AGVs, or Automated Guided Vehicles, are mobile robots designed to transport materials within warehouses, production plants, and distribution centers without human intervention. They automate tasks traditionally performed by forklifts, conveyor systems, or manual carts, efficiently moving goods from point A to point B.
The purpose of this article is to provide Polish entrepreneurs and operations managers with a comprehensive guide to calculating the return on investment (ROI) for AGV systems. Understanding the potential financial benefits and the payback period is essential before making an informed decision to implement this technology. Many businesses (88%) view uncertainty about ROI as a significant barrier to investing in automation (Mobile Industrial Robots).
Therefore, this article aims to provide clear and practical guidance on how to calculate and interpret ROI for AGV systems in the context of Polish business.

📈What is ROI from AGVs? Definition and Key Metrics

The ROI (Return on Investment) metric is a fundamental financial measure used to evaluate the efficiency or profitability of an investment. It represents the ratio of the net profit or benefits generated by an investment to the cost of that investment, usually expressed as a percentage or ratio. The general formula for calculating ROI is:

(Net Profit / Investment Cost) × 100%.

In the context of implementing AGV systems, ROI analysis is a comprehensive evaluation of the potential pros and cons – specifically, the financial returns relative to the costs incurred – associated with deploying autonomous transport vehicles in a warehouse or industrial environment. It involves a detailed examination of various factors including initial capital expenditures, ongoing operating costs, anticipated productivity increases, labor cost savings, and safety improvements, all aimed at determining the overall profitability and financial justification of investing in AGVs.

Key metrics to consider when analyzing the ROI of AGV systems include:

• Initial Investment Costs: Expenses incurred for purchasing or leasing AGV vehicles, system installation, software integration, and any necessary modifications to the existing infrastructure.
• Operating Costs: Ongoing expenses associated with the AGV system, such as maintenance, software licensing, energy consumption, and employee training.
• Labor Cost Savings: Reduction in labor costs achieved by automating material handling tasks using AGVs.
• Productivity Increases: Improvements in efficiency and output resulting from the deployment of AGVs, such as increased throughput and faster order fulfillment.
• Safety Improvements: The financial impact of reducing workplace accidents, injuries, and the associated costs through enhanced AGV safety features.

🧮How to Calculate ROI from AGVs? Methods and Examples

The basic method for calculating ROI on an investment in AGVs involves comparing the cost of the AGV system with the annual labor cost savings, particularly with respect to replacing forklift operators. The formula for a simple payback period is as follows: 

Payback Period (in years) = Total Cost of the AGV System / (Annual Forklift Operator Salary × Number of Replaced Operators).

Example: Consider a warehouse operation with 15 forklift operators, each earning 15,000 EUR annually. If the cost of the AGV system intended to replace these operators is 437,500 EUR, the simple payback period would be: 437,500 EUR / (15,000 EUR × 15) = approximately 1.94 years, or just under two years.
This simple calculation offers a quick preliminary assessment of the potential return based on the direct replacement of labor, which is often the most significant and easily measurable benefit for many businesses. However, it is important to note that this is a simplified view.
A more comprehensive approach to calculating the ROI of AGV systems involves a two-stage process that takes into account the total cost of employing a worker (including benefits and overtime) and the ongoing costs associated with existing manual material handling equipment, such as forklifts.

Stage 1 Formula: Annual Cost of the Existing System = ((Annual Employee Cost with Benefits + Average Annual Overtime Cost per Employee) × Number of Employees) + (Total Annual Cost of Manual Forklifts).

Stage 2 Formula: Years to Breakeven = Total Cost of the AGV System / Annual Cost of the Existing System.

Example: Consider the same operation with 15 forklift operators. Suppose the annual cost of an employee with benefits is 18,750 EUR, the average annual overtime cost per employee is 3,750 EUR, and the total annual cost of maintaining and operating 7 manual forklifts is 36,750 EUR (5,250 EUR per forklift). If the AGV system costs 437,500 EUR:

●  Stage 1: ((18,750 + 3,750 EUR) × 15) + 36,750 EUR = 337,500 EUR + 36,750 EUR = 374,250 EUR.

