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Are Automated Data Collection Systems Cost-Effective? How to Justify Your Investment

Inventory Management, Technology

Automated data collection systems are often a substantial investment, particularly for enterprises first implementing company-wide initiatives involving thousands of assets. Automated data collection champions within organizations are often eager to prove ROI in order to justify both the effort and the cost. Fortunately, justifying investments in automated data collection is feasible, and often within reasonable time frames.
Keeping Pace with Innovation Has Rewards
inventory-control-scannerEarly adopters in various industries have the burden of proving the value of embracing advancements in technology. It’s at this early juncture that most technology investments are most expensive, with prices typically dropping as efficiencies are gained and advancements evolve from new and innovative to standard and expected.
Automated data capture (ADC) has been proven cost-effective and even profitable across a multitude of industries. While some industries are just beginning to adopt regulatory standards requiring companies to use efficient asset tracking and data collection methods, others are first discovering the value of automated data collection in improving business processes.
The fact that ADC isn’t a new innovation yet also isn’t quite saturated across industries creates a unique opportunity for companies in many verticals. In other words, you get the advantage of lower costs coupled with the confidence of adopting a proven technology. Look for success stories from companies not only in your industry but in other verticals with comparable business processes and systems benefiting from automation in various forms.
Convincing business leaders to adopt automatic data collection is the first step, but you’ll be expected to justify the investment that you’ve championed following implementation. Fortunately, justifying ADC investments is relatively simple when you look to the right data.
Identify Easily Quantifiable Metrics
Justifying investments in automatic data collection should encompass both direct savings and ROI and the more-specific but sometimes harder-to-measure soft benefits, or tangible vs. intangible benefits.
Concrete, quantifiable benefits are easiest to measure and thus are the easiest path to justification. These easily quantifiable metrics include:

  • Labor Costs – ADC reduces demands on staff, enabling companies to realize savings in overtime costs, taxes, and other benefits.
  • Operating Costs – By reducing labor demands and optimizing processes, companies are able to achieve more with less both in terms of time (greater output from the same or fewer resources boosts profits) and space (inventory storage, shared assets, etc.).
  • Fixed Asset Investments – One of the biggest areas for potential gain is in the area of fixed asset investments. ADC makes it possible to better monitor and maintain expensive equipment, machinery, and other assets, which in turn extends the usable lifespan of many assets. Thus, businesses are able to get more from investments and extend the time between repairs and replacements.

As these costs are typically already measured in some form or another by most organizations, determining the ROI of a newly implemented ADC initiative is as simple as comparing before-and-after figures, provided no other variables were present that could skew the data.
Establish Baselines
asset-tracking-IMG_3906_revWhen implementing an ADC initiative, identify quantifiable, measurable metrics at the start of the project focused on areas in which you hope to realize gains. For instance, automatic data collection can speed documentation time and reduce errors. Both of these objectives can be quantified.
Determine how much time it takes to perform data collection tasks without ADC systems in place – either for a particular task or over a specified duration of time. Likewise, calculate errors identified and/or corrected during a pre-determined time frame or on a given data collection task before introducing ADC. Before and after comparisons are simple when you take the time to establish a baseline before implementation.
Don’t Ignore Other Measurable Benefits
Many of the benefits of automated data collection are soft, or not as easily quantifiable or easily tied back to ADC as the cause. Alone, these benefits are sometimes insufficient to convince data-oriented, bottom line-focused leaders that the investment is justified. But tapping into today’s vast data sources to offer measurable progress in these areas is particularly powerful when combined with other data illustrating clear cost savings across other areas such as labor, overhead, and fixed asset costs. Don’t ignore soft benefits such as:

  • Increased Sales – Sales may increase due to better data accessibility for sales staff, such as field sales representatives, on factors such as current inventory levels and detailed product information.
  • Employee Satisfaction – Employees armed with the tools to do their jobs effectively are generally happier, and as a result, they work harder, produce better outcomes, and are loyal to their employers.
  • Efficiency – Efficiency gains in one area tend to have a domino effect that is realized throughout the organization (much like the ripple effect in the supply chain). Thus, ADC often results in improved efficiency in departments directly impacted by ADC as well as others.
  • Customer Experience and Satisfaction – Happy employees have better, more positive interactions with customers. ADC can contribute to better service delivery, faster shipment and product delivery, accurate product information and communication, and fewer inventory and shipment errors, a group of effects that together have substantial impacts on customer satisfaction.

A comprehensive analysis and review that encompasses both tangible and intangible benefits is the most effective way to prove the ROI of ADC investments – even to the most critical executives. When you prove the gains realized across practically every facet of the organization, the value of an ADC system is impossible to deny.

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