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The Optimal Time forInvesting in AMRs
Why now is the right time.
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The Optimal Time for Investing in AMRs

Contents
Introduction

The Benefits of AMRs

Is Waiting Worth It?

The Cost of Waiting

Now, Later, or Never?

Conclusion

The Optimal Time for Investing in AMRs

Introduction
The benefits of automation in a warehouse areclear and proven. Deciding when to make thetransition is the hard part.
Warehouses and manufacturers have beenusing automation for a long time now. The
practice of automating tasks that a person
does not want to do or cannot do isn’t new.
However, the forms of automation and theirapplications change and grow as new technologies develop. Many traditional forms of automation require infrastructure changes, which
can be costly and lead to considerable downtime in operations. While Automated Guided
Vehicles (AGVs) have tried to address theseissues, Autonomous Mobile Robots (AMRs)
are perfecting what AGVs set out to do.
Interact Analysis predicts a strong growth in

AGV and AMR deployment over the coming
years from almost 60,000 deployed in 2020 to860,000 being deployed in 2025 (2.1 million in
total by that time). Or, put in other terms, fromover 9,000 customer sites in 2020 to 53,000
in 2025, with AMRs expected to increase
market share with each year.[1]While the growth is staggering, it still represents less than 30% of the total market by2025. The room for further growth is huge andit begs the question, “Why isn’t a larger portion of the market getting involved sooner?”
Here, we are going to look at the benefits of
AMRs in a warehouse, reasons that warehouses are hesitant to invest, and why warehouses stand to save more by adopting thisnew technology early.

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The Benefits of AMRs
Productivity

Increased Accuracy & Inventory Visibility

A quick glance at any case study that has
adopted AMRs in its operations shows a clear
boost in productivity. Most show anywherefrom a 100%–200% (2x–3x) increase in picking
production. ITOCHU Logistics China boasts a
2.13x increase in picking efficiency after
adding AMRs to its distribution center.

A major source of lost revenue is due tohuman error. Usually in the form of picking thewrong item or being unaware of a surplus orlack of inventory. AMRs reduce the error rateand collect real-time inventory data. This
allows warehouse managers to save on operations both in time and expenses, by being
able to make more informed decisions about
when to add more inventory. SF Supply Chain
China saw a pronounced improvement in its
error rate after introducing 20 AMRs to its
warehouse.

Reduced Labor Costs
Labor costs are on the rise around the globe.
The demand for workers is getting more andmore competitive as consumer demand ande-commerce continue to grow. Automation
reduces labor costs and relieves businesses
the grievances of labor shortages, particularly
during peak seasons.
Flexibility
AMRs are the most flexible form of automation available. They are adaptable to any environment, don’t need any infrastructurechanges, and can be scaled up or down
depending on the user’s needs.

SafetyAccording to the US Bureau of Labor Statistics in 2019, hand laborers, material movers,
stockers, and order fillers accounted for 21% of
workplace injuries and illnesses among the
top ten occupations with the most job-related
injuries and illnesses (see fig. 1). The mostcommon cause of injury among these professions is material handling. Furthermore, handlaborers and material movers had the highest
number of days away from work.[2]Figure 1: Top 10 Occupations with the Most Job-Related Injuries & Illnesses in 2019

Nursing Assistants (16%)
Heavy Truck Drivers (16%)
Material Handlers (15%)
Light Truck Drivers (15%)
Construction Workers (11%)
Maintenance Workers (9%)
Order Fillers (6%)
Janitors (5%)
Registered Nurses (4%)
Retail Salespeople (3%)

*Data for 2020 was not available at the time of publishing.

The Optimal Time for Investing in AMRs

Is Waiting Worth It?
While AMRs aren’t as expensive as otherforms of automation, they still aren’t whatmany would consider “cheap.” Warehouses
that have relied on manual operations may behesitant to make the switch for several reasons, but according to McKinsey & Company’s
Industrial Robotics: Insights into the Sector’sFuture Growth Dynamics, “By far the mostwidely cited challenge is the cost of robots.” Intheir survey, “All players identified the cost of
robots as one of the primary challenges toadoption.”[3]Analysts expect the cost of
robots to drop by 20% to 60%
by 2025.