●  Stage 2: 437,500 EUR / 374,250 EUR = approximately 1.17 years, or about 14 months.

This more detailed calculation provides a significantly shorter payback period by taking into account the comprehensive costs of the current system, offering a more compelling financial justification for investing in AGVs. A full ROI analysis should also include other factors such as productivity gains and safety improvements. Although labor cost savings are significant, the overall economic benefit of implementing AGVs is much broader.

⚙️Impact of AGV Implementation on Operational Efficiency and Labor Costs

AGVs contribute to increased operational efficiency by automating repetitive and often time-consuming material handling tasks, which improves workflow. Unlike human workers, who require breaks and are subject to working hour limitations, AGVs can operate continuously, 24 hours a day, 7 days a week. This continuous operation results in increased throughput, faster order fulfillment, and the ability to handle larger volumes of goods in a shorter period. Additionally, AGVs are programmed to follow optimized routes, which reduces travel time and minimizes congestion within a facility.

The primary driver for the adoption of AGVs is the potential for significant labor cost reduction. By automating material handling tasks, AGVs can replace human workers in various labor-intensive tasks, such as manual picking, replenishment, and transportation of goods. Industry data suggest that it typically takes between 1.3 and 1.5 AGVs to replace one manually operated vehicle, such as a forklift (AGV ROI Calculator). This direct replacement of labor translates into substantial wage savings, especially in operations requiring multiple shifts.

In addition to basic wages, AGVs can lead to savings in other labor-related costs. They do not require overtime payments, benefits packages (such as health insurance or pension contributions), or paid leave (vacation, sick leave), which represent significant employee-related expenses. Moreover, the high employee turnover common in warehouses and logistics can be costly due to recruitment and training expenses; AGVs can help stabilize the workforce and reduce these associated costs. The training costs for new AGV operators and maintenance personnel are typically lower and less frequent than the ongoing training and development required for a larger number of manual workers.

AGVs have the capability to operate continuously, around the clock, which is a significant advantage over workers who have limitations on working hours. This continuous operation enables businesses to maximize production and throughput, potentially leading to increased revenues and a faster return on the initial investment in the AGV system. In operations running multiple shifts, the savings resulting from eliminating the need for multiple teams of workers can be especially significant.

💰Typical Costs Associated with Investing in AGV Systems

The initial investment in AGV systems includes the cost of purchasing the vehicles themselves, which can vary considerably depending on the type and capabilities of the AGV:

●  Forklift-style vehicles, also known as AMRs or "turtles". This is the most basic type, with costs ranging from approximately 40,000 to 70,000 EUR, with an average of 50,000 EUR.
●   AGV tractors/tuggers: Used for towing carts, these cost between 40,000 and 85,000 EUR, depending on payload and navigation capabilities.
●   Automated horizontal transport vehicles: Typically priced at around 60,000 EUR.
●   Automated pallet trucks and forklifts: Capable of lifting and stacking, these are more expensive, with prices ranging from 75,000 to 200,000 EUR or more, depending on lift height, payload, and features.
●   Automated high-bay vehicles (VNA): For high-density storage warehouses, these can cost between 150,000 and 200,000 EUR.

The final price also depends on factors such as payload, navigation technology, battery type, charging system, and any required customizations. In addition to the cost of the vehicles, businesses must consider the cost of software to manage the AGV system, which is essential for controlling and coordinating the fleet. This software typically costs on average between 10,000 and 40,000 EUR, depending on the complexity and features of the system, such as fleet management capabilities, route optimization, and integration with other warehouse systems.

