Return on investment

See how much you can save

We have completed a sample ROI analysis using an example customer to give you a sense of the savings that are possible with PorterLogic

In this example, let's assume we are a distributor with the following attributes...

$125m in annual revenue
500k cases shipped per year
2700 total customers
$250 average order value
6 warehouse sites that operate two 8-hour shifts per day, 6 days per week
50 employees per shift
$25/hour avg wage & benefits

With PorterLogic, you could achieve up to...

$680k

annual savings
including both direct operational efficiency gains as well as indirect support cost reduction

6 month

breakeven point
on the implementation costs associated with PorterLogic when compared to savings

Cost Savings

Eliminate operational inefficiencies

50 employees
x 8-hours per shift
x 2 shifts
x $25 avg wage & benefits
= $20,000 per day in labor expenses

x 25 days per month
= $500,000 per month in labor expenses

+ $200,000 per month in utilities, taxes, insurance, etc.
= $700,000 per month total operating expenses

/ (16 hr * 60 min/hr * 25 days/month)
= $29.16 per minute

500,000 cases/year / 300 days/year / 16 hours/day
= 104.17 cases per hour throughput

3600 sec/hr / 104.17
= 34.56 seconds per case

By making systems align more directly with operations, we can achieve at least 2% reduction in processing time, or 0.68 seconds per case

0.68 sec/case savings * 500,000 cases per year
= 340,000 seconds per year saved
/ 60 = 5,666.67 minutes per year saved

x $29.16 per minute
= $145,800 dollars saved per year

$145,800 / year
Reduce system implementation costs

To implement a full WMS, a company would typically need the following teams...

4 internal project team members
$125,000 average annual salary & benefits per employee
= $250 per hour cost of team
Each will spend an average of 30 hours per month on project
6 month project involvement
= 720 total hours
= $180,000 internal project time

4 implementation consultants
$200 per hour bill rate
Team will spend 80 total hours per week
8 month total project timeline
= 2,560 total hours
= $512,000 in consulting fees

6 total custom system modifications required
$60 per hour custom mod development rate
Average 1 month of development and testing per mod
4 team members, 160 hours per week
= 3,840 total hours
= $230,000 in mod cost

= $922,000 total cost to implement WMS

By automating tasks such as environment, testing and data management, as well as offering visual editors and configuration, we can reduce daily implementation time by 50%, and we can eliminate the need for 80% of custom modifications.

= $546,000 saved per implementation

On average, implement or upgrade software every 5 years
= $109,200 savings per year

$109,200 / year
Time spent on system updates

Every time you need to make a functionality change to your systems that involves updates to custom functionality, a company on average must spend...

20 hours of internal time designing the functionality and gathering requirements
40 hours of consulting time writing design specifications, management of configuration and development, plus system testing
20 hours of development time, assuming a small to medium modification change

$200 per hour consulting bill rate
$60 per hour mod development rate

$100,000 average annual salary & benefits per employee
= $48 per hour of internal time

Current state, this change would cost (20 hr x 48 $/hr) + (40 hr x 200 $/hr) + (20 hr x 60 $/hr)
= $10,160 per system change

With just 1 change a month, that's $121,920 spent per year making system changes

With PorterLogic, the change instead takes 40 hours of internal time, with just 2 hours of consulting time for support
(40 hr x 48 $/hr) + (2 hr x 200 $/hr)
= $2,320 per system change
= $27,840 per year

$121,920 - $27,840 = $94,080 per year savings

$94,080 / year
System maintenance costs

$100,000 average annual salary & benefits per IT employee
= $48 per hour of support time

If you have a team of 4 IT people, who spend on average 4 hours of their day maintaining your systems and fighting software fires, you are spending 80 hours per week on system maintenance

80 hr/wk x 52 wk/yr = 4,176 hours per year
x $48 per hour
= $171,216 per year spent on system maintenance

With PorterLogic, your team will only have to spend 2-4 hours per day on maintenance, because our technology automates environment management, data migrations, integration error handling, and server/infrastructure, plus our system intelligently corrects error it finds, automatically.

2 hr/day * 261 days per year
= 522 hr/yr
x $48 per hour
= $25,056 per year on maintenance with PorterLogic installed

$171,216 - $25,056 = $146,160 annual savings

$146,160 / year
Reduce compliance chargebacks

Per industry reports, noncompliance with customer requirements (e.g. shipping to retailers) can result in chargebacks of up to 10% of the product's value.

Current state, 2% of your outbound cases receive chargebacks
$125m annual revenue
x 2% product value that receives chargebacks
x 10% chargeback rate
= $250,000 per year in chargebacks

With PorterLogic helping your systems better align with physical processes, and with your software more flexible to react to changing customer requirements, chargeback rates decrease by 0.5%.

$125m annual revenue
x 1.5% product value that receives chargebacks
x 10% chargeback rate
= $187,500 per year in chargebacks

$250,000 - $187,500 = $62,500 annual savings

$62,500 / year
Reduce associate onboarding time

$20 per hour starting salary for new warehouse associates
$30 per hour supervisor / manager salary

On average, it takes 2 weeks for a new employee to learn your systems and become productive.
2 weeks = 80 hours
80 hours x $20 per hour
= $1,600 spent before associate is productive

Managers and supervisors typically may spend 1 hour a day training new associates during this initial 2 week onboarding period.

1 hour per day x 2 weeks
= 10 hours
x $30 per hour
= $300 spent on supervisor time per associate onboarding

= $1,900 cost per associate onboarding
x 50 new associates hired per year
= $95,000 per year spent bringing on new employees

With PorterLogic, instead of teaching new associates the real-world process and then also having to teach them the system process, your systems directly align with your operations, so you only have to teach one process. Additionally, you can design much richer user interfaces that better explain and direct users, so your workers can start being productive after just 1 week.

(40 hr x 20 $/hr) + (5 hr x 30 $/hr) x 50 employees
= $47,500 savings per year

$47,500 / year
Time spent updating documentation

To document how your systems behave, especially when it comes to custom modifications, it is best practice to write extensive documentation detailing this functionality.

Creating these documents can be tedious though, often requiring upwards of 40 hours. Documentation must also be updated on a regular basis, especially as custom functionality is developed. Let's assume it will require 5 hours per week for half of the implementation project to keep documents up to date.

40 hrs to create + 5 hr/mth x 4 months
= 125 hours documenting

$100,000 average annual salary & benefits per IT employee
= $48 per hour of time

125 hrs x 48 $/hr = $6,000 spent on document creation and updating

How often does it occur, however, that documents get out-of-date or have errors? Every time that documentation is out of date and causes your employees to need to clarify requirements or make incorrect assumptions about system functionality, a barrage of meetings and emails typically ensues. Let's estimate that each time this happens, 2 of your employees, plus 2 people from your consulting team, spend 8 hours each emailing, meeting, updating documents, and correcting mistakes.

(8 hr x 48 $/hr x 2 employees) + (8 hr x 200 $/hr x 2 consultants)
= $3,968 per occurrence

If these issues occur just once a month...
= $47,616 per year spent because documentation is incorrect

With PorterLogic, all of this documentation headache is eliminated. Our system automatically can generate documentation for all of your processes directly from our LogicFlow configuration. By creating the functionality you need, you are also directly creating documentation for how it works.

$6,000 + $47,616 = $55,616 total savings per year

$55,616 / year

Profitability Lift

$680,296 / year

Based on the costs related to implementing PorterLogic, this project would breakeven in...

6 months
Savings based on estimates made against an example implementation using the assumptions listed above. Every project is different, and actual savings may be higher or lower than these estimates. Savings and breakeven cannot be guaranteed.

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