Return on IntelliTrack… ROI!

To help you through your IntelliTrack software purchases the example below explains how you can save money by utilizing barcode technology.

Using Paper vs. Barcode Scanners

The following example describes a simple inventory situation for a small warehouse. In Situation 1, a worker conducts inventory manually using pen and paper. In Situation 2 inventory is conducted using a barcode scanner.

Situation 1.
Using a Paper based Inventory Process – A company must conduct an inventory of a small warehouse using a pen and paper. There are 10,000 SKU’s (Stock Keeping Units) in 4000 locations that need to be accounted for in the warehouse. Item counts are required for each location and takes approximately 1 minute each. Each count is recorded manually on a written form through the following process:

1. The worker must find a location and identify the location on the count sheet
2. The worker must identify what items are in the location on the count sheet
3. They now perform the count of items in the location
4. Next they enter their count on the count sheet

Costs involved with the simple paper inventory process:

• Time spent performing inventory process for 10,000 units in 4,000 locations
• Time = 10,000 minutes or 166 Hours = 21 man hour days
• Labor costs for 4 part time employees to complete the inventory in just under 3-Days
• Labor is paid $10 per hour and the labor cost of performing inventory is $1,680
• Inventory is conducted every two months at a yearly cost of $10,080.00

Annual estimated cost to conduct a manual pen & paper inventory every two months: $10,080.00

Situation 2.
Using Barcode Scanners to Perform Inventory – A company must conduct an inventory of a small warehouse using a scanner and barcodes that represent location, items and manual count. There are 10,000 SKU’s (Stock Keeping Units) in the warehouse in 4,000 locations. Item counts are required for each location and each count takes approximately 18 seconds. Each count is conducted using a barcode scanner through the following process:

1. The worker faces a location
2. The worker scans the barcode identifying a specific location
3. The worker then scans the item's barcode to identify the units stored in the location
4. They now perform the count using their barcode scanner
5. The count is verified on their portable barcode scanner

Costs involved with conducting an automated inventory process:

• Time spent performing inventory process for 10,000 units in 4,000 locations
• Time = 3,000 minutes or 50 hours = 6.25 man-hour days at a labor cost of $540.00
• Labor cost for 2 part time employees to complete the inventory in just over 3 Days at a cost of $540
• Inventory accuracy from using barcode scanners has reduced the demand for inventory to twice a year with an annual cost of $1080

Annual estimated cost of performing inventory using barcode scanners twice a year: $1080

ROI from Utilizing Barcode Technology (Situation 2.)

The return on investment (ROI), of implementing a barcoded inventory system includes:

• Increased accuracy of inventory
• Less shrinkage or loss of items
• Inventory requirements are reduced to twice a year
• The labor required is reduced by 116 hours per inventory
• Labor is paid $10 per hour
• Time spent for each count is reduced from 1 minute to 18 seconds

Total estimated ROI = $8,920 per year

Inventory Method:	Annual inventory counts	Hours to complete inventory	Annual inventory time (hrs)	Labor cost per inventory ($10/hour)	Annual labor cost
Pen & Paper	6	166	996	$1,680.00	$10,080.00
Bar code scanner	2	50	100	$540.00	$1,080.00