Adapting Lifecycle Management Strategies to New Operational Constraints

When it comes to integrating industrial internet of things (IIoT) technologies into maintenance operations, the distribution and fulfillment (D&F) sector has experienced somewhat of a disconnect. While many retailers have tested the waters with exploratory IIoT initiatives, few have been successful in leveraging the power of data to drive sustained, measurable operational improvements.

On paper, the business case for utilizing data-driven insights seems undeniable. By monitoring IIoT-connected assets via sensors and control system data, operations can:

• Increase equipment reliability
• Limit unplanned downtime
• Enhance operational performance
• Transition to a more predictive, automated maintenance and operations (M&O) model

Despite recognizing the obvious potential of IIoT, the D&F sector’s progress along this digital transformation continuum has been relatively slow. For most retailers, pre-2020 market conditions did not create an overwhelming imperative to accelerate this transition.

Events of 2020 may have changed all that.

Pandemic Compounds Lifecycle Management Challenges

Pandemic-driven disruptions only worsened pre-existing M&O technician challenges and highlighted other weaknesses that posed threats to operational continuity. To keep pace with demand, many retailers found themselves operating their distribution centers (DCs) at nearly continuous peak productivity levels — placing added strain on material handling equipment (MHE) while raising the stakes of incurring unplanned downtime.

The challenges associated with replacing veteran technicians or upskilling new team members were only made worse by the pandemic. Many DCs implemented new safety precautions that hampered their abilities to bring in outside technicians for equipment expertise and assistance with issue resolution. In addition, mobility constraints due to social distancing precautions introduced other barriers to M&O crew efficiency. As a result, the emergence of any MHE issues now presents a much greater threat to overall DC performance and its ability to meet elevated throughput targets.

In this environment, the opportunity cost of not embracing connected technologies in lifecycle management programs has grown exponentially. Key equipment and assets have become more important and essential. Not only have the costs associated with downtime risen significantly, they also begin accruing within minutes, rather than hours — which also makes recovery from downtime much more difficult. And as downtime leads to missed service level agreements (SLAs), a company’s brand reputation and well-earned customer loyalty are also in jeopardy.

As a result of these challenges, the fundamental structure of lifecycle management programs is evolving to a more connected services model that helps companies mitigate market uncertainties. These programs are designed to address existing and emerging M&O and business challenges through:

• Connecting equipment/asset infrastructures and software to enable remote, continuous monitoring and analyses of system health
• Supporting M&O services with programs designed to augment gaps in technician staffing, automate work orders, upskill existing resources, and enable remote technician support
• Providing outcome-based commercial agreements with financial models that flex with seasonal order volumes and business profits

The Consequences of Downtime

Up to 80 percent of businesses are unable to accurately estimate their downtime rates. Many underestimate downtime costs by 200–300 percent. The following far-reaching consequences must be considered when calculating the costs of downtime:

• Lost production
• Recovery costs
• Wasted labor/productivity
• Missed customer SLAs
• Depleted inventories
• Mechanical equipment/system stress
• Disruption to innovation
• Loss of brand loyalty/customer trust

To offset these repercussions, DC operations need connected, data-driven strategies and tools that enable:

• Remote visibility into DC operations
• Fast identification of productivity bottlenecks
• Shorter equipment maintenance windows
• Smaller spare parts inventories
• Data capture and knowledge transfer
• Reduced reliance on skilled labor
• Predictability of outcomes

Connecting Assets within an M&O Service Model

Prior to the pandemic, retailers faced the ongoing collective challenge of finding, training and retaining the ideal mix of skilled labor and technician resources. But with the introduction of current operational demands and safety protocols, these labor pressures have only intensified.

To meet spikes in online demand, many companies have been running their DC operations at near-peak productivity levels for extended periods of time. This unexpected scenario has placed continuous, additional strain on MHE systems at a time when fewer maintenance personnel are available to keep these systems operational.

Generally, most companies operate their DCs without objective baseline data about the current health of their essential MHE, such as critical sortation systems. Understanding the intricacies of these systems typically falls within the purview of veteran technician staff members, who evaluate system condition by “feel” and whose insights are mostly undocumented or considered tribal knowledge.

