Category: General

July 9th, 2013

Don't Just Look at the Price Tag- Consider All Costs When Buying Equipment

While high-quality equipment may cost more initially, reduced downtime and higher production saves the customer money in the long run.

While high-quality equipment may cost more initially, reduced downtime and higher production saves the customer money in the long run.

Everybody has heard the phrase "you get what you pay for." Whether comparing automobiles, tissue paper, electronic equipment or construction machinery, the perceived value of a product is generally defined by the customer’s perception of the quality relative to the cost that has been invested.

Can someone save money by buying equipment from a smaller fabricator with a lower overhead burden as compared to a world-class manufacturing organization? Sure. But there is an inherent risk if things don’t pan out -- the biggest and costliest risk being poor or non-existent factory support, which must be absorbed by the customer in the form of downtime and costly loss of production.

Let’s do some quick math. Let’s say a customer saved $50,000 by purchasing equipment from a lower-quality manufacturer. The quick math would seem to make a strong case supporting that they made a wise choice, wouldn’t it?

Let’s put some variables to the operation: A 200tph plant produces material worth $12/ton. When the plant is up and running, it produces a revenue stream of $2,400 per hour. For a typical eight-hour shift, the system will generate just north of $19,000 per day in revenues.

Now imagine that the competitive equipment collapsed because it wasn’t properly designed by a certified engineer like that we employ at a higher wage. Now the plant is shut down and the customer’s revenue stream is suddenly at zero.

The customer calls Brand X to explain what has transpired; however, they lack a strong service department. A couple of days pass before a corrective action plan is established. By the time final repairs are implemented and the plant is back running, all of the front-end savings - and then some! - have long since been consumed by a single failure that could have been avoided.

Of course, larger, world-class manufacturers like KPI-JCI and Astec Mobile Screens go to great lengths to ensure that these types of scenarios are prevented. How, you ask? Factories like us use:

  1. Professional engineering systems to identify "hot spots" on paper long before anything is operated in the field;
  2. Industrial engineering/CNC programming to guarantee precision assembly;
  3. A company-wide quality and assurance culture to ensure multiple quality checks and shop-floor accountability;
  4. State-of-the-art manufacturing facility and tooling to provideconsistent workmanship;
  5. Parts inventory and service personnel on the ground to offer smooth start-ups;
  6. Year-round factory training schools to educate the users.

Can failures that incur downtime expenses occur? Sure. But the chances of common failures occurring are fewer, and the response time to repair them from a 24/7 global support team is far faster.

All of these activities are the norm at KPI-JCI and Astec Mobile Screens. They do add to the front-end cost of factory products. But they also contribute greatly to the value, and they ultimately will contribute to a lower cost-of-ownership on the part of the customer.

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