When you think of buying or leasing, the first thing that might come to mind is car shopping. But these days you have the same choice with warehouse automation. Take a few minutes to weigh the pros and cons of a lease option through a robotics as a service (RaaS) contract. And learn how customers are benefitting from the new AutoStore RaaS offering.
Above, see Rohlik Group's Head of Automation, Aleš Malucha, describe the benefits of adopting the AutoStore pay-per-pick (PPP) robotics as a service (RaaS) model. Rohlik is a leading European e-grocery retailer active in the Czech Republic, Hungary, Austria, and Germany.
Robotics as a service (RaaS) is a business model that offers robotic capabilities to customers as a service, rather than selling the equipment. It's a relatively new concept in the warehouse automation industry that allows companies to rent robotic equipment on a temporary or ongoing basis, rather than investing capital.
This model can offer several benefits, including increased flexibility, reduced upfront costs, and access to the latest technology. RaaS providers often handle maintenance and support for the equipment, freeing up companies to focus on other areas of their business.
Overall, RaaS is an innovative solution that is gaining traction in the warehouse automation industry as companies seek ways to optimize and balance their operational and capital budgets.
If you’re comparing a buy vs. RaaS option, take a minute or two to break down the pros and cons. Here are some key points to consider:
Pros of buying robotic systems:
Cons of buying robotic systems:
Pros of using RaaS:
Cons of using RaaS:
AutoStore, in collaboration with its partner network, offers an RaaS model that operates on a pay-per-pick (PPP) basis. This enables customers to acquire the aluminum storage Grid upfront and then lease the most capital-intensive and flexible parts (Robots, Ports, and software) through a subscription fee based on the volume of picking. The Grid typically accounts for 20-40% of the overall cost for an average customer, while the remaining expenses are associated with the PPP service, which may vary depending on the system's design and the level of technology integration required from other vendors.
In today's context, where over 80% of warehouses worldwide lack modern automation, this volume-based pricing approach makes robotics more accessible to a broader range of customers who require automated solutions that are easy to scale up or down with robots and workstations that don't require an outright purchase.
While the AutoStore PPP model is available to all customers for any project, certain project characteristics and segments may benefit more from this pricing option. Specifically, 3PLs can benefit from the PPP model due to time constraints in their customer contracts, and the ease of allocating a PPP cost to end customers. Growth companies can also benefit from the PPP model since it allows for earlier and faster adoption of automation, which can be expensive.
Additionally, the PPP model is particularly advantageous for projects where AutoStore handles the majority of the material flow and Robots and Ports account for a significant portion of the total project cost. This is because the PPP model enables payment on a per-pick basis, significantly reducing capital expenditure (CAPEX) in such projects.
The AutoStore PPP pricing option is exclusively available through its partner network. This ensures that the buying process, from initial concept and design to installation and commissioning, remains unchanged and customers are fully supported throughout.
The pricing metrics for the PPP model are straightforward, with the upfront investment consisting of the fixed infrastructure (the Grid) and a recurring fee per pick. This pricing model protects customers from demand fluctuations, with monthly recurring fees adjusted based on volume. This minimizes the potential loss in cases of a decline in demand, ensuring that customers only pay for what they need.
In essence, the PPP model allows customers to pay for performance and capacity, aligning incentives between supplier and customer. This ensures that all parties benefit from the system quickly going live, operating at high throughput performance, and maximum uptime.
To ensure alignment between AutoStore, partners, and customers in terms of how much robotic capacity is required to handle customer picking volumes, the PPP model has a minimum term of typically 3-5 years and a flat monthly minimum fee based on the number of operating Robots and Ports. We will continue to monitor success and develop new pricing models that ultimately meets the needs of our customers.
The choice between buying a warehouse automation system or using RaaS will depend on several factors, such as budget, capital priorities, and overall goals. However, it's important to note that implementing warehouse automation is a costly process that requires careful planning, time, resources, and capital. RaaS offers a lower entry point to test the technology with less capital risk. Once you adopt the system, you can easily scale up or down based on business demands and rely on the RaaS provider to make the necessary investments. This allows you to focus on serving your customers more efficiently and productively while leaving repetitive picking and replenishment tasks to the robots.
“In today's context, where over 80% of warehouses worldwide lack modern automation, this volume-based pricing approach makes robotics more accessible to a broader range of customers who require automated solutions that are easy to scale up or down with robots and workstations that don't require an outright purchase.”