Aberdeen Survey Of Voice Users

January 2012
Event Driven Warehousing Trends:
Voice Users Speak Out
In November and December of 2011, Aberdeen surveyed 134 warehousing Sector Insight
professionals for a benchmark report (Fulfillment Excellence and Dynamic
Aberdeen’s Sector Insights
Event Warehousing Come of Age) that explores the pressures these
provide strategic perspective
companies are facing and what plans they have for the coming months. This and analysis of primary
Sector Insight focuses on one specific segment of warehouse professionals - research results by industry,
voice users. To learn more from this segment in December 2011 we sent market segment, or geography
out a detailed follow-on survey to obtain a larger sample of current voice
users so we could compare them with their peers. Based on the new survey
we obtained 65 qualified responses. This insight compares the 32 voices
users to the remaining 33 companies. What can we learn from the 32 voice Sector Definition
companies versus the others? How are the voice companies coping with This document is focused on
present economic conditions, what capabilities do they have, and what the current voice users - a
technologies do they rely on to ensure efficient operations and provide total of 32 companies out of 65
value to their customers? enterprises from the detailed
follow-up survey report.
Event Driven Warehousing Trends: The Advantage of
Both voice and no voice
Voice Explored companies have virtually equal
In today's environment a predominant pressure companies are experiencing percentages by organization
is a need to reduce warehouse operating expenses while maximizing type:
utilization of resources. In order to achieve this goal, over 94% of all  44% - Original manufacturer
companies are looking to enhance or acquire more dynamic and interactive
warehouse processes. Across a broad spectrum of options ranging from  30% - Distributor
Auto ID and RF or mobility and including voice technologies (see Appendix /Wholesaler
A) they are willing to invest in more real-time, hands-free interactive  19% - 3PL
processes. The goal is both to increase efficiency of software and
automation across the entire distribution network and to improve alliances  15% - Other
with internal and outside parties to allow for better planning of physical  10% - Retailer
space/locations and labor, and to justify and prepare for the future, in terms
of potential investments and ROI expectations.  10% - Freight Forwarder,
Customs broker
The Current and Future State of Voice Technology  6% - Supplier Manufacturer /
Supplier
In our recent survey we get a better idea of the level of technology
adoption and integration by the Voice Users and better understand their Note: 30 or more users yields
plans for integrating voice solutions into their future warehouse strategies. a 95% statistical confidence
level
We also uncover the connection between warehouse complexity and
volume and a need (or desire) to balance tasks or labor and more mobile /
interactive technology with voice capability into picking or replenishment
operations.

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and
represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc.
and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

Voice Technology Meets the eCommerce Distribution Challenge
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Table 1: Years of Voice Hardware Usage and % Refreshed

Years of Current Voice When
% Refreshed
Hardware Usage, n = 32 Acquired
0 months - 11 months 44% new or 2011= 24%
refreshed units
1 - 2 years 17% 2010 = 17%

3 - 4 years 33% 2008-2009 = 29%

5 + years 22% 2007 and prior = 17%
Never = 17%
Source: Aberdeen Group, December 2011

Current State -Past Hardware Upgrades and Refreshes –
Largest Single Surge Occurred in Last 12 months
If past history serves us, from the above table we can see that in the average
year about 20% of voice users refresh or acquire current hardware in any
given year in a five-year cycle. It is interesting to note that the most
significant amount of hardware upgrade or refresh for voice technology
occurred in the past 12 months (cited by 44%, Table 1). We can break
down that group into two subgroups:
1. 20% acquired New Voice Units in 2011 and have yet to refresh
2. 24% refreshed/switched older units in 2011
The point to be made is that (based on what is considered to be a qualified
sample at the 95% confidence level) we have seen a full 20% of the Voice
Users acquired new voice equipment for the first time in 2011 and they did
so with an average ROI of 18.9 months (see Appendix A). This represents a
huge overall vote of confidence for the coming of age of voice technology
and the benefits that the move to voice technology can deliver in the
current, highly interactive, event-driven warehouse.

