1
Determine Costs for Wrong Pick
The cost of a picking error depends heavily on when the error is detected. If an error is detected before the product leaves the warehouse (e.g. at packing or outgoing goods inspection), the cost is significantly lower than if the error is detected at the customer. In the first case, a new order has to be created and processed, while in the second case there are the costs of returns and possibly the loss of a customer.
A
Error is Noticed Before Leaving the Warehouse
In a survey conducted by the Chair FML at the Technical University of Munich, the companies surveyed stated that the cost of such an error was around €25. The publication is from 2012 and the costs should be checked internally. (Source: DOI: 10.2195/lj_Proc_rammelmeier_en_201210_01)
B
Error is Noticed by the Customer
In a survey conducted by the Chair FML at the Technical University of Munich, the companies surveyed stated that the cost of such an error was around €210. The publication is from 2012 and the costs should be checked internally. (Source: DOI: 10.2195/lj_Proc_rammelmeier_en_201210_01)
2
Determine Average Error Rate
The average error rate indicates the percentage of all picks in which an error occurs on average.
3
Determine Number of Incorrect Picks
The average number of picking errors is calculated by multiplying the total number of picks per day by the average error rate.
4
Determination of Total Costs per Year
The total cost per year is calculated by multiplying the number of faulty picks per day by the number of working days per year and the cost per fault.
5
RoI Calculation
To determine the return on investment, the calculation must be performed again, whereby the error rate can be reduced by the value specified by the manufacturer of the measure. This is contrasted with the costs of the measure. (Graphic: Example calculation)
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