The Final Step in Selecting Automation for Sorting Facilities

In previous articles, we delved into the benefits of automation in sorting facilities, the criteria necessary for selecting an automation solution, and the technologies applied. Today, we focus on constructing the ultimate business case that will not only guide the choice of automation but also justify its economic viability.

When building a business case, the core variables to consider include:

• The volume that needs sorting per hour of machine/system operation.
• The efficiency per hour of different sorting solutions and systems, including a comparison with current performance.
• The number of personnel required to operate the machine at planned efficiency and for a specified number of sorting directions.
• The level of salaries currently and in the projected investment period.
• The amortization costs of various machine solutions or the entire sorting system.
• The maintenance costs (including energy consumption and servicing) of the machine/sorting system.
• The footprint of the system – how much space it occupies.
• The cost of warehouse space rental.

With these variables in hand, one can proceed to create the business justification. After narrowing down the selection based on previously described criteria, there will likely be several potential solutions. These will also vary in CAPEX—the capital investment required. Our financial capacity to fund this expense will be one of the initial constraints on the various options.

If there are limitations regarding warehouse space (such as the known size of a plot or an investment in an existing warehouse), this will be another boundary condition. It might make specific solutions impossible—for example, using two simpler sorting machines instead of one but much more advanced.

With all variables accounted for, we calculate the unit sorting cost. The example of dummy data is below.

and the total sorting cost

Additionally, the calculations will yield planned employment and requirements for the necessary space. Here, we must also consider several variables, such as the required space for different operational areas and factors like employee absences due to vacations, etc.

Ultimately, we will obtain a comprehensive decision-making model, enabling us to plan operations and make informed decisions. This model is not just a theoretical exercise; it is an essential tool for optimizing efficiency and ensuring that the chosen automation solution aligns with both current needs and future growth.

By approaching this final step systematically, businesses in the postal and parcel sector can not only ensure that they select the right automation solutions but also that their investment is grounded in solid, quantifiable benefits. The goal is clear: to achieve an optimal balance between performance, cost, and operational demands, leading to a more efficient, responsive, and profitable sorting facility.

Part I

The Benefits of Automation in Parcel Sorting Centers

Part II

Parameters for Planning the Automation of Sorting Centers

Part III

Exploring the Landscape of Automation in Sorting: A Dive into Modern Technologies

Part III supplement

AMRs: Is it The Future of Parcel Sorting?

Do you want to know more? Contact Greg Urban Last Mile Experts