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    • AMHS – ROI 2009 Update Automated Materials Handling Systems Return on Investment Study in Massachusetts Presented at American Library Association - 2009 – Chicago Greg Pronevitz, Northeast Massachusetts Regional Library System
    • Copy of Presentation and Related Information
      • www.nmrls.org/greg/ala2009
    • Special Thanks
      • Massachusetts Regional Administrators
      • Lori Ayer, Galecia Group
      • Melissa Stockton, QuipuGroup
      • These consultants did statewide analysis of delivery workflow and sorting and they contributed many suggestions regarding options for automation.
    • Why We Looked at Automation
      • Volume Increase
        • Patron-Placed Holds
      • Dissatisfaction with service
        • High costs
        • Delays
        • Missorts
      • Impressed with tours
        • King County Library System
        • http://www.youtube.com/watch?v= 4fq3CWsyde4
        • Seattle Public Library
    • Our Second Look
      • Labor Savings at Libraries
        • Efficiency
        • Ergonomics
    • Specifications - Unchanged 2008 & 2009 Hybrid – Barcode + RFID Overnight Turnaround Compatible Containers
    • Specification Changes 2008 – 3 Regions 2009 - Statewide Sort Site Proximity One Statewide Sort Site 285 Libraries 646 Libraries and Branches 6 ILS’s 9 ILS’s 31,000 items per day 50,000 items per day
    • Benefits of Automation
      • Labor Savings at Libraries
        • End to
          • Labeling outgoing items
          • Presorting
          • Packaging/Bundling
        • Reduce mis-sorts
        • Potential for
          • Live tracking data
          • Tote level check in
          • Improved containers
          • Gentler treatment
          • Sorted by return/hold/branch
    • Benefits of Automation
        • Regional System Benefits
          • Centralized management
          • Lower costs?
    • Risks of Automation
      • Ownership
        • Cost
        • Maintenance
        • Power outages
          • Need back up process
        • Centralized management
          • All eggs in one basket
    • Costs and Requirements of Automation
      • System cost
      • Maintenance costs
      • Labor costs
      • Management costs
      • External barcode/RFID
      • Container standards
      • System connections (CIP2)
    • Return on Investment - ROI
      • System cost + Operating cost compared to optimal Manual sorting operation costs
    • Current Costs in Massachusetts
      • About $14 per hour for sorters
      • Sorting Rate of about 400-500 items/hour
      • or 3.5 cents per item
      • .035 x 13 million = $455,000
      • Outsourced to various courier companies
      • Bundled with
        • Transportation
        • Facilities
        • Vendor profit
    • ROI Case Study for 3 Regions
      • AMHS with 4,000 and 8,000 items per hour throughput
      • Manpower Requirements
      • Facilities Requirements
      • Other Considerations
    • Labor Savings
      • Optimal Sorting Costs $285,000
      • 8,000 per hour AMHS $226,000
      • Difference $59,000
      • Difference will increase with cost of labor
      • What is the cost of the system, facilities and other variables?
    • System, Facilities, Set Up Costs 2008 Estimates – Over $300,000 per year Needs Start-Up One Time Costs Ongoing Year One Year Two System Costs         Purchase/Lease/Loan         Loan $1 million for 5 years at 8% 0 245,000 245,000 245,000 Installation, Shipping, Training 7,000   7,000   Maintenance Agreement at 5% 5,000     5,000           ILS Work         CIP Licensing or advanced RFID $1,000 x 6 systems   6,000 6,000 6,000 Misc. tbd   tbd tbd           Facilities Costs 10,000 sq ft x $8         Purchase/lease   80,000 80,000 80,000 Utilities/Upkeep/Taxes   9,000 9,000 9,500           Facilities Preparation         Build Out tbd   tbd    Power Installation 5,000   5,000   Networking 3,000   3,000   Computer Equipment 4,000   4,000   Furniture tba   tbd             Totals     $359,000 $345,500
    • Labor Costs for AMHS at 4,000 and 8,000 items per hour Throughput (estimate)     Items per Hour Cost per Day Items per Hour Cost per Day   Staffing 4,000   8,000   Salary/Benefits Hourly Operating Hours - 40,000 items/day 10.00   5.00       No. Staff   No. Staff     $12 Loaders 1,000 per hour per person 4.00 $480 8.00 $480 $12 Staging 40 item totes at 50 per hour per person 2.00 $240 4.00 $240 $30 Mangement/Minor Maintenance 1.00 $300 1.00 $150   Labor Cost per Day   $1,020   $870   Labor Cost per Year 260 days   $265,200   $226,200
    • Current Labor Cost (estimates)     Current Items per Hour Cost per Day Optimal Items per Hour Cost per Day   Staffing 450   550   Salary/Benefits Hourly       6.66   $14 Sorting & Staging at 450 per hour per person 88.88 $1,244 72.72 $1,018 $40 Mangement/Minor Maintenance 2.00 $80 2.00 $80   Labor Cost per Day   $1,324   $1,098   Labor Cost per Year 260 days   $344,323   $285,501
    • Other Costs Bar Codes/RFID Equipment (Barcode Printers) Supplies   Library Needs RFID readers Bar Code Printers Supplies   Containers Vehicle upgrades
    • Does this ROI work?
      • Labor $265,000
      • + System/Facilities $345,000
      • = $610,000 per year
      • vs.
      • Optimal Labor Costs
      • $265,000 per year and vendor provides facilities
      • However, there are other savings
    • Per Transaction Savings in Libraries
      • 5 seconds X 13 million items per year =
      • 65 million seconds =
      • 1,083,333 minutes =
      • 18,055 hours X $16 =
      • $288,888 labor savings in libraries per year on delivery transactions
      • Don’t forget non-ILL circ transactions
      • RFID might save more
    • AMHS Variables
      • AMHS benefits increase with cost of labor
      • Vendor facilities costs are buried and could change
      • AMHS technology improvements could require less manpower
    • New Direction
      • Decision to seek long-term Public/Private Partnership(s)
      • Avoid purchase/lease of AMHS
      • Request for Information (RFI) issued July 7, 2009
      • Responses due August 17, 2009
      • Contact:
      • Greg Pronevitz, Northeast Massachusetts Regional Library System (NMRLS)
      • 978-762-4433 [email_address]
      • Copy of presentation:
      • www.nmrls.org/greg/ala2009
      Thank you
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