse, which also reduces the need to cover:

    • Healthcare
    • Retirement benefits
    • Overtime
    • Vacation
    • Sick time

    These dollars add up, which helps to pay off the investment quicker.

    Additionally, an AGV can work around the clock. This means no lunch breaks, multiple shifts to cover, and reduced ancillary expenses.

    You might be wondering how this sounds. Not to worry, however, as robots are not taking over the world. And those employees who do get replaced by an AGV can be circulated through to other tasks. In many cases, automation boosts employee productivity by freeing people for higher-value work—maybe even a task you have been needing more hands to help fulfill.

    Savings of Benefits and Salary Increases

    Over time, an employee will earn raises, receive added benefits, and extra vacation or sick time.

    We spoke above about how an AGV can save on payroll. But when that employee is no longer needed, your payroll budget based on these added earnings will likely trend in a positive direction. It also helps to remove the need to hire additional employees to handle those tasks in the future. This cuts down on:

    • Training
    • Background checks
    • Other HR expenses

    An AGV becomes more profitable every year it is in use. Once the cost savings with employees, HR, and other departments pays off the initial investment, additional cost savings in these areas help improve the bottom-line profitability of the warehouse and lend themselves to overall scalability.

    Reducing Damage to Products and Structures

    It's quite common for human operators of pallet jacks, forklifts, and other heavy equipment to damage products and structures inside the facility. Additionally, human operators can become fatigued, tired, or distracted by others while operating the equipment. When this happens, it can result in injuries to themselves and others. removing them from the equation is a win-win situation for the company.

    Accidents in the workplace and damaged goods negatively impact the bottom line... significantly. In fact, shrink can affect relationships with manufacturers, suppliers or distributors.

    The AGV operates with:

    • Lasers
    • Sensors
    • Cameras

    These help them efficiently and safely operate through the warehouse.

    Improvement of Warehouse Safety

    It's estimated that a single workplace accident can cost a warehouse up to $15,000 in penalties and fines issued by OSHA. That's not to mention the cost of medical expenses, treatment, therapy, and lost days of service.

    AGV systems can be programmed to:

    These tasks tend to otherwise lead to most on-site accidents. They operate smooth and controlled, can be programmed for speed, and monitored for enhanced safety.

    Manually operated forklifts introduce the human factor, which likewise leads to accidents.

    Less Expensive Than Fixed Automated Systems

    It's common for warehouses to weigh the benefits of fixed automated systems like conveyor belts versus something like AGV systems.

    Essentially, they complete similar duties – as their goal is to move freight from one location to another.

    However, across the board, AGV systems are less expensive and require less upkeep. They also do not impact the daily operation while they are being constructed.

    Increase Inventory Control

    AGVs can be linked to warehouse management systems, which helps to track and manage inventory levels. Again, a reduction in employee-related expenses is achieved.

    Additionally, when inventory levels are maintained and accurate, it helps you:

    • Better forecast sales
    • Reduce out of stock situations

    Final Thoughts

    There are multiple benefits to using AGV systems in your warehouse. The key is to review areas of improvement within your facility that the AGV can improve.

    If you'd like to learn more about integrating automation tech in the supply chain, reach out to our team of experts here at Redwood Logistics!

    FAQs

    What are AGV systems in a warehouse?

    AGV systems are automated guided vehicles that move freight and materials through a warehouse with minimal human input. They can handle tasks that would otherwise take several employees and several hours, depending on the job. In practice, they are used to improve warehouse efficiency, support faster fulfillment, and reduce repetitive manual handling.

    How do AGV systems help reduce labor costs?

    AGV systems reduce labor costs by taking over freight-moving tasks that would otherwise require employee time, payroll, and related benefits. They can also run around the clock without lunch breaks, overtime, or shift coverage, which lowers ancillary labor expenses. Over time, those savings can help pay back the initial investment sooner.

    Can AGV systems improve warehouse safety?

    Yes, AGV systems can improve warehouse safety by reducing the amount of manual equipment operation inside the facility. They use lasers, sensors, and cameras to move in a controlled way, and they can be programmed for tasks involving hazardous materials, cold storage, or heavy supplies. That lowers the human-factor risk tied to forklift and pallet jack accidents.

    Are AGV systems cheaper than fixed automation like conveyor belts?

    In many warehouses, AGV systems are less expensive than fixed automated systems such as conveyor belts. They generally require less upkeep and do not disrupt daily operations while being built. Because they are more flexible, AGVs can deliver many of the same material-movement benefits without the same level of infrastructure commitment.

    How do AGV systems help with inventory control?

    AGV systems can improve inventory control when they are linked to a warehouse management system. That connection helps track and manage inventory levels more accurately, which supports better sales forecasting and reduces out-of-stock situations. In a warehouse environment, tighter inventory visibility also helps limit avoidable labor and handling costs.

    Do AGV systems still need human workers?

    Yes, AGV systems still need human workers, but usually for higher-value tasks rather than repetitive movement work. The article notes that employees displaced from one task can often be reassigned to other responsibilities, which can improve overall productivity. In that sense, AGVs are more about reallocating labor than removing people from the operation entirely.

    What types of warehouse tasks can AGV systems handle?

    AGV systems can handle a range of warehouse tasks, including moving freight, transporting heavy materials, and working in environments that involve hazardous materials or cold storage. They are designed for controlled, repeatable movement, which makes them useful for tasks that are time-consuming or physically demanding when done manually.