How to Calculate the ROI of a Warehouse Automation Project?

A warehouse automation project is no small investment, but the potential benefits can be substantial. How can you ensure these returns justify the expense? Alexis Laverdant, Senior Manager in Supply Chain at independent consultancy Mews Partners, outlines the approach to accurately calculating the return on investment (ROI) of warehouse automation.

“Calculating ROI from an automated warehouse solution requires a thorough, data-driven approach,” he explains. This involves breaking down costs and productivity rates by product category and logistics stage.” Consider automotive parts: Exotec’s intralogistics automation system, for example, is tailored for handling small parts up to 30 kilograms per bin. This contrasts with systems engineered for larger, heavier items like car bodies, which follow a different cost structure. Keeping these distinctions is essential to a precise ROI calculation.

“This sets the foundation for a tailored cost baseline,” Alexis Laverdant continues. “During the study phase, we analyse the warehouse’s operational accounts to map out cost allocations according to productivity metrics—such as £0.20 per item in receiving, £0.25 in picking. This allows us to establish per-unit costs at each logistics stage.”
Once logistics flows and product typologies are defined, the next step is projecting these metrics at least five years into the future.

“A warehouse automation project is a long-term commitment,” he notes. “We work with executive management to align on the company’s growth plans, creating a baseline scenario that forecasts manpower and warehouse space needs without automation, generating a theoretical total cost.”

This baseline and forward-looking model then make it possible to calculate the ROI of an automated warehouse, incorporating the capital outlay, maintenance, and projected productivity gains, which can typically outperform manual operations by a factor of four or five. “At this point, we have all the groundwork in place to conduct a thorough simulation!“

Beyond the core investment in warehouse automation equipment, there are further costs to account for, such as retrofitting the facility to accommodate additional floors, fire protection, or new electrical systems. “There’s also software, integrations, and IT infrastructure to consider,” Alexis Laverdant adds, “alongside project oversight, external consulting, relocations, training, and scaling up operations.”

Ongoing costs must be projected as well, from labour and maintenance to spare parts, energy, consumables (such as boxes and labels), and overseeing the automated warehouse solution itself, all ideally mapped out over five years.

Finally, collaborating with the finance department is essential to understand funding options—whether through equity or loans—and to ensure alignment with the company’s target returns, including its weighted average cost of capital (WACC). “With these details, we can sharpen the ROI calculation even further, particularly on the cost side.”

So, what about the returns? ‘ Direct savings are seen mainly in order accuracy—less damage, fewer errors, and more efficient parcel preparation. Indirect savings come from improved stock control and potentially better terms with suppliers due to structured procurement. Automated systems also enhance transport efficiency by enabling denser packing, optimising truck loads, and reducing shipping costs. In-store, automated sorting via an autonomous logistics solution improves the speed and precision of parcel preparation, leading to additional savings. ’

There are also non-financial gains, such as enhanced capacity, throughput, and logistics capabilities, which can significantly boost service quality.

Warehouse automation, especially warehouse robotisation, has become a strong recruitment factor in a logistics sector grappling with labour shortages. For younger talent, an automated warehouse offers a more attractive, dynamic environment, and career pathways are often better than in manual warehouses.

D’autant plus que les solutions d’entrepôt automatisé permettent d’avoir des postes plus ergonomiques, moins pénibles, avec des tapis antifatigue, des prises de colis à la bonne hauteur et la mise en place de rotation pour des activités plus variées. La grande crainte des opérateurs est d’être remplacés par des robots et renvoyés. « Je travaille pour la mise en place de solutions de mécanisation d’entrepôt depuis 10 ans, confie Alexis Laverdant. “In the vast majority of cases, these projects are intended to handle additional activity flow with a stable workforce. What’s more, we’re seeing increased loyalty from staff who recognise genuine opportunities to develop their skills. ’

With these considerations in mind, it’s possible to calculate a full-cost ROI. For medium-sized projects costing £10–30 million, the ROI typically takes six to eight years. Larger projects, exceeding £50 million, might see returns in around ten years. “And if we add the non-financial gains, the benefits to a business are undeniable,” Alexis Laverdant concludes.. Mon conseil final : n’hésitez pas à vous faire accompagner. Un accompagnement par des experts à tous les niveaux (équipementier, conseil, informatique…), qui apporteront une solution facile à prendre en main et à exploiter, pérenne et évolutive. Vous éviterez ainsi les mauvaises surprises et profiterez au maximum des atouts de votre solution d’automatisation d’entrepôt ! ’

The Exotec® Skypod® system exemplifies advanced automated storage and retrieval (ASRS), using robotics to achieve industry-leading performance and remaining highly adaptable to meet evolving customer needs. Deployable in mere months, it enables you to stay agile in a shifting supply chain landscape.