Future State - Plans for Voice Hardware / Software
Going forward the current users will be continuing to utilize their voice
technologies and over 80% will be updating, or refreshing their hardware in
the future – with at least 50% of all users, including those that have just
acquired voice in the last 12 months, citing they will refresh in the next
three years. As we see from the past (Table 1) and from what the users
have cited as the year of next refresh we can safely state that hardware
updates plans are continuous with 20% or more of companies
refreshing each year for the foreseeable future.
Of the Voice Users 90% will upgrade software at the same time as their
next hardware upgrade or refresh and 76% will consider a new device
manufacturer when they upgrade or refresh. It makes sense that
© 2011 Aberdeen Group. Telephone: 617 854 5200
www.aberdeen.com Fax: 617 723 7897

Page 3

software would be upgraded and integrated with any process and hardware
change that a company has planned and, with the superior return on
investment that most voice users say they have obtained, it also makes
sense that 80% of them plan on continuing to utilize and enhance their voice
technologies. But it is instructive to understand why 76% are looking at
alternative manufacturers on their next upgrade or refresh.
For the 76% willing to consider a different hardware manufacturer
reasons cited include:
 36% We want a “multi-modal” device that has a screen, scanner,
and/or keyboard in addition to being voice-capable
 35% Our present device requires the use of expensive,
proprietary accessories - so we want to get a more standard device
 34% We believe that the pricing of our voice units is just too
high, and want to look at other options
Many current voice users (35%) want to get out from under the
proprietary, high-cost voice devices that were common a number of years
ago. Back then, these pioneering companies had no choice but to acquire
such devices. But these are sophisticated buyers with continuing refresh
plans, and the market has now evolved to where major manufacturers are
offering open, lower-cost voice-capable units that are also multi-modal
devices (36% cited this as the top reason to switch). These stats show that
current voice users are eager to jettison proprietary, single-mode devices
and move to alternatives that offer more flexibility and lower TCO.
Regarding Software experience, 40% of current users cited high cost and
time required for changes by vendors …
1) to develop changes we want to our voice processes and also
2) to make changes relating to the voice-WMS interaction.

The experience of Voice Users to get changes made to the way the
voice application works include:
 42% Due to cost considerations, we “batch” a number of
changes together so that we can justify the time and money to get
the changes done
 37% We don’t consider changes because the cost to have the
vendor modify the application is just too high
 26% We’ve paid too much for changes that seemed trivial to us
 16% We never need changes
The remarkable thing here is that cost is the top concern. Majority of all
current voice users have a major issue when changes to voice apps are
needed. They either delay change until they can justify paying to
open/update the code, or they avoid change altogether. Of current users


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42% batch updates and 37% avoid altogether, so this is a remarkably large
number and it speaks to the problems inherent to an existing, custom-
coded voice solution. One valid observation is that if these companies who
are committed to voice could find a way to make their software
infrastructure more flexible then they could gain a further competitive
advantage over companies that continue to live with closed, proprietary
custom solutions.
Experienced voice users are committed to voice because of its operational
benefits, but they need to find a way to bring down this high cost of change
in order to be more agile. Hardware refresh is an ideal time to investigate
ways to make the voice system more flexible and move to a lower TCO
architecture.
Regardless of the impetus, whether hardware or software improvement or
enhancement is driving the change, the voice users are continuing to invest
in the technology. Hardware tends to lead the way closely coupled with the
associated process and software changes required to move from current
state operations to a more event-driven warehouse. Both within picking and
replenishment many tasks require interactive processing. Across all users,
both Voice and Non-Voice, there is a trend to adopt more dynamic event
capabilities. In Table 2 we compare areas where Voice Users are
demonstrating more advanced Dynamic Event Capability. In each instance
the likelihood that a Voice User has some capability today, the Voice GAP
(ranging from 1.6 –times to 4.2 times), reflects the number of times more
likely that a Voice User has the indicated capability versus a Non-Voice
User.