For the past few years, truly autonomous
AMRs that rely on sight and sensors havebeen priced at around $30K per robot.
Depending on your source, analysts anticipate
the cost to drop by 20%–65% by 2025
(Boston Consulting Group, BCG, expects a
20% drop by 2025 while ARK Invest anticipates a 65% drop).[4] The uncertainty doesn’t
make things easy for the consumer, but analysts can agree that they will get cheaper overtime.
On the face of it, it’s no surprise that warehouses want to hold out for cheaper AMRs in
the future. But when you break down the numbers, it simply costs more to wait than toadopt the technology now and reap the benefits for years to come.

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04. The Cost of Waiting
In this section, we’re going to look at labor andwage trends for the warehousing industry in
the United States, then apply three different
scenarios for a small warehouse to examine
the potential costs over a 10 year period. Alllabor and wage data were collected from the
US Bureau of Labor Statistics, and all averages are mean averages unless otherwise
stated.
Labor
Between 2014 and 2020, the number of warehousing and storage employees has been on
the rise at a relatively constant rate. There has
been an 8%–12% increase in the workforce
each year (see fig. 2).
This shows the industry is growing, but on its
own doesn’t tell us by how much. For that weneed to also look at the unfulfilled positions, or
job openings, to see how many jobs areneeded in the industry to keep up with consumer demand. If we look at the labor shortage, we can see, while it isn’t as consistent, it
is also on the rise, and the gap is widening.
This is true for many jobs in the supply chain
as well, such as manufacturing, retail trade,
construction, wholesale trade, etc.
This means that warehouses, and otherindustries closely linked to warehousing, arefacing a growing problem. The number ofworkers needed to keep operations running attheir maximum level of output is outpacing
the available workforce. A certain scaremongering rhetoric has many believe that automation is or will be taking jobs away frompeople. However, we are in fact observing the
opposite: consumer demand is causing an
increase in both automation and employment.
The level of automation just has not yet
reached what's needed to correct the labor
gap.

Figure 2: The U.S. Labor Gap, Showing Positions Required and Positions Filled From 2014 to 2021
1750

Thousands

1500

1250

1000

750

500

2014

2015

2016

2017

Positions
Filled

2018

2019

2020

Positions
Required*Data beyond July 2021 was not available at the time of publishing.

2021

The Optimal Time for Investing in AMRs

Figure 3: The Average Hourly Wage in the US between 2014 to 2021

23.0
22.5
22.0
21.5
21.0
20.5
20.0
19.5
19.0
18.5
18.0
2014

2015

2016

2017

2018

2019

2020

2021

Average Hourly Wage ($)*Data beyond July 2021 was not available at the time of publishing.

This gap leads to increasing competition
among employers to offer higher wages andbenefits. The demand for employees, among
other variables, has led to a yearly average
wage increase ranging from $0.50 to over
$1.00 per hour for all warehousing and storage
employees since 2015 (see fig. 3).
In fact, many examples of this can be seen inrecent events. One such example which provides a clear view of the changing landscapefor pay and benefits can be seen in Amazon’s
September 21st announcement where it statedit will begin to fully fund college tuition for
more than 750,000 operations workers aspart of its Career Choice program. All-in-all,the e-commerce behemoth plans to invest
more than $1.2B to expand its education andskills training programs to its employees in
the U.S. Taking this into account, how canother organizations keep up?
As the demand for increasingly expensive
workers rises, the cost of running a manual
warehouse at full capacity is becoming far too
costly. Integrating AMRs into the workforce
addresses the labor gap and provides a
cost-effective solution for warehouses tomeet demand.

Case Study: SF Supply Chain China
SF Supply Chain China is a top 3PL
provider and has a distribution
center that handles about 1,000
SKUs and serves 400+ stores. Prior
to implementing AMRs, the warehouse used manual picking methods
with paper pick lists and manualcarts. Employees covered large
distances every day, resulting in low
productivity and high error rates that
led to significant financial loss.
To address its issues, SF Supply
Chain China chose a ForwardX Solution that consisted of ForwardX Flex
300-S AMRs with custom built racking and f(x) Fleet Manager. The
results were astounding. The facility
started with 5 AMRs and increased
the order to 20 shortly after implementation. Now, error rates are down
90%, productivity has increased
3-fold, and labor costs have beenslashed by 43%.

