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Building the Business Case for Automation: How to Evaluate Automation Investments

October 10, 2012

Benefits beyond pure dollars and cents are needed to drive the investment request across the finish line. Gaining authorization to invest in distribution center improvements, including automation, is a challenging endeavor in most organizations.

Overall economic conditions, along with individual business concerns such as availability of capital, competing capital projects and myriad obstacles potentially stand in the way. Given many immediate obstacles to obtaining investment approval, the development of a sound, thorough business case is essential for the distribution operations management team who wants to move his project forward successfully.

Reasons commonly cited for rejecting or delaying investments to substantially improve DC operations include:

  • Prioritization of capital toward top line growth, e.g., manufacturing capacity expansion, new product development, sales and marketing initiatives, etc.

  • Concern about temporary decline in sales or reduction in sales growth due to competitive pressures and/or economic conditions

  • Limited availability of capital due to recent business conditions

  • Unwillingness to put capital at risk due to an unfavorable regulatory climate

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