Costs associated with configuring and installing the AGV system can vary significantly depending on the complexity of the facility layout and the extent of modifications required to accommodate the AGVs. This may include installing fleet management systems, configuring charging stations, and integrating the AGV system with existing warehouse management systems (WMS) or enterprise resource planning (ERP) systems. The complexity of the installation is often categorized as low (up to 10 pick-up/delivery points), medium (10-50), or high (50+), with costs increasing accordingly.

Like any other equipment, AGV systems require regular maintenance and occasional repairs, which contribute to the overall cost of ownership. The annual maintenance cost for AGVs is typically estimated at around 5% of the vehicle's purchase price. These costs include routine maintenance, software updates, and potential repairs to ensure the AGV system continues to operate efficiently.

Depending on the type of AGV and the existing warehouse infrastructure, certain facility modifications may be necessary, such as installing charging stations or designating dedicated paths for AGVs. Additionally, training programs for employees who will operate, monitor, and maintain the AGV system are required, representing an additional cost. The scope of these costs will depend on the complexity of the AGV system and the level of specialized expertise needed to manage it.

^{*Approximate costs in PLN were calculated using an exchange rate of 1 EUR = 4 PLN. Actual costs may vary depending on various factors.}

Case Studies: 🏆 AGV Implementation Successes and Achieved ROI

Many companies across various industries have successfully implemented AGV systems, optimizing their operations and achieving significant ROI. Examples include:

• Implementation at RABEN: The implementation of AGVs at Raben Logistics Polska contributed to increased efficiency, improved safety, and enhanced customer service quality. This solution proved to be a key step in optimizing warehouse operations and gaining a competitive edge in the logistics market.
• Huhtamaki: The deployment of AGVs at Huhtamaki Foodservice Poland resulted in improved operational efficiency, enhanced safety, and better internal process quality.
• Brødrene A&O Johansen A/S (building materials wholesaler, Denmark): They implemented three AGVs and recorded significant internal logistics cost savings of 60-80%. (Source: Global AGV)
• Toyota (automobile manufacturing, United Kingdom): They installed the AGV300 TOW system from MasterMover to automate the inefficient and costly process of transporting resin rear doors, which led to increased productivity and maximized production floor efficiency. (Source: MasterMover.com)
• AUO (electronics manufacturing, Taiwan): They integrated production lines with AGVs and AMRs, reducing the overall number of manual tasks by 80% and significantly enhancing production efficiency (Source: AUO).

The benefits achieved by companies that have implemented AGV systems are manifold and include:

• Significant labor cost savings: Automating material handling tasks reduces the need for a large workforce, resulting in substantial wage savings and related labor cost reductions (Source: Robopac ).
• Increased productivity and throughput: AGVs can operate continuously and efficiently, leading to higher production rates and faster order fulfillment (Source: Vision Nav Robotics).
• Improved safety: AGVs are equipped with advanced safety features that minimize the risk of workplace accidents and injuries. (Source: CYNGN)
• Enhanced efficiency and accuracy: Automation reduces human error in material handling and inventory management, leading to more accurate operations and reduced waste. (Source: CYNGN)
• Scalability and adaptability: AGV systems can be easily expanded or reconfigured to adapt to changing production requirements and warehouse layouts. (Source: LogisNext)
• Reduction in damage to goods and equipment: The precise movements and obstacle detection capabilities of AGVs minimize the risk of collisions and damage to transported materials as well as warehouse infrastructure. (Source: Robopac)
• Better space utilization: AGVs can often navigate narrower aisles compared to manual equipment, allowing for more efficient use of warehouse space. (Source: HCO Innovations)
• ROI and payback period data achieved by companies implementing AGV systems further underscore their profitability:
  • Brødrene A&O Johansen A/S achieved a payback period of less than a year (resulting from 60-80% annual savings). (Source: Global AGV)
  • The payback period for AGV projects typically averages around 2 years for three-shift operations, 4 years for two-shift operations, and 6 years for single-shift operations (Source: AGV Network).