A connected services approach provides an answer to this all-too common conundrum. By continuously gathering and analyzing data on a sortation system — such as motor temperature, vibration and electrical current draw — a connected solution could detect a potential system failure before it occurs, and even automate a workflow for work order creation and issue resolution, as follows:

1. Issue is detected that poses a significant threat to uptime.
2. Work order is created in a computerized maintenance management system (CMMS).
3. Resolution instructions are sent to a technician via a hands-free, voice-directed system.
4. If needed, a live video chat is initiated with a remote support technician using augmented reality smart glasses or another video-enabled solution.

The benefits of such a connected services approach include:

• Remotely accelerate issue resolution.
• Upskill or train the technician in the process.
• Improve the hiring search by reducing the skill level needed by candidates.
• Reduce the number of labor hours to maintain systems.
• Limit the frequency and duration of unplanned downtime.
• Provide the ability to schedule/plan downtime during off-peak periods.
• Lower the amount of spare parts needed on-site.

Proving the Value of Predictive Programs

The prospect of converting operational data into business value was validated in a study by the Department of Energy (DOE) more than a decade ago. This report demonstrated how the use of data in functional predictive maintenance programs delivered the following benefits, including:

• 10X return on investment
• 25–30 percent reduction in maintenance costs
• 70–75 percent elimination of equipment breakdowns
• 35–40 percent decrease in downtime needed to perform maintenance
• 20–25 percent increase in production

Partner with an Expert to Ensure Results

Along the journey toward connected lifecycle strategies, most companies quickly discover that they are simply not equipped to manage IIoT initiatives on their own. Another common barrier to adoption is that many companies view maintenance initiatives as distractions and would rather concentrate more on their throughput goals and business objectives. Many companies also face organizational resistance when trying to change the cultural mindset to a data-driven paradigm.

Partnering with an experienced lifecycle management service provider is essential to overcoming these common pitfalls. When equipped with industry experience, IIoT expertise and a consultative approach to customer engagement, a partner can help you to:

• Define the scope and desired outcomes of your initiatives
• Extract the benefits of a connected M&O strategy
• Interpret data into actionable insights
• Provide coaching on IIoT adoption
• Hold internal stakeholders accountable for action items

Considering the diversity of D&F operations and profit models, a one-size-fits all approach to lifecycle management is simply not feasible. Instead, a consultative engagement provides a framework for offering flexible commercial lifecycle management agreements that closely align with a company’s financial preferences and operational (or personnel) constraints.

Rather than incurring large intermittent expenses — typically from resolving major downtime issues — a partner can offer more predictable financial arrangements that may even flex with seasonal demand fluctuations and profit margins.

What’s more, an experienced lifecycle management partner can help you to evaluate your strengths and weaknesses and develop programs tailored to your preferences and business goals. Depending on your capabilities, these outcome-based lifecycle management agreements can provide options to outsource the full or partial ownership of maintenance functions.

Counter Uncertainty with Predictability

The sheer unpredictability of 2020 has prompted many companies to kick-start their connected initiatives to help drive out operational inefficiencies and begin the transition to more predicable M&O and lifecycle management strategies.

Connected Services from Honeywell Intelligrated’s Lifecycle Support Services provides flexible commercial, technical and financial agreements designed to complement our customers’ current capabilities and help them achieve their defined business outcomes.

We leverage consultative engagements to help companies at every step of their journey toward predictability — with the goals of maximizing IIoT investments and extracting optimal value and insights from operational data.

Our lifecycle management engagement model is designed to help your organization understand:

• Where you sit on the continuum of digital transformation
• What resources you need to augment your M&O operations
• How you prefer to align lifecycle management agreements with your financial business models

Partnering with an experienced lifecycle management service provider is essential to overcoming these common pitfalls.

By helping you transition to a more predictive lifecycle management program, we’re committed to lowering your labor costs, increasing system reliability and uptime, and maximizing the utilization of your operations to meet current and future demands.  

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