Uncover Hidden Revenue Potential in Your DCs
January 28, 2019
In distribution and fulfillment center operations, utilization is typically defined in terms of getting the maximum capacity out of existing resources. With constant pressure to meet customer service level agreements (SLAs), increase throughput and protect profit margins, effective utilization is critical to running a successful e-commerce business. Unfortunately, many operators either don’t know where to begin or are unaware of existing opportunities to improve utilization in their DCs.
Fortunately, technologies enabled by the industrial internet of things (IIoT) are helping to shed light on operational inefficiencies in the DC and deliver what 30 percent of c-level executives believe IIoT is inherently capable of: uncovering hidden revenue potential from existing products and services.
While the concept of IIoT is not necessarily a new one, until very recently its vast potential had not been fully explored in distribution, fulfillment and manufacturing operations. Enter The Connected Distribution Center from Honeywell Intelligrated: an accessible, end-to-end technology and software platform that delivers the visibility and agility needed to drive efficiency and optimized decision making within the DC and across the enterprise. From machine-level sensors and smart controllers to workers, automation, robotics and the cloud, The Connected Distribution Center connects DC assets to uncover previously hidden utilization improvements, among other things.
Improve utilization in a typical DC
One of the primary methods to improve DC utilization is by consistently achieving (even exceeding) daily throughput targets. When evaluating targeted throughput rates, it’s important to remember that even an incremental throughput gain of 1 percent can potentially increase annual site revenues by millions of dollars.
By monitoring activities occurring in all fulfillment systems and processes in real time, The Connected Distribution Center evaluates trending data to detect when systems are underutilized and then notifies you when you’re not hitting targeted throughput rates. From there, it uncovers the root causes for these inefficiencies and reveals the conditions that are impeding throughput, such as repetitive jams that may be causing excessive downtime. This helps operators make the adjustments needed to remove these jams and restore throughput to desired levels.
In an average 750k square-foot facility that operates 5,200 hours per year, processes 200 cases per minute and earns $10 in revenue per case, increasing output by just 1 percent will result in 120 additional cases per hour. In this scenario, even this relatively small utilization improvement can quickly add up to substantial hourly, daily and annual revenue increases:
- $1,200k per hour
- $24k per day
- $6M per year
The Connected Distribution Center can tell you how many jams per day are occurring in your facility, how long they’ll take to correct, and how much additional runtime is required to meet daily throughput targets. It can also help you quickly identify deteriorating system KPIs and critical path inefficiencies which might also limit optimal DC utilization.
To learn how The Connected Distribution Center could provide reliability, utilization and productivity improvements in your DC, download our white paper.
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