Transform your distribution hub with digitalisation: an introduction

In the increasingly competitive CEP industry, companies are always on the lookout for that next big technological advancement. For some time now, most of the attention has been devoted to the hardware, but now, that is starting to change. The next big thing? Digitalisation. 

By Sebastian Titze


10 years back, when faced with the challenge of improving throughput at a distribution hub with limited budgets, a hub manager would immediately look at the physical limits of his or her operations.

He would look at the chutes. He would look at the sorters and the conveyor belts. And he would think to himself: I need to add more equipment to our sortation system.

Today, the focus is beginning to change. The processing power in today’s computers, combined with sensors, allow insights that weren’t even imaginable only a few years ago.

Digitalisation in the CEP industry

Coming up with the right solution is no longer just a matter of toying with system layouts and changing them. The focus has shifted, from hardware-only to a more holistic view. Now, the Courier, Express and Parcel (CEP) industry is looking to digitalisation as a possible means for optimisation. The thing is, in today’s CEP industry, distribution centres have access to both the data and the processing power to analyse the data and put the data to use.

What are we actually talking about when we talk about the digitalisation of the CEP industry?

Digitalisation in the CEP industry is the process of gathering enormous amounts of information from distribution centres and storing that information digitally.

Why is data so valuable to distribution centres?

Distribution centres tend to collect data about two things:

  1. Operations: How shipments/parcels are processed
  2. Equipment: How well the sortation system is operating

Without necessarily having to change the layout of their sortation systems, distribution centres can benefit from data capture, analytics and other digitalisation efforts on several parameters:

  • Improved throughput
  • Improved availability of the system
  • Less budget spend on maintenance
  • Reduction of breakdowns
  • Reduced manual handling

The bottom line: improved throughput, reduced operational risk and lower cost per parcel.

How is data gathered?

So how does digitalisation actually work? Let’s start off by looking at the data collection methods.

The sortation system that makes up the physical side of a distribution centre is equipped with various PLCs. These PLCs detect all kinds of information from the system: temperature, vibrations, power consumption, processing speed and much more. We call these raw data.

Another example: weighing units. An important component in almost every sortation system. One would think a scale just tells the weight, but inside the weighing units, you will find a processor that works as a small computer with the capacity and ability to process all kinds of information specifically related to the process of weighing. This is known as edge analytics.

Both streams of data, edge analytics and raw data, provide valuable insight into the sortation system performance but at different levels. The weighting unit, for example, will have processed the data locally and can tell exactly what’s wrong. The sensors, on the other hand, will leave the conclusion to be made by processing the data. That is data analytics.

Data tell us how every component of the sortation system operates and how the sortation system processes items. When analysing data, patterns begin to reveal themselves in terms of the two subjects: operations and equipment.

For example, the system might find that specific types of packaging often causes manual sortation. Or that a breakdown occurs every time the conveyor belt reaches a certain temperature. Or that a specific pattern of vibrations from the chutes reveal that the machines perform poorly. Instead of this information only being inside someone’s head, the distribution centre can collect and analyse the data to get more insights. The result is essentially a completely transparent distribution centre.

“The result is essentially a completely transparent distribution centre.”

The predictive potential of data

In the process of digitalisation, distribution centres eventually reach a point where experience – gained over time – can be combined with data to reach a predictive level where they can recognise patterns that the human eye would never detect. This is the point where the sortation system provider will be able to step in with experience within automated sortation, to reach the next step; a higher level of digital maturity.

Let’s take a look at some straight forward examples of the value that data creates:

  • The predictive potential. Computers can predict when a breakdown is immediate and tell distribution centres about the exact adjustments they need to make to prevent breakdowns. Just imagine how a reduction of breakdowns could affect the cost per parcel handled!
  • Maintenance professionals can use data to detect when a specific spare part will need to be replaced.
  • Operators can detect if a certain type of parcel is always sorted manually. And why that is. Perhaps the packaging is unsuitable for automated sortation. Perhaps a specific combination of parcels causes trouble when those items follow after each other in the sortation process. Or it can be a myriad of other factors that somehow intervene with production. Insights that are undetectable to the human eye can have a huge impact on the throughput and efficiency of a sortation system.

Get the full overview: Read the Parcel distributors’ guide to digitalisation.

The different levels of digitalisation

Every distribution centre can benefit from digitalisation. But in order to get started, it might be helpful to understand the different levels of digitalisation to determine where your distribution centre finds itself right now.

Most distribution centres would rank at one of the four levels described below. Distribution centres at step 1 or 2 in particular have a vast potential for improving their operations through the use of digitalisation.

1. Manual operations

The pen and paper method. Rules for when the sortation system needs service are typically based on a calendar. Every piece of information is written down and stored manually. Breakdowns are handled once they occur. Repairs or optimisations generally take place when they are obviously required or when throughput drops noticeably.

2. Basic digitalisation

Sensors in automated machinery detect information from the entire sortation system. Information is stored digitally. Every part of the system is constantly monitored. Data are collected and provide a clear view of how the system performs. Data serves as an aid to understand what and why something happened. Operators are data-driven in their work as well and react when digital predetermined conditions are met.

3. Advanced digitalisation

Coupling of numerous data sources reveal patterns about the performance of the system, performance in specific situations and probable outcome. Use of algorithms lets you optimise the system through prediction on both operational and equipment levels.

4. Full digitalisation

The prescriptive level where you know which action to take to eliminate a future problem foreseen by the system. On the equipment level, this could include knowing which parts to exchange when. On the operational level, this includes knowing which decisions to make to avoid a potential bottleneck situation. Depending on the chosen level of autonomy, the system can either propose an action, inform about an action that has been taken, or simply carry out the action autonomously.

Any distribution centre can benefit from digitalisation and, in time, advance to a higher level of digitalisation. However, taking the necessary steps might require some help from a systems provider.

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