I write today's blog entry while listening to a 70's
progressive rock group named Renaissance doing their soundcheck for their
concert tonight.
The lead singer is said to have a five octave voice ... let's
hope we can reach some high notes when it comes to justifying your automation
project.
Like progressive rock music, good justification comes
from depth. In the case of justification, it is the depth of understanding of what is trying to be accomplished ... ALL the derived benefits ... bottom line savings ... top line revenue
growth. Let's explore some of these topics a bit more.
Project objectives
Establishing project objectives is akin the Thomas Edison's philosophy of "one percent inspiration and ninety-nine percent perspiration" ... it is a lot of work ... it takes cross-functional involvement and commitment .
When discussing with a customer cross-functional involvement I will typically hear a comment akin to "well, I have IT involved." Okay, they are involved, but are they committed? Are their objectives IT that has that project can be in alignment with? What might be in it for them is another way to think about that question. The simple fact is that if given the choice, I would like to have other parts of the company want to advocate for the project, as opposed to be a non-committal supporter. While I single out IT in the example above, one should ask the same questions of themselves for every functional area the distribution center affects.
Bottom line savings
When talking to a customer about project savings, guess what almost everyone looks at almost exclusively ... yup ... you guessed it ... LABOR. Below is the savings breakdown from a $20 million plus project implemented within the past few years. I love this example because LABOR was 28% of the overall savings, as opposed to normally expected 75 or 95%. Granted, this customer was a repeat buyer of warehouse automation. They understood the benefits both operationally and strategically. As a enterprise WANTED to implement the solution; you might say they took Edison's advice to heart ... so yes ... they did dig deep ... and the results were extremely telling.
.
... and ... to paraphrase the late great Paul Harvey ... the "rest of the story" is this project was implemented so successfully that still another project (approximately 40% greater in scope) was implemented by the same client at another site.
Top line growth
A bit earlier, I discussed cross-functional involvement and commitment ... you should see some of the looks I get from customers at times when I asked about their "sales or marketing departments" being part of the cross-functional team ... while no one has ever said "are you crazy?" you could certainly read it in their eyes.
Several years back, Tyson beef operation in Dakota Dunes asked us to look at automation feasibility for several of their distribution operations. The presentation of our findings/recommendations was to the now COO of Tyson Corp, Jim Lochner and his staff. That day, I came to appreciate strongly he advocated to his staff linkage between capital investment and revenue growth ... and ... how careful all in the room were to "signing up" to that commitment.
Having a unclouded crystal ball is extremely challenging (oops ... I think I hear Edison whispering again) ... but the rewards can be tremendous ... and the justification, with a organizational commitment to revenue growth can make the change a "putt from the edge of the green" into a gimme.
Oh ... and I almost forgot ... that 40% greater in scope project I made reference to a bit earlier ... well let's just say that a significant portion of that project's justification came from being able to facilitate a 5% revenue increase in some very profitable export business.
So Yes ... just like progressive rock music ... depth, as well as diligence and commitment are the secrets to justification success.
For more information on distribution center automation, feel free to visit http://www.tgw-group.com/.
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