Table 2: Dynamic Event Performance Gaps- Voice versus Other
Voice Dynamic Events: Non- GAP
Users Have or Have and Plan to Enhance Voice Voice
92% Direct order-picking with mobile devices 41% 2.24

75% Hold replenishment tasks and release 18% 4.17
replenishment to coincide with picking
71% Task interleaving dynamically (switching 45% 1.58
employees between functions - picking,
replenishment)
51% Dynamic real time order dispatch (i.e., ability 25% 2.04
to interleave order adds or quantity changes)
42% Event management (automatically notifying 18% 2.33
personnel when certain warehousing events
take place)

So we see from Table 2 both the relevance/popularity of process change by
the specific areas of interactive dynamic event processing that is fueling the
continued deployment and enhancement of voice technology. However, as

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companies make hardware refreshes they need to reengineer the software
processes as well. For current voice users the following are reasons they Voice Users are Refreshing
are considering upgrading their voice application upon refresh: Hardware

 50% We want something that is easier to coordinate with our  (A substantial number of
WMS voice users (over 50%) will
refresh their current voice
 33% We want a solution that doesn’t cost so much to change devices over the next 3
 33% Our IT group wants us to get more modern technology years.

 22% We want to change hardware vendors and our current  A total of 76% of all voice
users are willing to consider
solution either does not support the new vendor’s device or the
a new hardware
cost to move it to that device is higher than what we want to pay manufacturer on their next
In summary both hardware and software architecture refreshes and refresh
upgrades are on the horizon for up to 76% of the voice pioneers. Current
voice users have the opportunity to leverage the cost benefits of voice
further if they can improve their software infrastructure to be more
amenable to change. Finally, the majority of those converting/enhancing are
willing to consider aggressive “rip and replace” strategies to be more
flexible with the interactive processing needs they plan to embrace.

Current Voice Users Speak Out
The experiences of current users as illustrated in the quotes that follow
indicate that complexity and volume increases within the warehouse are
fueling change. There is a need for more dynamic and flexible processes
and more real-time technologies within the warehouse. The move from
label-based picking to voice-directed picking is a technology option that
companies should explore (or continue to explore) as they look into many
of the areas mentioned below.

Quotes from Users
 “I believe voice directed picking will improve our pick accuracy and picking
efficiency. Past examination of the piece volume of the business did not support
such a large hardware/software/implementation cost. If costs/savings and voice
technology have improved we are foolish not to reassess it.”
~Vice President, Operations Large Retailer
 “Would like to enable task interleaving in the split case picking module - to be
able to dynamically float across picking, stocking, cycle-counting, etc.”
~General Manager / Managing Director, Office Depot
 “Voice wins in picking of high piece count or high value product. Voice wins in
improving pick rates and accuracy in highly structured flows. Voice loses when
we need to modify functionality or tweak commands flows and syntax.”
~Director, Information Technology, Large Global Manufacturer
 “With regard to replenishment working towards better handle on demand based
replenishment - filling forward pick locations directly with what our ERP demand
plan determines should be the daily need (not average weekly or monthly) to
better utilize and turn pick locations. This is significantly different than


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replenishment trigger points or reactive replenishments driven by allocation.”
“Voice justification comes in to play with process efficiency due to hands free (no
holstering, reading, re-holstering, scanning, entering data) accuracy as a result of
picking and confirming at point of grab along with the ability to dynamically shift/
push work to user groups. Training is also much more efficient as well.”
~Director, Logistics / Supply Chain, Midsized Wholesaler
 “We are already using RF for putaway and replenishment - we see no
operational improvement in moving these to voice - in fact, we have had our
industrial engineers look at it, and they have not seen any operational
improvements in moving these functions to voice. We believe the market voice
technology is changing and have recently built a solid business case for voice and
multi-modal.”
~Manager, Logistics / Supply Chain, Large Non-Voice Manufacturer

