Cost Minimization for Silo Management
Read how you can easily optimize your silo management with IoT techniques and cloud applications.
In the following example, you will find a cost analysis to determine the potential savings.
Cost-benefit calculation using the example of a raw material Storage (e.g. plastic granules, feed for livestock, chemicals, etc)
Currently, the storage silos are operated by the producing company (customer) and raw materials are ordered as needed.
In the future, the management of the storage silos on the customer's premises will be done by the supplier with the help of the Heavy Data Cloud. The customer pays for the raw material and the security of always having a sufficient amount of raw material available. This saves the customer the individual ordering processes and the monitoring of the stock and the supplier can optimize the disposition of the raw materials and the transport processes.
25 silos on customer premises are supplied by the supplier. The silos are on load cells with weight indication on the silo or monitored with level gauges.
One silo is used per customer: So far, the silo contents (raw material quantities) are managed by the customer himself.
Customer point of view (producing company)
- 1 x per day read and archive fill level on site: 15 minutes
- Place an order 1 x per week 30 minutes
- 1 x per month to process a rush order due to an error 60 minutes
Monthly working time on customer side: at a 6 days week: 9 h
Labor costs per hour 50 Euro
Mtl. total labor costs per customer and silo: 450,00 Euro
Mtl. total costs with 25 silos: 11.250 Euro
Mtl. savings potential with 25 silos: 11.250 Euro
Supplier point of view
- 100 orders a 30 minutes per month: 50 h
- 25 rush orders a 30 minutes per month: 12,5 h
- 400 delivery trips per month a 4h: 400 h
Working time per month on supplier side: 462,50 h
Average labor costs per hour 35,00 Euro
Total monthly costs for 25 silos: 16.188 Euro
Savings potential on the supplier side with the Heavy Data Cloud
- The 100 individual orders are no longer necessary. Only one consumption-based invoice is generated per customer per month. Instead of 100 orders per 30 minutes, only 25 invoices per 30 minutes are required. Monthly savings potential for orders: 37.5h
- With the exact current filling levels and supplier-controlled material disposition, material bottlenecks and thus urgent orders are avoided. Monthly savings potential for rush orders: 12.5h
- With the exact fill levels, the refill transport processes can be optimized. Due to the multiple delivery of silos by means of one delivery run, we assume a savings potential of 10% for delivery runs. Mtl. savings potential delivery trips 40h
Mtl. saving potential total: 90h
Average labor costs per hour: 35,00 Euro
Mtl. savings potential labor costs on supplier side: 3.150,00 Euro
Total savings potential for monthly silo management (customer and supplier)
Total monthly savings potential (customer + supplier): 14,400 euros
Cost for 25 silos for the Heavy Data scale cloud with existing weighing equipment (silo scales) or level measuring devices:
- Heavy Data Gateway incl. mobile phone adapter: 367.00 Euro, one-time per silo
- Adaptation scale electronics or level meter + on-site housing Gateway 980.00 Euro, one-time per silo
- Installation gateway and measurement technology: 600.00 Euro, one-time per silo
- Project planning costs: approx. 3,000.00 Euro one-time per project
Total one-time investment costs for 25 silos: 51,675.00 Euro
Mtl. usage fee per silo IoT cloud: 10.00 Euro
Mtl. cellular charges per silo 2,40 Euro
Mtl. fees for 25 silos: 310,00 Euro
Savings potential per month (total savings potential customer+supplier minus monthly fees) 14,090.00 euros.
Payback period 3.7months
The payback period is 3.5 months if customer and supplier share the costs. After that, both parties together save about €14,000 per month in process costs for silo management. The main share of the savings potential is on the customer side.
For the raw material supplier, the opportunity arises to create new offer packages for his customers with the help of the Heavy Data Cloud and thus to improve the service quality and customer loyalty and to increase his added value from the existing customer relationships (service silo management).