Executive Brief: The Cost of a Bad Connection
The Hidden Drain on Automation Gains
As the CEO of a global supply chain manufacturing and distribution operation, your policies and strategies drive the efficiency of your organization to deliver your products and services on time and on budget while maximizing profit. To do this, you rely on automation and a fleet of mobile workers to get those products and services out the door. These mobile workers depend on a vast network of connected networks, applications, devices and robots. The mobile worker is the human link in your automation supply chain and needs fast and reliable connections to do their job. But what is the actual cost to your organization when your mobile workforce (and robots) experiences slow-downs and downtime caused by bad connections?
Cost Calculator
When looking at the actual costs of poor connection performance in warehouse automation, it is more than just sunk labor costs. While these costs can be significant, labor costs are only part of the calculation when looking at the cost of a bad connection. For CEOs it is critical to understand the actual impact to both the top line and the bottom line of the business.
DIRECT COSTS
- Increased labor costs. When mobile workers that are driving warehouse automation experience slow-downs or downtime from connectivity issues this results in increased labor costs. The more time it takes to complete a task, the more labor is required.
- Reduced productivity. Productivity is calculated as a quotient of input and output. Connectivity latency and disconnects result in a direct impact to a reduction in productivity based on more input (time) for less output (product or service).
- Technical support costs. Troubleshooting poor connection performance can require significant investments and divert internal organizational resources, often without clear diagnosis and resolution. Additionally, determining if it is a vendor or service provider issue can introduce greater challenges.
INDIRECT COSTS
- Supply chain delays. A recent study of global manufacturing and distribution organizations found that 98% deal with technical or system difficulties that delay shipments in a normal week.[1] The cost of supply chain delays including missed deadlines and service-level agreements (SLAs) incur increased transactional costs and fees.
- Reputation. As a critical link in the global supply chain, your customers and partners need to know they can depend on you. Supply chain delays and missed SLAs caused by connectivity problems are not good for your global brand and can negatively impact sales.
- Competition. Improving your organization’s ability to realize the full benefits of automation that give you an edge over the competition is a cornerstone of your strategy. Bad connections can cause you to lose that edge. In fact, a recent survey found that 70% of CEOs in manufacturing and distribution said that reducing downtime of mobile devices in the field is a top business concern.[2]
OPPORTUNITY COSTS
- Lost revenue. Slow-downs from connectivity issues result in fewer products and services getting to market and lost revenue opportunities.
- Reduced return on automation investments. As digital transformation accelerates, and investments in automation and robotics increases, bad connections drain the gains of these investments.
Do you know if poor connection performance is slowing down your warehouse automation?
The data you need to answer this question is often siloed between IT, operations and the mobile end user. This can make it hard to know if you have a problem or not. If you can answer this question, you can prove your automation investments are paying off.
[1] Independent unpublished industry research
[2] Independent internally published industry research
About the Author
Shari Christofferson is President of Connect Inc., a digital technology company that has been innovating in supply chain mobility for over 30 years. Her role at Connect has included a customer-centric approach to market research and product development focused on advancing mobile enterprises past challenges with relevant data analytics, process automation and AIOps technology. Prior to Connect, she worked with technology entrepreneurs supporting market development and expansion in local and global markets.