Voice User Strategic Capability Assessment
From our companion study (the December warehouse management report)
with findings across 134 investing companies, 17% of companies have
already deployed voice enabled warehouse management technology to drive
improvements in operational efficiency. And in aggregate about 20% (a total
of 37% of companies which we will call the voice users) have and /or plan to
invest in voice technology in the next 12 months (see Appendix A). Overall,
across all companies on the topic of warehouse management, Aberdeen
found that two of the top three business pressures centered on efficiency
and resource management "doing more with less." With respect to the top
pressures for the voice users alone we see that they exactly mirror the full
sample across all companies with regards to "doing more with less."
Specifically both voice and no voice groups have identical percentages on or
need the top- ranked pressures to:
1. Support increased sales without increasing staff or space (46% of
voice and all companies)
2. The need for better utilization of underutilized resources (31% of
voice and all companies)
From the top-ranked strategic actions they are taking (Figure 1, below)
let's focus on the three where voice users have the highest priority gaps and
are more focused than the others:
 3.1-times as likely to better leverage part-time / full-time mix and /
or realign shift volumes
 1.7-times as likely to reduce staff and / or eliminate idle resources
 1.3-times as likely to improve perfect order rate by improving pick
accuracy and on-time shipments
It is clear that the voice users are more event-driven and balanced, placing
from 1.3-times to 3-times the level of focus in balancing and optimizing labor
to address volumes and mix, to reduce waste, and to balance that with
picking and shipping accuracy. Since labor comprises over 35% of the full
operating budget, labor is a clear focus for all respondents but is highest for

Page 7

those operations with lots of each-picking and a variety of order types to
handle within their warehouse operations. To further illustrate the
challenges and opportunities of labor optimization under large growth and
complex operations it is interesting to note that on average the voice user
operated 6-7 DCs in their network.

Figure 1: Top Actions for Voice Users
"Actual results to date have
No Voice, n=127 Voice, n=31 resulted in overall productivity
levels that can result in a
Offload some products or volume to a 46% payback within 1.5 years.
3PL or satellite facility 37% However, it should be noted
that the voice functionality
Reduce staff and / or elimination of idle 46%
27% component yielded a payback
resources
of less than a year. The
Add new, or enlarge existing, warehouse 38% workers have been very
space 46% receptive to the change, and
have embraced it in a fashion
Improve perfect order rate by improving 38%
pick accuracy and on-time shipment 29% capable of the quick ramp-up
we needed in advance of the
Better leverage part-time / full-time mix 31% 2010 holiday season. We also
and / or realign shift volumes 10% estimate that, operating under
the old system, this additional
0% 10% 20% 30% 40% 50% volume would have incurred an
Percent of Respondents, n = 158 additional cost of $400,000
during the holiday season
alone."
Again, we can see from a ranking of current capabilities that voice ~ VP Supply Chain, Large
companies are more aware and more prepared to address the labor and Specialty Ecommerce Retailer
process complexities across order pick and replenishment types where they
are 1.2-times to 3-times as likely as their peers to have capabilities in place
to handle the various order replenishment processes required of their
operations such as task-interleaving and hot replenishments.
The number of order and process flows required increases dramatically as
the complexity, number of DC sites, and volume increases and can justify a
move to more real-time, dynamic and flexible technologies such as voice.
These technologies are more advanced than they have ever been and up to
39% of all respondents from the Voice Users in our follow-on study indicate
that these technologies produce benefits allowing them to self fund in one
year. One caution for companies as they explore these options is to
diligently explore their volumes and process flows by SKU, channel and
order type. Voice technology alone is not always the answer: companies
must look to process first and, as in our interviews indicate, devise an
overall automated solution complete with layout or sizing of new zones,
introduction of "put areas," conveyors, printers and a variety of supporting
investments.
In addition to process reengineering and hardware upgrades there must be
conjoint focus on flexibility in software architecture. With the software
changeover cost challenges cited by voice pioneers (“42% batch changes and