 

🤖The Role of AGVs in Overall Automation of Logistics and Production Processes

AGV systems are not isolated solutions; rather, they are integral components of a broader automation strategy pursued by businesses aiming to optimize logistics and production processes. They provide a flexible and efficient means of automating internal transport and material handling tasks, which are often bottlenecks in overall operational workflows. By automating these tasks, AGVs free up human resources to focus on more complex and value-added activities, thereby contributing to more efficient and productive overall operations.

One of the key advantages of AGV systems is their ability to seamlessly integrate with other automation technologies commonly used in warehouses and manufacturing facilities. This includes integration with industrial robots for tasks such as automatic loading and unloading or collaborative work on assembly lines. AGVs can also be integrated with automated storage and retrieval systems (AS/RS) to streamline the flow of goods between storage locations and picking areas. Additionally, they can work in conjunction with conveyor systems, providing a flexible transport link between fixed automation and various work zones within a facility.

Beyond manufacturing, AGVs play a significant role in creating comprehensive logistics solutions in warehouses and distribution centers. They are used for a wide range of tasks, including transporting raw materials from receiving docks to storage areas, moving goods between different stages of production, and transporting finished products from production lines to storage or shipping areas. AGVs also contribute to goods receipt and dispatch processes, including stock replenishment and order picking, often integrating with warehouse management systems (WMS) to ensure an efficient and accurate flow of materials throughout the logistics process.

⏱️Factors Affecting the Speed of ROI for AGV Investments

The number of work shifts per day has a significant impact on the payback period of an AGV investment. Operations running three shifts per day generally experience a much faster ROI (around 2 years) compared to two-shift operations (around 4 years) or single-shift operations (around 6 years). (Source: AGV Network). This is because the AGV system is utilized for more hours, maximizing its operational efficiency and accelerating the savings generated through labor replacement and increased productivity.

The type and value of materials transported by AGVs can affect ROI in several ways. For high-value or delicate goods, the precision and controlled movement of AGVs can significantly reduce the risk of damage during transport, leading to substantial savings by minimizing losses and waste. Automating the transport of hazardous materials with AGVs can also result in cost savings by reducing accident risks and providing a safer work environment, potentially lowering insurance premiums.

The level of automation in other processes within the enterprise can influence the ease of integrating AGV systems and the overall benefits derived from their implementation. In highly automated environments, AGVs can often be more easily integrated with existing warehouse management systems (WMS), enterprise resource planning (ERP) systems, and other automated equipment, resulting in smoother workflows and increased overall efficiency. This seamless integration and enhanced synergy among various automated systems can contribute to a faster realization of the expected ROI from AGVs.

The performance and reliability of the chosen AGV system are key factors affecting the speed of ROI. AGV systems with high uptime (e.g., up to 99%) ensure continuous operation and maximize the potential for labor cost savings and productivity gains. Reliable AGVs that require minimal downtime for maintenance or repairs will contribute to a faster payback period by consistently performing their tasks and avoiding disruptions in overall workflow. The prevailing labor costs in a given region, such as Poland, directly affect the potential for cost savings through automation technologies like AGVs. In areas with higher labor costs, the financial benefits of replacing manual labor with AGVs are more significant, leading to a quicker recovery of the initial investment. Considering the rising labor costs in Poland, investing in AGVs to automate material handling tasks may offer a significant financial advantage and a faster payback period compared to regions with lower labor costs.

🧩Integration of AGV Systems with Other Systems (WMS, ERP)

Integrating AGV systems with warehouse management systems (WMS) offers numerous benefits in optimizing warehouse operations. This integration enables real-time data exchange between AGVs and the WMS, providing accurate and up-to-date information on inventory levels, locations, and movements. The WMS can directly dispatch tasks to the AGVs, optimizing their routes and ensuring an efficient flow of materials throughout the warehouse. This seamless communication reduces the need for manual intervention, minimizes errors, and enhances overall warehouse efficiency and productivity.

