RTLS Return on Investment: A Guide to Calculating RTLS ROI
Unlocking the Value of Real-Time Location Systems and how to compute the RTLS Return On Investment (RTLS ROI). Return on investment (ROI) is a performance measure used to evaluate the efficiency or profitability of an investment or to compare the efficiencies of several different investments. In simpler terms, it helps you understand how much money you gained or lost relative to the amount you invested.
- Profit (or return): This is the benefit you get from the investment, like income, cost savings, or increased property value.
- Cost of investment: This is the amount of money you put into the investment initially.
- ROI calculation: A percentage or a ratio, usually calculated by dividing the profit by the cost of investment and multiplying by 100.
- Helps make informed investment decisions by comparing potential returns for different options.
- Tracks the performance of existing investments to see if they are meeting expectations.
- Allocates resources efficiently by prioritising investments with higher expected ROIs.
Curious about the financial benefits of RTLS deployment? Here’s a comprehensive guide to calculating your potential return on investment.
- Pinpoint Costs:
- Grasp both initial investments and ongoing expenses. This will be based on the total area, the number of assets to be tagged, the RTLS infrastructure setup cost, and RTLS software subscription or perpetual licence costs.
- Quantify Benefits:
- Uncover potential savings and revenue gains across diverse areas, such as improved inventory stocktake, reduced maintenance costs or enhanced shop floor efficiency & worker productivity.
- Assign Financial Value:
- Transform benefits into tangible numbers. RTLS in lone worker safety will help reduce insurance costs.
- Calculate ROI:
- Employ the ROI formula to gauge profitability.
A successful WMS + RTLS implementation isn’t just about “going live”—it’s about proving that the investment has paid for itself through measurable gains. At the 6-month mark, you should have enough data to move from “estimated savings” to “actual ROI.”
| Category | Key Performance Indicator (KPI) | 6-Month Target | How to Measure |
| Labor Efficiency | Search Time Reduction | 80–90% reduction | Compare time spent “searching for missing SKUs” vs. the new “Go-to-Location” speed. |
| Travel Distance per Order | 25–40% reduction | Use RTLS spaghetti diagrams to compare the total forklift miles travelled per 1,000 picks. | |
| Onboarding Speed | 50% faster | Measure days until a new hire reaches “standard pick rate” using the system’s guided UI. | |
| Inventory Accuracy | Cycle Count Accuracy | 99.5%+ accuracy | Count the number of “Location Discrepancies” found during random RTLS-backed audits. |
| Shrinkage & Loss | 20–30% reduction | Track the value of “lost/unaccounted” stock compared to the same 6-month period last year. | |
| Asset & Yard | Forklift Utilisation | 15–20% increase | Use RTLS data to see “Idle Time” vs. “Task Time.” Are you paying for more forklifts than you need? |
| Dock Turnaround Time | 20% faster | Measure the time from “Gate In” to “Dock-to-Stock” availability. | |
| Safety & Risk | Near-Miss Incidents | 30–50% reduction | Count geofence alerts triggered by forklift-to-pedestrian proximity violations. |
Additional Considerations for a Thorough Evaluation of RTLS return on investment
- Project Timeframe: Factor in the expected lifespan of the system.
- Intangible Benefits: Acknowledge non-financial advantages.
- Risk Mitigation: Assess potential deployment risks.
- Pilot Program: Conduct a trial run to gather realistic data.
- Expert Consultation: Seek guidance from RTLS specialists.
Remember
- RTLS ROI calculations serve as estimates, not guarantees.
- Accuracy hinges on data quality and underlying assumptions.
- Continuously track and measure post-deployment results for validation and potential adjustments.
Embark on Your RTLS ROI Journey with Confidence:
- Harness the power of RTLS to streamline operations, enhance productivity, and unlock significant cost savings.
- Engage in a thorough ROI assessment to ensure a sound investment decision.
- Embrace the expertise of RTLS vendors and industry professionals for tailored guidance.
- Read about RTLS FAQ and RTLS software