Page 8

37% try not to change voice systems due to cost” from above) software
architecture must likewise be more adaptable and interoperable. Voice can
be flexible but, to adjust to multi-modal devices and more highly interactive
events, software must be simplified. This current focus is and should give
priority to a software solution architecture is that is “open and flexible as
opposed to closed and hard coded.” For the users we interviewed it was
only when the streamlined process and integrated hardware/software
automation solution had been carefully planned that it was it possible to
layer in the voice components to bolster efficiency and accuracy. Planning an
integrated solution and embracing these technologies allows companies to
move off of constrictive label-based processes and to move picking,
replenishment and other functions within the warehouse to new levels of
efficiency and agility.
Regarding Software Experience,
Required Actions Current Voice Users Speak Up

Whether a company is trying to move its performance in warehouse  40% of current users cited
management and resource utilization to new levels or simply wants to high cost and time required
reduce its labor costs or increase its order flow, the following actions will for changes by vendors …
help to spur the necessary program success: 1) to develop changes we
want to our voice processes
 Debunking the High Cost Perception. Picking activities in our and also
survey encompass over 50% of the direct labor and 35% of the
operating budget. The interactive processing of interleaved order 2) to make changes
volume and movement of staff can yield superior costs/efficiencies. relating to the voice-WMS
interaction.
Costs for voice are coming down and ROIs within the first year are
possible with the benefits that innovative voice solutions can The experience of Voice
provide. For Voice and Non-Voice users alike there is a need to Users to get application
look anew at today’s costs and technologies for voice - unhampered changes include:
with yesterday’s perception of high cost. Remember 31% of non-  42% Due to cost
voice users are reevaluating the voice option for their future considerations, we “batch” a
investment strategies and up to 39% of Current Voice Users expect number of changes together
a payback of less than 1 year. With costs down and savings up the so that we can justify the
rewards can be healthy. time and money to get the
changes done
 Move toward multi-modal, easily-adaptable technology.
Most of the barriers identified by current voice users indicate a  37% We don’t consider
desire to move toward multimodal easily adapted technologies. changes because the cost to
When it comes to mobility within the warehouse being able to have the vendor modify the
interact with order and processing flows at the device level application is just too high
becomes more important and the ability to have multiple ways to  26% We’ve paid too much
confirm events is central to success in today's dynamic warehouse for changes that seemed
environment. Learn from leading companies and current voice users trivial to us
and avoid single technology devices and proprietary technologies
which tend to decrease flexibility and are not easily changed.
 Investigate configurable and flexible software solutions. In
today’s dynamic warehousing environment change is a given and
yesterday’s batch and static requirements are under pressure to be
highly flexible. Both voice and non-voice user should review their
voice software and modernize it if they are experiencing the kind of

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impediments to change found in the sidebar to the right. Learn to
avoid high cost and time for software changes by investigating
configurable software solutions that can more readily support
process change. In this way the ability to quickly adapt processes
becomes a competitive weapon instead of an impediment to
operational evolution.
 Address complexity with automation. While it is not always
the answer automation can lead to improved efficiency and allow a
company to grow into multiple order and process flows within its
operation. As we saw in this study, voice users are anywhere from
1.5-times to 2.2-times as likely to handle order flows like task
interleaving or employee switching dynamically in real time ( Table
2). Additionally, the voice users were 4.17 –times as likely to
support their picking operations across with “hot replenishment”
that is timed to picking activities. These automation gaps are
significant to support extended dynamic picking zones and “I believe voice directed
operations. picking will improve our pick
accuracy and picking efficiency.
 Apply rigor to the ROI justifications. As we indicated earlier Past examination of the piece
complex operations require diligence in preparing a rigorous volume of the business did not
reengineering and ROI justification plan. Companies do not simply support such a large
address volume and complexity by rolling automation into the mix. hardware/software/implementa
A successful business transformation requires careful volume, tion cost. If costs/savings and
channel, and order level analysis and planning. Focus should be voice technology have
placed on streamlining processes first, applying appropriate improved we our foolish not to
reassess it.”
technologies in an integrated fashion (don’t overlook the voice
option based on yesterdays costs/technology), and final putting ~Vice President, Operations
together a detailed multi-year year ROI justification that is Large Retailer
conservative but consistent with company requirements. A proper
plan should demonstrate payback within two years with some
components yielding less than a one year payback.
For more information on this or other research topics, please visit
www.aberdeen.com.


