Case History: Warehouse Saves Thanks to Lighting Investment

Case History: Warehouse Saves Thanks to Lighting Investment 2017-01-07T17:08:31+00:00
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Case Histories: Industrial/Warehouse Lighting 

Warehouse Saves Thanks to Lighting Investment

“We had been planning to improve lighting for the past five years or so, but the dollars required for remodeling could not be justified based on O&M (operation and maintenance) savings.” That’s the way John J. Kauffman summarized the situation at the American Hardware Supply Company’s 318,000 square-foot distribution center that he managed at the company’s national headquarters in Butler, Pennsylvania. Nonetheless, he decided to install High-Benefit Lighting®, a decision that proved to be completely successful. Relying on many of the existing fixtures (cleaned and relamped), plus new metal halide units, his plan achieved the following objectives:

Personnel were able to work faster than before. Mr. Kauffman estimated that at least a 1 percent productivity improvement was achieved, worth a minimum of $35,000 per year.

Workers made fewer errors. The savings, estimated at $1,800 annually, were comparatively small, because there was so little room for improvement.

Because of the company’s excellent record, it was assumed little could be done to improve safety. Nonetheless, the company estimated that better lighting `s safety benefit had a value of $1,000 per year, due to time savings and lower insurance premiums. But as Mr. Kauffman noted, ” The principal benefit involved is one that cannot be calculated; sparing loyal employees the pain (or worse) that can result from an injury.”

Increased sales worth $50,000 annually were attributed to the better lighting, in large part because of the much improved image created when customers visited the facility. According to Mr. Kauffman, “The one word most commonly heard when we take [a store] owner or prospective owner through the warehouse is, `Wow.’ The lighting is the first thing they see when they enter. It makes the warehouse look much larger than before, much cleaner, and more contemporary. It instantly conveys the impression that we are a large, modern organization . . . .”

Employee morale improved because employees were able to perform their work faster and better, liked the improved appearance of the space, and appreciated management’s investment in their comfort and safety.

Overall, lighting benefits carried a value of just under $88,000 per year; O&M cost savings added another $14,746 to the total, bringing it to $102,546 annually. Given the company’s investment of $176,806, simple payback was achieved in 1.7 years; simple return on investment (SROI) came to 58 percent per year.