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Now, Later, or Never?
The following three examples use an averageof a 10% yearly increase in hired labor (themedian increase since 2014). They also use
the lowest average wage increase since 2015
of $0.50 an hour each year. They do notaccount for the labor gap that is also on therise and may lead to even larger wage increases over the following years due to increased
hiring competition. They also do not accountfor overtime pay (using only a 40-hour work
week, which is lower than the national average) or other benefits. Therefore, the overall
projected labor costs presented are likely
lower than what the actual costs would beover a 10-year period.
Manual is Expensive
After 10 years, a traditional manual warehouse
employing 10 order pickers today will need tospend over $8.3M to keep up with growing
demand (see fig. 4). This assumes that employers will be able to find and retain the workers they need. This also uses fractions ofpeople in the calculations, resulting in aslightly lower cost due to the assumption that
all workers are working at their full capacity,
therefore 12.10 workers would need a 13th
worker in 2023 and so on.

The following two examples use AMRs to bringlabor down by roughly 50%. The calculation for
the number of AMRs needed assumes a ratioof 2.5 robots per person. 10 people in a manual
warehouse have the same output as 5 people
with 12.5 robots (rounded to 13 robots). Bothexamples also add in a 7% maintenance cost
per year after the initial purchase of eachrobot throughout its lifecycle. AMR life cycles
are typically 5 to 7 years, so these examples
add replacement robots every 5 years.
Save Big with AMRs Today
This example uses a fixed cost of $30K per
robot over the course of 10 years. It does notaccount for any decrease in AMR costs overtime to show a worst-case scenario of investing today.
In the unlikely event that AMR costs do notdecrease, a warehouse will still save about$2.64M over the course of 10 years (see fig. 5).
If we assume robot prices will decrease tosome degree over the next 5 years, then the
total cost would go down by a significant
amount in this example, resulting in a savingsof something closer to $3M (or more if theydrop by 65% as ARK Invest predicts).

Figure 4: Scenario 1 - The Projected Cost of Fully Manual Operations from 2021 to 2030
Year

Workers

Weekly Hours

Weeks

Hourly Wage

Yearly Total

2021

10.00

40

52

$22.50$468,000.00

2022

11.00

40

52

$23.00$526,240.00

2023

12.10

40

52

$23.50$591,448.00

2024

13.31

40

52

$24.00$664,435.20

2025

14.64

40

52

$24.50$746,105.36

2026

16.11

40

52

$25.00$837,465.20

2027

17.72

40

52

$25.50$939,635.95

2028

19.49

40

52

$26.00$1,053,866.21

2029

21.44

40

52

$26.50$1,181,546.15

2030

23.58

40

52

$27.00$1,324,223.42

Total Cost

$8,332,965.50

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Figure 5: Scenario 2 - The Projected Cost between 2021 and 2030 if You Invest in AMRs now

Year

Workers

Yearly LaborAMRs

AMR Costs

2021

5.00

$234,000.00

13$390,000.00

2022

6.00

$287,040.00

0

$

-

$27,300.00$314,340.00

2023

6.00

$293,280.00

2$60,000.00$27,300.00$380,580.00

2024

7.00

$349,440.00

0

$

-

$31,500.00$380,940.00

2025

7.00

$356,720.00

2$60,000.00$31,500.00$448,220.00

2026

8.00

$416,000.00

13$390,000.00$8,400.00$814,400.00

2027

8.00

$424,320.00

2$60,000.00$35,700.00$520,020.00

2028

9.00

$486,720.00

4$120,000.00$39,900.00$646,620.00

2029

10.00

$551,200.00

3$90,000.00$44,100.00$685,300.00

2030

12.00

$673,920.00

5$150,000.00$56,700.00$880,620.00

Total Cost

$5,695,040.00

It’s Not Worth the Wait

MaintenanceYearly Total$624,000.00

house (see fig. 6). That is still $10K less in savings than a worst-case scenario of adopting
AMRs today. This difference goes up to $1M if
the costs do not go down at all or about $750K
if these projected AMR cost reductions werereflected in the previous example. The actual
result will most likely be somewhere between
the two assuming AMRs will become cheaperover time at some rate. Not only does thiswarehouse not save as much, but it is also 4
years behind in experience than any given
warehouse that invested today.