Page 10

Related Research
Fulfillment Excellence and Dynamic Event Labor Management: Instill Accuracy,
Warehousing Come of Age, January Efficiency, and Productivity in the
2012 Warehouse and Retail Store; March
Warehouse Management Excellence: 2010
Maximizing Resources and Efficiency, On-Time and Under Budget: Maximizing
November 2010 Profits with Efficient Warehouse
Robotics going Mainstream: Improve Management; December 2009
Warehouse Productivity and Safety; Warehouse Operations: Increase
September 2010 Responsiveness through Automation; July
International Transportation: Optimize 2009
Cost and Service in a Global Market; July Five Key Steps to Optimizing Warehouse
2010 Management; February 2009

Author: Bob Heaney, Senior Research Analyst, Supply Chain Management
(bob.heaney@aberdeen.com)
For more than two decades, Aberdeen's research has been helping corporations worldwide become Best-in-Class.
Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide
organizations with the facts that matter — the facts that enable companies to get ahead and drive results. That's why
our research is relied on by more than 2.5 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of
the Technology 500.

As a Harte-Hanks Company, Aberdeen’s research provides insight and analysis to the Harte-Hanks community of
local, regional, national and international marketing executives. Combined, we help our customers leverage the power
of insight to deliver innovative multichannel marketing programs that drive business-changing results. For additional
information, visit Aberdeen http://www.aberdeen.com or call (617) 854-5200, or to learn more about Harte-Hanks, call
(800) 456-9748 or go to http://www.harte-hanks.com.

This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies
provide for objective fact-based research and represent the best analysis available at the time of publication. Unless
otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be
reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by
Aberdeen Group, Inc. (2012a)


Page 11

Appendix A:
Investment Popularity & ROI Guidelines
From January Warehousing 2012 report (Fulfillment Excellence and Dynamic Event
Warehousing Come of Age)

Technology - Meeting the Event Driven Fulfillment
Fast Facts
Challenge
 94% of respondents will be
When it comes to bringing together best-practices in process improvements exploring process or
with the technology available in the market today, investment in WMS / LMS technology solutions to
software, auto-ID and mobility, and material handling equipment has largely become more Event Driven
matured, and is poised to match business need in virtually every aspect of and Real-time in fulfillment
warehousing. One trend is clear from the data: real-time processing and
event driven warehousing has arrived and is growing. According to our  78% of respondents expect
full payback on process or
study there is Best-in-Class distinction in capabilities that include:
technology investments
 85% of the Best-in-Class confirm transactions with automatic data within 2 years
capture barcoding, speech, RFID  26% of respondents expect
 78% of the Best-in-Class utilize direct order-picking with mobile devices full payback on process or
technology investments
 72% of the Best-in-Class utilize commercial warehouse management within 1 year or less.
software (WMS). These solutions all offer advanced dynamic event
management
 Over 50% of even Laggard companies utilize the preceding key
Dynamic Event Processing features
With the exception of voice and robotics (which are just now emerging as
options for all companies to explore) most companies have already
deployed most technology/automation options. Companies in each class
need to select the right options from all that compete for the company's
continuous improvement dollar.
We asked the respondents planning to invest in one or more technology
areas to indicate their interest in investment / improvement by technology
type. Table A provides a decision matrix to assist in developing the cost /
benefit and ROI factors.
Out of 134 survey takers 123 are interested in options ranging from
software, equipment, logistics service providers, or 3PLs to help them
upgrade their current capabilities or handle portions of their volume. The
real challenge in selection is aligning the right technology / solution to each
operations-specific need or operating profile, then sorting through a cost /
benefit analysis of all competing options.
Across the top of the matrix are the various technology types, ranging from
Event Driven Processing (which includes all real-time interactive activities in
picking, replenishment), in which 94% of respondents (116 companies) plan

