Scott Ichikawa

With companies transitioning toward automated solutions, a more and more common industry desirable is automated label printing.  In the material handling world it is often simply referred to as “Print and Apply” or “P&A” and is the process of receiving a label order from the warehouse management system (WMS) and printing the label on a carton as it passes by on a conveyor.  While this sounds like a relatively simple process, there are a lot of factors involved that require serious consideration by an engineering integrator.  For information on that, check out my related article here.  The focus of this piece is on the ROI of Print and Apply.

What Components Are Part of a “Print and Apply” Solution?

As with many parts of automation, it is important to recognize that a solution is more than just purchasing the hardware.  There are three main upfront costs that are incurred with a P&A: hardware, software and integration/installation.  Each has their own considerations and are discussed in more detail in a previous article about P&A considerations, but here is a brief summary.

Hardware: A P&A hardware set consists of the print engine (Zebra and Sato are two common ones) and the applicator device.  Most integration houses are flexible when it comes to choosing a print engine, just make sure to confirm the type of communication and that it is able to work with the warehouse management software.

Software: The software involved in a P&A solution is usually built into the print engine, however, the engine has to have a reliable way of communicating with the warehouse database that is stored in either a Warehouse Management System (WMS) or the Enterprise Resource Planning (ERP) software.  Unless your WMS is made to work efficiently in real time with hardware control components, you might require a Warehouse Control System (WCS) to work effectively with the hardware.  Ask your WMS provider, or feel free to send me a message with questions about it.

Integration/Installation: The third upfront component is the integration and installation of the system.  While I personally feel that a company should always aim to have a single automation house (see my article on “Keeping it under one roof – Warehouse Management”), it is understandable that as a business grows, it will accumulate a number of automation and software vendors.  The cost comes when the company tries to add something into an existing system.  Expect a number of software and control engineer labor hours to be applied during installation and do not be surprised if the cost is higher is an add-on rather than part of a full system installation.

What Will A P&A Solution Cost?

As with any costing estimate, this is a difficult question, but when you add together a single print and apply machine, the necessary controls and the integration, it could easily run over $50,000 depending on the application.  The machine itself can run between $10,000 to $35,000 depending on factors such as resolution, number of labels and size of the label.  There are some definite reduced costs at scale and that should be investigated by inquiring with your automation integrator.  Remember, however, that this is upfront cost and that there is a recurring cost of ownership that needs to be considered.  Spare parts and maintenance are two categories that are often overlooked and should be considered before pulling the trigger on a P&A system.

What Is the Payback Period / Where Does the ROI Come From?

Most U.S. companies tend to want a payback period of 2-3 years or less.  That means the cost savings from implementing the machines will recover the upfront costs in that time period.  There is also an expectation to see an additional ROI, meaning the solution will potentially increase revenues by making the process more efficient and/or productive.  Most companies group both of these numbers into an “ROI calculation”.  Here are the factors that can contribute to this and check out the easy to read infographic here.

Reduced Labor Cost: A $9/hr worker usually costs a company $18/hr fully burdened (benefits, employer tax, etc).  That amounts to $37,500 per year in savings per worker saved.  This increases even more if they are working overtime/off-hours at 1.5X or 2X rate.  Keep in mind that a P&A can run considerably more efficiently than a human, so it could replace more than a single employee.

Increased Throughput: Related to the efficiency of operations, a P&A machine can run multiple shifts and does not take breaks other than maintenance time.  This means you get more operating time at a faster speed, which can contribute to growth, reduced lead time for your customers, or both.

So Is a P&A Right For Me?

This determination can only be made by taking the benefits, such as increased throughput and reduce labor costs, and weighing them against the cost of the solution.  I suggest having an automation integrator take a look at your situation and help you work through the decision, but hopefully this information helps you go into the conversation better informed.

If you have questions or comments, I would love to hear them. Feel free to email questions or constructive comments to scott.ichikawa@cognex.com.