Integrating AGV systems with enterprise resource planning (ERP) systems extends the benefits beyond the warehouse to the entire enterprise. This integration provides a holistic view of the supply chain, facilitating better coordination among logistics, production, and other business functions. Real-time data from the AGV system can inform inventory management, production planning, and order fulfillment processes within the ERP system, leading to better decision-making, optimal resource allocation, and improved overall business performance.

✅Summary: Maximizing ROI from AGV Investments

Investing in AGV systems offers businesses significant long-term benefits that go far beyond the initial payback period. AGVs are depreciable assets that can provide years of reliable service with minimal additional capital expenditure after the initial investment, thereby increasing in value over time. Continuous operation, reduced labor costs, enhanced efficiency, and improved safety all contribute to enduring savings and increased profitability in the long run.

To approach the ROI analysis of AGV systems and maximize the return on investment, Polish businesses should:

• Conduct a thorough analysis of their specific needs and objectives: Clearly define the goals they aim to achieve with the implementation of AGVs, such as reducing labor costs, increasing throughput, or enhancing safety.
• Consider all relevant costs and benefits: In their ROI calculations, include both direct factors (e.g., vehicle purchase, installation, labor cost savings) and indirect factors (e.g., reduced damage, improved safety, increased flexibility).
• Select the appropriate ROI calculation method: Choose a method that matches the complexity of their operations and provides a realistic assessment of the potential return, starting with simple calculations and moving to more advanced ones as needed.
• Plan for seamless integration with existing systems: Ensure that the chosen AGV system can be effectively integrated with their WMS, ERP, and other relevant automation technologies to maximize efficiency and data flow.
• Monitor and optimize AGV system performance: After implementation, continuously track key performance indicators (KPIs) and make adjustments to routes, schedules, and configurations to ensure the system operates at peak performance and delivers the expected ROI.
• Consider partnering with an experienced AGV solutions provider: Look for reputable suppliers with a proven track record and expertise in warehouse optimization and AGV deployments to guide the process from system design to installation and ongoing support.
• Take advantage of the robotics tax relief. As of January 1, 2022, a law on robotics tax relief came into effect, which will remain in force for 5 years. According to this law, “A taxpayer engaged in non-agricultural business activity may deduct from the tax base, determined in accordance with Article 26(1) or Article 30c(2), an amount equal to 50% of the costs incurred in the tax year for robotics, provided that the deduction does not exceed the income earned by the taxpayer from non-agricultural business activities in the tax year.” All costs incurred (depreciation, services, training, modernization) related to robotics are eligible for this relief. Eligible costs for robotics are considered to include:
  • mobile robots, as well as machines and peripheral devices functionally related to industrial robots,
  • costs of acquiring intangible assets necessary for the proper commissioning and acceptance of industrial robots and other fixed assets listed in point 1 (i.e., fleet management system for AMR/AGV), costs of acquiring training services related to industrial robots, and other fixed assets or intangible assets mentioned in points 1 and 2,
  • Fees specified in Article 23b(1), as stipulated in a leasing agreement under Article 23f concerning industrial robots and other fixed assets listed in point 1, if, after the basic leasing period, the financing party transfers ownership of the fixed assets to the lessee. (Source: SEJM RP)

This means that an entrepreneur can benefit not only from tax relief for AGV forklifts but also for related peripheral equipment such as sensors, safety curtains, HMI panels, or end effectors used to perform specific operations or to operate machines, as well as for overarching monitoring systems (industrial PCs, software, industrial networks, etc.). The taxpayer may also apply for a refund of costs related to management, diagnostic, monitoring, or servicing systems. Consequently, an entrepreneur may purchase, among other things, IT equipment, management software, network and monitoring systems, provided that all these elements are connected to the automated workstation.

By following these recommendations, Polish businesses can make informed decisions regarding investments in AGV technology and take the necessary steps to maximize ROI and achieve their automation goals. Here are the key takeaways about AGVs (Automated Guided Vehicles) and AGV systems based on the provided document: