The Business Case For AMR’s In Manufacturing

The Business Case For AMR’s In Manufacturing

OTTO Motors and PULSE Integration have partnered to implement one of the world’s largest deployments of AMR technology. The OTTO material handling platform was deployed at a billion dollar company that is a household name in consumer goods. This was in part because of the ability for the AMR platform to flexibly, reliably and safely move materials but the strength of the business case was a deciding factor in the choice to implement OTTO.

The following conclusions were drawn after a detailed analysis of the OTTO platform vs alternative material handling methods for the customers. When compared for productivity and costs:

  • OTTO was 10% the cost of a full-time equivalent for manual cart movement
  • OTTO was 50% of the costs associated with a driver and a forklift.
  • OTTO was 66% the cost of an AGV equivalent
  • OTTO was 50% the cost of a conveyor equivalent

When the customer began its work with PULSE to transform its operations, four methods of material transport were considered. The customer needed a flexible, reliable and safe solution that would optimize materials movement. OTTO AMRs were found to be more flexible than a conveyor and safer than a forklift. The deployment resulted in an ROI of less than two years, and significant cost savings for the operation. The payback drivers included labor savings, increased productivity, improved safety and ergonomics for operators, lower capital costs, and a more compact facility design.

PULSE Integration and OTTO Motors Deploy the Largest AMR Fleet

PULSE Integration and OTTO Motors Deploy the Largest AMR Fleet

PULSE Integration partnered OTTO Motors, to undertake what is the world’s first in-depth analysis of automated mobile robots (AMRs) deployed at scale in industrial facilities. With hundreds of facilities across North America, this billion dollar organization is a household name in Consumer Packaged Goods. In 2 facilities spanning over 1.7M sq ft, this Fortune 500 company is 100% reliant on OTTO technology for their material transport.

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Proving the Case for Autonomous Mobile Robots

Proving the Case for Autonomous Mobile Robots

PULSE Integration partnered OTTO Motors, to undertake what is the world’s first in-depth analysis of automated mobile robots (AMRs) deployed at scale in industrial facilities.

Working with an F500 company, OTTO deployed the OTTO Materials Handling Platform at a brownfield and greenfield site. PULSE then compared performance with:

  • Forklifts
  • Conveyors
  • AGVs
  • Manual material handling

The fact that these deployments were carried out at scale was important. What we have found amongst all but the digital leaders is that businesses look to adopt the technology bit by bit, trying to hedge their bets on their investment risk and keep all stakeholders happy. The result is that you tend to get islands of automation across a business or a production facility, missing out on the network effect you get with a large scale implementation where all pieces complement each other to achieve a greater whole.

Analysis and Conclusion

The findings of PULSE’s study were unanimous – on a per-unit basis, they found that:

  •  AMRs were significantly cheaper compared to other materials handling solutions
  • 90% cost saving compared to manual handling
  • 33% saving compared to AGVs.

Depending on the investment model used (system lease, vehicle-only lease or capital funding), PULSE calculated that this would translate to ROI being achieved in one to two years.

These are significant figures for an industry that has long tended to view robotics as an expensive solution with a high bar for ROI. As McKinsey puts it, the robotics market, in the past, leaned towards customers with the biggest spending power, focusing on proprietary, non-standardized whole factory solutions that kept costs high – and meant only those firms with the deepest pockets could forge ahead.
PULSE’s study is proof that times have changed. AMRs offer a specialized automated solution for one critical area of manufacturing operations, materials handling and intralogistics. PULSE and OTTO have demonstrated how AMRs can boost agility, efficiency, productivity and space utilization in the factory, while also driving down costs.
Critically, AMRs do this in a way that is more cost-effective than other available solutions, with an ROI that fits well within standard financial reporting cycles. If, as the likes of Interact Analysis forecasts, this leads to significant growth in the mobile robotics sector, this will also help to close manufacturing’s digital divide.
The Growing Digital Divide in Manufacturing

The Growing Digital Divide in Manufacturing

There is a growing consensus that digitization is opening up a chasm in the manufacturing industry.

On one side, there are the innovative, tech-savvy firms that are forging ahead full speed with digital transformation strategies, and reaping the benefits of doing so. On the other side, are businesses that have been slower to embrace the ‘Industry 4.0’ trend and who are at risk of falling behind as a result.

Deloitte reports that early adopters of smart factory initiatives have enjoyed average gains of 10 to 12% in areas such as manufacturing output, factory utilization and labor productivity. Research published in The Harvard Business Review found that digital leaders are 1.5 times more likely to optimize production runs based on demand forecast.

Moreover, there are fears that COVID-19 could make the divide even greater. According to a survey carried out by L.E.K, 51% of businesses with existing advanced digital capabilities plan to invest more in digitized operations in response to the pandemic, compared to 30% of firms overall.

It isn’t that the benefits of digitization are disputed. According to another study carried out by Deloitte, 69% of decision-makers said switching to a digital supply chain would deliver exponential or significant benefits to their business.

Yet only a third said they were prioritizing this as a strategic objective. Asked what the barriers to digitization were, the most common answer was budgetary constraints. Other issues cited included not knowing where to start, misalignment of competing priorities across the business, and difficulties making the long term business case within a rigid financial reporting framework.

Making Good the Promise

As far back as 2016, industry bodies were heralding mobile robotics as critical pieces in the jigsaw for achieving agile, efficient “always-on” supply chains. According to Robotics.org, the use of mobile robots as an intralogistics solution would streamline workflows, cut picking errors, boost throughput, consolidate space and offset rising labor shortages and costs.