Page 12

to invest, and ending in 3PL at 31% of respondents (38 companies). In the
middle section of the matrix are the ROI required financial payback hurdles
mandated for each solution type and company.

Table A: Technological Investment Hurdles and ROI Guidelines
Expected ROI All Event WMS Auto Mat LMS Voice 3PL
Types Driven ID Hdling
Percent of Companies 94% 88% 83% 62% 59% 37% 31%
Planning
0 - 6 months 6 4 5 2 2 2 2 -
7 - 12 months 26 35 17 29 10 20 8 4

13 - 18 months 45 33 45 29 31 17 15 16

19 months - 2 years 21 21 18 20 15 16 10 10

2 - 3 years 18 16 16 15 14 12 8 5

3 - 5 years 6 6 6 6 4 4 2 3

More than 5 years 1 1 1 1 - 1 - -
Total Companies … 123 116 108 102 76 72 45 38

Months to ROI…. 18.3 18.0 18.9 18.7 19.6 19.2 18.9 20.5

Percent expecting less 26% 34% 20% 30% 16% 31% 22% 11%
than 1 year ROI
Note: while none of the companies in the study have internal ROI financial paybacks set at beyond five years this does not imply that
these solutions have been used for less than 5 years. In many instances these solutions have been in place at these companies for 7 -
10 years and more. Automation and equipment are depreciated on schedules of 7 years plus, but the ROI plan is still 2 years or less

Overall there is an average ROI expectation of 18.3 months to payback.
Some companies target paybacks in less than one year, and the last row
summarizes the percent of companies expecting that rapid return. In the
ROI matrix, we observe:
 The popularity of a given investment choice is ranked from left to
right, and the first three items (Event Driven, Auto ID and WMS)
are in the 80% plus range. Auto ID has a very high current adoption
rate (Table 3 shows adoption levels ranging from 85% to 73%
respectively depending on maturity class).
 The most popular choice for investment, Event Driven technology
(94%), includes several other categories of investment across Auto
ID and WMS / LMS. It also integrates Material Handling systems and
mobility devices, RF, and mobility devices and Voice. It relies on
real-time data capture and employee / task tracking, and hence must
be coupled with WMS / LMS features and employee labor. The
pressures / actions from the survey, including the top action "the
need to integrate order and operating delivery flows" and the top

