Factoring in whole life costs

Plant managers are often distracted by the initial capital outlay required rather than the effect whole life costs may have on their profitability.

Plant managers must embrace the concept of whole life costs, during the purchasing stages, in order to reap the greatest benefits and the real value from their equipment, according to Jeremy Wilkinson, Drive Centre Product Manager.

Presenting the question "What single factor has the biggest impact on your purchasing decisions?", to a room full of plant managers and you will undoubtedly get a resounding reply - "purchase price".

Whilst perceptions are beginning to change across the industry, there remains a percentage of the UK manufacturing industry that still thinks this way and who may not therefore be benefiting from some of the latest product innovations in the market place.

The issue of whole life costs refers to the amount incurred by the running of equipment throughout its operational life, from the initial purchase price, to productivity levels, equipment availability, maintenance costs and operational costs.

The process is concerned with optimising the total operating costs of a piece of equipment and then calculating a comprehensive estimation of alternative products.

To ensure that the estimate is accurate, it is important to know the accrued cost of a product over a period of time, addressing issues such as maintenance changes, installation time and cost, as well as the effect of various environmental factors.

Improving the effectiveness of a company's purchasing decisions is therefore perhaps the key emphasis of the whole life cost approach.

The calculations are not only useful for forecasting the lifetime cost of equipment but also to monitor current situations.

In some circumstances, this has presented something of a hurdle for companies due to reluctance to provide all of the necessary/required information for an accurate assessment.

Whilst an understandable concern, it is important that companies overcome this and address the issue wholeheartedly.

One such area where purchase price plays a crucial role is in the use of drive equipment.

The use of drives, and particularly variable speed drives, in the manufacturing industry continues to rise.

However, purchasers are still not fully aware of the benefit of calculating the whole life cost of equipment before purchase.

Perhaps one of the main reasons for this is that plant managers are distracted by the initial capital outlay required rather than the effect whole life costs may have on their profitability.

Profitability, however is heavily dependent on a number of important operational factors such as productivity and equipment uptime.

Where either of these two factors is affected, so too is profitability.

The key objective of estimating whole life costs is to therefore not to focus solely on capital expenditure, but to look more at efficiency values in order to maximise productivity.

The Siemens Sinamics range is an innovative drive solution, featuring a number of products with the ability to reduce the cost of cyclic loads through the use of regenerative power modules.

The system allows users to regenerate energy back into the mains supply every time a load ramps or down, enabling end users to save energy and therefore profits in the long run.

Energy consumption is a key factor for industry as prices continue to remain unstable.

Systems and equipment with the capability to reduce consumption levels are therefore of key importance, and is therefore one of the key selling points of the Sinamics range, with the additional ability to brake with a minimum load.

In many traditional systems the braking system presents an area of high maintenance due to the constant ramping up and down of the load as well as safety requirements.

The process traditionally occurs via mechanical or electrical means and therefore requires regular maintenance checks and servicing every three to six months.

A number of products within the Sinamics range also feature fully integrated safety technology and require very little additional hardware to cover safety requirements.

The safety technology and regeneration system are all contained within a compact module, ensuring low maintenance levels.

Moreover, the regenerative system requires maintenance checks every two years, providing higher productivity levels for the end user as well as optimum efficiency.

The potential rewards for the whole life costs approach can be greater machine availability, higher productivity levels, greater energy and machine efficiency as well as lower maintenance costs.

While purchasers may face a short-term increase in cost, the benefits in the long run will far outweigh the short-term considerations.

At a time when UK industry is being squeezed from every direction, the whole life cost purchasing scenario can be one of the only approaches for a sustainable future.

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