The final example assumes that AMRs will, in
fact, drop by the optimistic 65% in costs by
2025. This gives us a best-case scenario forwarehouses waiting for cheaper robots toinvest. It then uses a fixed cost as in the previous example, but at $11K over the course of 6
years.
If a warehouse waits for AMRs to become
cheaper and invests in 2025 at about $11K per
robot, they will save about $2.63M over thecourse of 10 years to that of a manual ware-

Figure 6: Scenario 3 - The Projected Cost between 2021 and 2030 if You Wait 5 Years to Invest in AMRs

Year

Workers

Yearly LaborAMRs

AMR Costs

MaintenanceYearly Total

2021

10.00

$468,000.00

0$00.00$00.00$468,000.00

2022

11.00

$526,240.00

0$00.00$00.00$526,240.00

2023

12.10

$591,448.00

0$00.00$00.00$591,448.00

2024

13.31

$664,435.20

0$00.00$00.00$664,435.20

2025

7.00

$356,720.00

17$187,000.00$00.00$543,720.00

2026

8.00

$416,000.00

0

$

-

$13,090.00$429,090.00

2027

8.00

$424,320.00

2$22,000.00$13,090.00$459,410.00

2028

9.00

$486,720.00

2$22,000.00$14,630.00$523,350.00

2029

10.00

$551,200.00

3$33,000.00$16,170.00$600,370.00

2030

12.00

$673,920.00

20$220,000.00$5,390.00$899,310.00

Total Cost

$5,705,373.20

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The

Conclusion

A warehouse waiting for a cost reduction in
AMRs is a warehouse that will lose out on
overall savings and revenue while fallingbehind its counterpart that invests today.
AMRs stand to save in ways that aren’t evenreflected in the given examples, as they are
hard to accurately quantify and would varysignificantly. By increasing flexibility, they
decrease the need for overtime pay during
peak seasons or part-time hires. By increasing accuracy and inventory visibility, they

decrease lost revenue. By increasing employee safety, they decrease days away from work
due to injury or illness. They also save in othercosts not reflected in employees’ wages suchas training costs, healthcare, etc.
Don’t fall behind and don’t miss out on theimmense savings that AMRs offer. The
rewards are evident with case study aftercase study to prove it. The optimal time forinvesting in AMRs is today.

References:
All case studies mentioned were in partnership with ForwardX Robotics. All data used for the included graphs was gathered fromthe US Bureau of Labor Statistics. Market projections come from research done by Interact Analysis.
1. "Mobile Robots Rapidly Mainstreaming – By 2025, AGVs and AMRs Deployed in 53K Facilities," Ash Sharma, Robotics Business Review,
October 12, 2021, retrieved October 15, 2021 from https://www.roboticsbusinessreview.com/analysis/mobile-robots-rapidly-mainstreaming-by2025-agvs-and-amrs-deployed-in-53k-facilities/
2. "Workplace Injury Statistics - 2021 UPDATE: Data for Workplace Accidents, Injuries, and Deaths," Work Injury Source, July 1, 2021, retrieved
October 8, 2021 from https://workinjurysource.com/workplace-injury-statistics-2019/
3. "Industrial Robotics: Insights into the Sector's Future Growth Dynamics," McKinsey & Company, July 2019, retrieved on October 9, 2021 fromhttps://www.mckinsey.com/~/media/mckinsey/industries/advanced%20electronics/our%20insights/growth%20dynamics %20in%20industrial%20robotics/industrial-robotics-insights-into-the-sectors-future-growth-dynamics.ashx
4. "Industrial Robot Cost Decline," Sam Korus, ARK Invest, August 07, 2017, retrieved on October 9, 2021 from https://ark-invest.com/articles/analyst-research/industrial-robot-costs/

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About
ForwardX Robotics is a global technology leader in the fields of AI
and Robotics. Through its flexible automation platform comprising ofintelligent mobile robots and AI-enabled software, ForwardX delivers
material handling solutions for warehousing and manufacturing
facilities that offer better performance at better value. The company
is comprised of over 300 members hailing from top universities andleading enterprises around the world. As shown by the 200+ patents
pending and its award-winning research work, such as 2 1st-PlacePrizes at TRECVID and the 1st-Place Prize at IEEE’s VOT-RT,
ForwardX’s team boasts some of the world’s top computer vision
scientists and robotics experts.
With offices in China, Japan, and the US, along with partnerships
around the globe, ForwardX is expanding and applying its provensolutions to warehouses and manufacturers worldwide.

Want to learn more about ForwardX and how
we can help you flexibly automate yourmaterial handling operations? For more
information, visit:www.forwardx.com