Category Archives: ROI

Qualitative Considerations: How to determine ROI in Materials Handling, Part 3

In our first installment on ROI evaluation, we discussed the “hard” evidence and facts such as product cost, operating costs, space utilization and the like. Next, we looked at throughput and turnover as additional vital calculations. These are major factors in any capital expenditure evaluation, however they are not the only criteria to be considered – additional, more qualitative or “soft” evaluation needs to be considered, such as the following:

  • Customer awareness and perception. How do your customers view your organization? Do they see a leader? Do they see a vendor willing to go out on the line to protect their interests and invest in technology which will deliver them better products and services at more competitive pricing? It’s an important consideration and one that reminds us of the old adage that, “You only get one chance at a first impression”.
  • Employee Morale. Remember that advertisement for cheese… Great cheese comes from happy cows? The commercial works because of the human metaphor – study after study proves that if your employees feel you’re working with them to make their jobs more productive, safer and more fulfilling- they’ll return the same commitment to the organization. We refer to this as the Material Handling Golden Rule of Employees. Do unto others as you would have them do unto you. Want employees to go the extra mile for you? Show them you’re taking a stake in their success and provide them with the proper tools to do the job at hand.
  • The value of being a “show-off”! Let’s say you buy a new car. Your neighbor notices it and you invite him or her over to see your new car. They go home afterward saying, “Wow, Jim and Jane are doing really well; buying that car was a great decision”. Why not invest in technology to show off to your customers that you’re being the best you can be? Have an open-house, a meet and greet or a customer appreciation day, bring your customers and prospects to you and show them that, as an organization, you’re making good decisions to help earn their trust and their business.

ROI evaluation involves much critical thought, calculation and investigation. Safety, cost analysis, space utilization, worker protection, insurance, product maintenance and many other factors are rolled into the equation. But the softer side ­—the “sizzle” as we call it— is often times more important than the actual “steak”. Roll some good marketing into your capital expenditure plans. Use your organizational development to prove to your customers that their interests are yours and vice versa. That’s the best ROI evaluation one can think of, in drum handling or any other industry!