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pressure, the "need to manage multiple logistics channels" such as Current Software Usage All
cross-docking, depend on real-time event processing. Hence WMS /  68% - Commercially
OMS / LMS systems need to be able to process dynamically in developed warehouse
response to a growing number of real-time events. Event Driven management software
Technology by nature requires concurrent change across people, (WMS)
process and technology. As such, it can involve significant capital
outlays, and yet, because it yields benefits in labor productivity and  56% - Transportation
management
resource efficiency, it can produce significant ROI (34% of
respondents say it can self-fund within one year). Each area Event  55% - Spreadsheets or
Driven Technology touches can provide unique benefits, but these manual system to manage
are complementary solutions, meaning that if one can take time out the warehouse or to report
of a process with mobility or voice, then one can plan, measure, metrics
schedule, and allocate labor to the new process under LMS.  48% - Home-grown or
 The system choices, WMS at 88% and LMS at 59%, benefit from legacy WMS that is no
high levels of current adoption already (see sidebar, even though longer commercially
supported
many are using home grown and manual systems). Many opt to
replace or upgrade the system they have in place to move from  46% - Distributed order
batched and paper-based operations to dynamic real-time event management software
processing. The commercial systems that exist today are robust in
 42% - Labor management
their capabilities to handle high volume real-time interactions with software
RF, mobility and high speed tracking / confirmation, and can support
task interleaving.  39% - Mobile computer
software for ruggedized
 The most common automation choices, at 62%, are material warehouse applications
handling solutions like conveyors, unit sortation, and so on. While
these solutions require a steeper investment, they can be very  33% - Commercially
beneficial and can sustain considerable growth in throughput volume developed warehouse
without the need to add headcount. Some companies which are control software (WCS)
capital rich but hiring shy can benefit from the opportunity these  18% - Home-grown or
solutions provide. It is also apparent from our research that many of legacy WCS that is no longer
these solutions are in use by the Best-in-Class, which are two to commercially supported
three-times as likely to have many of them as their peers (see
Warehouse Management Excellence: Maximizing Resources and
Efficiency, November 2010 for a detailed comparison).
 Finally, at 37%, voice technologies are becoming more accepted and
more capable (this is a significant uptick in planned investment given
that only about 20% of companies have voice today). The current
state of the technology has benefited from the smartphone
revolution. Devices have become more free-ranging, and are being
bundled with Auto ID and mobile device technology. Both of these
technologies are being applied in non-traditional warehouse areas
like put away, replenishment, and support. The new event-driven
needs of the modern warehouse, coupled with lower costs are
fueling renewed interest in this technology.
 The final choice, 3PLs or logistics service providers (31%), is a
growing option for handling overflow volume, strategically balancing
the supply network, or offering extended capabilities (value added
services and multi-channel logistics, Figure1, for example) that a

Page 14

company does not possess in-house. The sidebar to the right
provides more details on the current levels of adoption of this
solution.
Again, each company has different operating profiles and requirements
which should always be matched to the solutions that best fit.

Future Investments to Increase 35% over 12 months Outsourced Services (3PL/LSP):
Current utilization of technologies, some of which are referenced in the
 23% to 31% off all
technology section of Table 3, range from a low of 11% for robotics (newer companies seek to expand
technologies), to the 60% to 80% range for WMS, and the 80%+ range for outsourced services for
some applications of barcodes and auto ID or Real-time Event Processing. logistics
Yet virtually all companies using Auto ID today (83% from Table A) are Beyond these levels:
upgrading to newer equipment and expanding to non-traditional aspects of
their operations (see the case study of the Specialty Retailer, for example).  49% to 60% of all companies
currently utilize outsourced
The same is true for WMS / LMS, which are extending into advanced
or managed services for
features like slotting, yard management, incentive based pay, and pay for components of their
performance in new and existing warehouse sites. warehouse management
The big story is in enhancements or extensions of functionality to software /  29% to 41% of all companies
equipment and tools already in use. Nearly 50% of current users, those currently outsource to more
represented by the ROI solutions matrix in Table A, plan enhancements. than one 3PL or logistics
service providers for
 Virtually all companies using Auto ID today (83% from Table A) are components of their
upgrading to newer equipment and expanding to non-traditional warehousing or logistics
operations (see the case study quote of the eCommerce Retailer,
for example).
 The same is true for WMS / LMS, which are extending into
advanced picking and replenishment methods like task interleaving,
mobility solutions, slotting, replenishment, yard management,
incentive based pay, and pay for performance in new and existing
warehouse sites.
 Many companies which have made sizable investments in technology
plan to extend their investment, or at least deploy untapped
features in solutions they already have, resulting in an average
overall 35% increase in usage in the next 12 months and
beyond.
In general terms, regardless of class, periodic ROI assessment and focus can
improve on-time delivery and throughput, bolster productivity, and reduce
warehousing and labor cost year-over-year. Best-in-Class companies have
been able to affect a 3% to 9% percentage point advantage in cost metrics,
while sustaining the high 97% perfect order metric.


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