New Financial Options Expand Opportunities for Warehouse Automation
With interest rates likely stabilizing at their highest level in years and inflation contributing to economic uncertainty, many businesses are reserving capital where they can. At the same time, persistent labor shortages have made warehouse automation essential to maintaining customer service KPIs and enabling growth.
That’s left some organizations in a holding pattern when it comes to automation. They know they need it but are unwilling or unable to make the capital investments required to purchase new systems.
If you’re in that position, there’s good news. Thanks to the financial solutions that are now available, it isn’t necessary to make large capital investments to automate warehouse processes and protect yourself from labor and economic uncertainty.
Why It’s Happening
The timing is right for a change in the way automation systems are acquired. The value and performance of systems deployed by integrators like Swisslog has been proven to be very predictable and that reduces risk for the financial services companies offering fiscal solutions. The fact that these systems have been in the market for a number of years enables more accurate projections around the resale value that financial services companies use in their financial models.
As a result of these developments, Swisslog partners are able to offer financial solutions today that are materially different than the capital leases offered on automation in the past. These new leases not only cover soft costs such as software, configuration and installation but also have end-of-lease terms that are well-defined upfront and very favorable to the lessee.
How it Works
Terms are tailored to the needs of each customer and generally extend from 36-84 months. With a capital lease, the lessee pays either 0 or 15% down and there is a one-dollar buyout at the end of the lease at which point the lessee owns the system. With an operating lease, the lessee has the option of buying the equipment at a pre-determined price at the end of the lease, extending the lease or returning the equipment. With the labor savings created by our automation systems, lease terms can often be structured so that the lessee is in a cash-neutral or cash-positive position over the course of the lease.
Who Can Benefit
These new financial solutions are creating opportunities for a wide range of organizations to accelerate their warehouse automation plans, including:
- Small and medium-size businesses who are unable to make the capital investments in automation required to keep pace with larger competitors, or who wish to maintain strong financial ratios for other business purposes.
- Third-party logistics providers who have been reluctant to invest in automation because they couldn’t recoup their investments over the duration of their customer contracts.
- Companies seeking to reserve capital for other investments or as a hedge against future economic conditions.
- Retailers seeking to establish or expand their e-commerce presence.
- Operators concerned about getting locked into automation systems that won’t meet the future needs of their business.
These leases can be structured to cover full project costs, including supporting systems such as conveyors and software, for every solution Swisslog delivers. That includes AutoStore, ACPaQ, CarryPick, CycloneCarrier, ItemPiQ, PowerStore, Vectura and Tornado.
For more information, contact Swisslog.