These are all benefits that the challenges of the COVID-19 pandemic bring into sharp relief. As a result, Interact Analysis has said that it believes the impact of the pandemic will lead to a long-term net rise in mobile robotics adoption.

“We believe that the impact of COVID-19 will lead to a long-term net positive for the mobile robot industry. E-commerce, near-shoring of manufacturing and adoption of robotics and automation to reduce reliance on human labor will all likely accelerate. This remains one of the most resilient and promising industries that we track.”
— Ash Sharma, MD & Senior Research Director - UK, Interact Analysis

That’s why PULSE Integration and OTTO partnered to undertake what is the world’s first in-depth analysis of automated mobile robots (AMRs) deployed at scale in industrial facilities.

The Business Case for Autonomous Mobile Robots in Manufacturing

The Business Case for Autonomous Mobile Robots in Manufacturing

OTTO Rendering
  • First deployment of OTTO AMRs at scale at an F500 company demonstrates clear benefits in productivity, cost savings, and robustness.
  • Analysis reveals that a single AMR unit represents just 10% of the equivalent human labor cost, 20% of forklift operating costs, 50% of conveyor costs and 66% of AGV costs.
For a number of years now, Autonomous Mobile Robots (AMRs) have been considered a promising technology for improving the resilience of manufacturing operations.

In the context of manufacturing, resilience means agility – the ability to react to and adapt to change at speed, whether it be in response to fluctuations in demand, market conditions, supply lines, the availability of labor, or otherwise.

The COVID-19 pandemic has tested the resilience of manufacturing operations worldwide like never before. Yet in the midst of the turmoil created by the biggest global crisis in 75 years, mobile robotics has been singled out as one of the most promising of all emerging technology sectors, offering a vital tool in the race amongst manufacturers to adopt COVID-safe, flexible, and digitized working practices.

Yet for all the optimism, manufacturing firms rightly ask one crucial question about AMR adoption – where’s the evidence that it will have the promised impact on my operations?

While there are plenty of examples illustrating the benefits of small deployments, the business case for full-scale adoption by large firms has been lacking robust evidence.

Until now, that is.

A World-First for AMRs

PULSE Integration partnered with OTTO Motors to carry out one of the world’s first large scale deployments of autonomous mobile robots for materials handling in manufacturing.

The project involved the deployment of the OTTO Materials Handling Platform to provide the backbone of advanced manufacturing and eCommerce intralogistics at an F500 company. It took place over two sites, a brownfield and a greenfield.

Brownfield deployment at an existing 700,000 square foot facility, half of which was given over exclusively to the use of AMRs to provide transport of raw material pallets, work in progress pallets, and finished goods pallets in place of forklifts.

Greenfield deployment at a brand new 1 million square foot facility, where AMRs were deployed exclusively in a 400,000 square foot area to collect materials from human pickers to take to automated machining cells, and also to perform autonomous collection of materials from automated cells.

By relying 100% on AMRs within the dedicated zones, PULSE was able to carry out a robust cost-benefit analysis in comparison with manual handling (use of hand carts or carrying good), forklifts, conveyors and also with Automated Guided Vehicles (AGVs), which run on tracks and therefore don’t offer the same freedom of movement as AMRs.

Clear Cost Benefits

1. AMRs vs. Forklifts

The findings were unanimously in favor of AMRs. At the brownfield facility, PULSE found the OTTO 1500 platform worked out at just 20% of the equivalent operating costs of forklifts. This was based on the calculation that a single unit operating around the clock, 24 x 7 x 52, cost $40-50k per vehicle per year. The equivalent cost of a single driver working 4.2 shifts per week, plus the forklift lease, comes in at $200-280k.

At the greenfield facility, PULSE deployed OTTO 100 units managed by the OTTO Fleet Manager IoT system. With an average cost of $15-25k per vehicle, the OTTO 100 represents just 10% of the labor costs of human drivers when compared on a 1:1 basis.

2. AMRs vs. AGVs

In comparison with AGVs, PULSE found that the overall productivity of the OTTO 1500 units was broadly similar and that AGVs even showed some advantage in wide-open spaces. However, in the tight, narrow spaces of a compact facility, the smaller footprint and better maneuverability of the OTTO 1500 showed clear performance benefits.

Freed from fixed paths and guideways, the AMR is, for example, able to navigate independently around obstacles and pedestrians and can maneuver flexibly within the footprint of a pallet. This makes it much more efficient when operating with work cells or production machinery. Overall, PULSE calculated that this gave the OTTO 1500 a 66% cost efficiency advantage compared to an equivalent AGV system.

3. AMRs vs. Conveyors

Compared with conveyors, meanwhile, which operate in fixed positions that cannot easily be rerouted as demands change, PULSE calculated that a single OTTO 100 unit could do the work equivalent to a 250 LF conveyor. This worked out as a 50% cost saving, although this was based on optimum loads. When conveyors, as so often happens, are sub-optimally loaded for throughput or when loading only happens sporadically, the cost benefits of the AMR can be even higher.

4. ROI

Finally, as well as significant cost efficiencies, PULSE’s analysis revealed that ROI on AMRs at this kind of scale could be as little as a year.

With payback driven by labor savings, increased productivity and efficiency, enhanced ergonomics, improved safety, lower capital costs (compared to conveyors) and the opportunity for more compact facility design (compared to AGVs), PULSE calculated that ROI for large scale deployments on system lease could be under 12 months.

Using vehicle-only lease, this would push up to 12-24 months, while upfront capital purchases would be typically paid for in two years or less.