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A supply chain will move thousands of SKU’s per day, maybe hundreds of thousands. To aid the movement of goods, businesses use supply chain handling units to allow more efficient transit of goods.

It is critical to the operation that the business has enough equipment to handle the volume of goods on a daily basis and therefore, maintaining optimal levels of equipment is key to avoiding bottlenecks.

Each year, businesses spend millions of pounds of supply chain handling units such as roll cages, totes, and pallets, but how much of this spend is due to business growth and therefore, increase supply chain throughput and how much is due to poor equipment utilisation?

Avoiding bottlenecks

Supply chains today are fine-tuned machines. Any disruption can have knock effects that cost huge amounts of time and money to resolve, not to mention the cost of the disruption itself. Inventory being in the wrong place and the wrong time will cost the business through lost sales and poor productivity. So, it is absolutely vital that the supply chain has the right equipment in the right places to enable operators to ensure inventory is in the right places at the right times.

Average annual spend

For this example, let’s say your business has 100,000 roll cages. Each roll cage costs £50.00 meaning your total roll cage estate is £5,000,000.00. Each year, the business spends 20% of its total estate on new equipment. This could be driven by a need to increase the number of roll cages to handle an increase in inventory volume, it could be to replace damaged units, etc. But that’s an additional 20,000 roll cages at a cost of £1,000,000.00.

What is driving this spend?

Now, really challenge some key assumptions here. Has the business’s supply chain throughput increased by 20%? Do 20% of the existing roll cages really require replacing due to damage? Maybe a new depot has been opened and requires a new fleet of roll cages to operate? Maybe seasonal peeks have caused a shortage in equipment and the 20% is a buffer for the seasonal spikes…?

The truth is, without better visibility of what’s actually happening to your business equipment, it is very hard to answer these key questions.

The actual reason for your business spending thousands of pounds on an annual basis could be that the equipment is not being used optimally. How many times have you walked through a depot only to see rows and rows of roll cages waiting to be deployed? How many times have you seen stores or depots hold on to equipment to use as extra warehousing apparatus?

A better way…

Entopy’s Tracca Platform Solution has a set of tools that specifically target this issue. Dwell and cycle times reports enabling operators to monitor and better understand the overall equipment utilisation within the supply chain environment, identify pinch points, target and resolve issues.

An increase in equipment ultisation will reduce overall equipment spend. A 25% improvement based on the example above will save the business £250,000 each year enabling more money to be spent into areas that drive business growth.

We often mention equipment utilisation as part of a larger value proposition alongside improved store stock file accuracy, reduced shrinkage, reduced supply chain waste, improved stakeholder transparency, reduced administration costs, and other hugely attractive benefits.

Equipment utilisation is often overlooked but it is an area where business can really reap the benefits of IoT within the supply chain.

Interested?

Get in touch today: info@entopy.com


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