blog-pick-to-light-cost-and-roi

Pick-to-Light Systems: Cost and ROI

3 minute read
Inventory managers understand the urgency of getting a pick done accurately and fast. Time is money – not just to the bottom line, but to the company and the people who depend on the accurate and timely flow of orders.

However, having a live inventory and barcoding capability is only a part of the story.

A Hill to Die On – Or Not

Filling orders is everything. Getting an order complete and shipped in a reasonable time is why people love Amazon and pay for Prime services. In wholesale, distribution centers, and manufacturing, there is no Amazon equivalent – they have set the bar for everyone. However, filling orders is just the last page of the story – behind every KPI is another KPI. In this case, effective warehouse managers know how to read the flow. The stack for “fill rate” looks like this:

  1. Fill Rate
  2. Pick rate or speed
  3. Mispicks
  4. Picking accuracy

Getting a grip on inventory and barcoding is only half the story. Yes, live inventory is the best way to build the complete picture needed to refine purchasing. Data is a vital way to control hard and soft costs of excess inventory and shortfalls.

Pick-to-light is a way to eliminate the extra time spent hunting for a given SKU. The less time involved with hunting a SKU, the more lines can be picked.  Not all PTL technologies are the same and it’s important to choose the right pick-to-light system for your warehouse.

Further, with pick-to-light hardware on a bin, rack or cart, there is a button that the picker has to press in order to acknowledge picking that item, so the accuracy of the pick is confirmed before of sending the order to the next stage.

Return on Investment (ROI)

Looking at ROI on live inventory, with operators using barcode scanners and tablets to scan items from bin to picking cart is easy to quantify. You know what’s selling, what’s not, and over time can build a whole ordering cycle for that SKU and others. Pick to light is more nuanced.

Let’s do a walk-through.

  1. Cart A lights up with a pick-to-light device and is operated by a picker.
  2. Picker directs the cart to the product location and picks the first line of the order, scanning the item into the cart, and then pressing the device’s button to acknowledge the pick.
  3. This continues for the next three products, including two that have just been newly stocked. The picker might not have known what these items were or where to find them, but the Pick-to-light system helped them locate the correct SKU quickly and accurately.
  4. The picker drops the cart off at the packing area and chooses a different cart to fill the next order (or group of orders).

Yes, live inventory did its job, but in this case, pick-to-light provided a faster and more accurately targeted pick than what might have happened organically. Determining ROI can’t really be calculated before the expenditure is made.

ROI needs to account not only for the “hard costs” of capital or operating expenditures, but for the “soft costs” not directly associated with inventory purchasing, receiving, stocking, and picking.

Think of time a picker is spending between the lines and factor that in.

Pick-to-Light Cost

The saying is, “Go big or go home.” It’s meant to be about chances and taking them, but in terms of starting with pick to light, especially with a smaller operation, it needs to be about modular growth and managing the deployment. For a smaller company, deploying pick to light system can seem prohibitive, rife with proprietary software licensing fees and out of the box costs that don’t include the downtime for installation or the cost to wire a warehouse.

This is why Voodoo is different.

  1. Hardware as service – lease a starter pack for $430 down and $180 per month. Ten wireless, battery operated devices + one Turbo (connects devices to the internet) + SKU Keeper account. Boom. Out of the box and into the warehouse!
  2. Easy integration – integrate with a Google Sheet or use your current ERP or WMS.
  3. Scalability – lights can be mounted almost anywhere and are easily relocated.

Watch some of our demos, and then talk to us about what you need to know to get started with faster, more accurate picks. We’re here to answer all your questions!