Inspired by the KPI Solutions seminar at ProMat 2025
Embarking on an automation project is a significant undertaking that requires careful planning and strategic alignment with your organization’s goals. To ensure success, companies must look beyond labor savings and take a holistic approach to automation investment. Here are the key factors to consider:
1. Labor Savings: A Piece of the Puzzle
While reducing labor costs is often a primary motivation for automation, labor savings alone are rarely enough to justify the investment. Automation should also aim to enhance operational efficiency, improve accuracy, and boost customer satisfaction. For instance, automation can streamline processes, reduce errors, and accelerate delivery times, all contributing to a more efficient operation.
2. Early Involvement of Stakeholders
Involving a diverse group of stakeholders early in the project is crucial. This includes not only operations and finance teams but also technology experts and end-users. Engaging IT early (especially the CIO and system integration teams) ensures that automation aligns with existing infrastructure and doesn’t become a blocker down the line. Waiting until later in the process to involve key stakeholders can lead to costly delays and resistance to change.
3. Aligning with Financial Priorities: Choosing the Right Investment Model
Understanding your company’s financial priorities is vital when selecting the right automation investment model. Two common approaches are:
- Fixed Automation Investments: This traditional model involves significant upfront capital expenditures and asset ownership. While it may offer long-term cost savings, it requires substantial initial funding and is often best suited for EBITDA-focused organizations that prioritize asset accumulation.
- Automation-as-a-Service (AaaS): This model provides automation solutions on a subscription basis, reducing initial costs and offering scalability and flexibility. It allows businesses to adapt to changing needs without large capital investments, making it more attractive to net profit-focused organizations that prioritize cash flow and operational agility.
Selecting between these models depends on factors like available capital, flexibility needs, and long-term strategic goals.
4. Comprehensive Data Analysis
Automation decisions should be based on hard data, not assumptions. Businesses should use at least 52 weeks of historical data to evaluate process variability, peak demands, and areas where automation can have the greatest impact. It’s also important to plan for three standard deviations in each direction, rather than relying on averages.
5. Infrastructure and Compliance Considerations
Many automation projects require more infrastructure investment than initially expected. For example, one 3PL at ProMat shared that they spent over $250K just to level the floor before automation implementation. In addition to physical infrastructure, companies should also consider:
- Fire suppression requirements and insurance costs
- IT system upgrades and network capacity
- Integration with WMS and other business-critical platforms
Ignoring these factors upfront can lead to unexpected expenses and project delays.
6. Phased Implementation and Continuous Evaluation
Rather than trying to implement automation all at once, businesses should consider a phased rollout approach. This allows teams to:
- Measure results incrementally
- Adjust automation processes as needed
- Gain internal buy-in from employees and leadership
Additionally, defining clear success metrics before implementation, using the company’s own KPIs and benchmarks, can help speed up acceptance and ensure that automation is meeting business goals.
Conclusion
Automation is not a silver bullet, it requires strategic alignment, financial planning, and operational readiness. By following these best practices, companies can make informed automation decisions that drive long-term success.
This post was inspired by the KPI Solutions seminar at ProMat 2025, where industry leaders shared insights on how to assess and justify automation investments effectively. If you’d like to explore how LogistiVIEW can help 3PLs and other logistics providers optimize their automation strategy with WES, contact us today.
