Case Study - How To Purchase the Correct Machine

Case Study - How To Purchase the Correct Machine

How does your business purchase the correct machine?

“It’s easy to be wise after the event” – Arthur Conan Doyle. When we make significant choices we apply our knowledge, expertise and importantly the experience we have developed over time. Can you recall when you realised that you had just learned an important lesson? Here we discuss lessons learned and the opportunities to bring performance metrics into selection criteria. This will assist when selecting the correct machine and automation strategy to do the job needed for it’s expected life. We consider this the Total Cost Of Ownership. When a machine tool has a lower investment price and is commissioned with a few key options left off the machine. The price is lowered and can become attractive to price sensitive buyers. The cost of ownership can then become higher when additional skilled labour is required to meet the specification of the project the machine could have ultimately automated. If the machine cost is lower, will this impact & increase the total cost of the part or process the machine was intended to address? The vested interest that we all have to collaborate sincerely and achieve success when the circumstances allow can only happen if we are properly informed. These are a generic set of rules that you can elect to apply to all machines, their manufacturers and suppliers to ensure that they are delivering value to your business and your customers. Please make notes for us to discuss your thoughts and ideas.

Commercial

  • Evidence: Review evidence-based metrics from the machine tool builder that identify capability to increase capacity, schedule or quality improvements plus measuring man-hours that can be re-tasked
  • Efficiency: Require time studies from the machine tool builder relevant to every part of the processing time and providing individual evaluation.
  • Mutual assurance: The machine tool builder will often request a letter of credit for security, it is reasonable for the buyer to request a bank guarantee to secure their deposit
  • Integrity: Eliminate the risk and related consequences of the machine tool builder selling your machine to another buyer that required a faster delivery to secure the order. This is not unusual once a letter of credit has been established and a deposit has been received?
  • Reliability: Consider the consequences to the machine tool builder if a function or capability was offered with the machine that doesn’t end up working? What protection does your workshop have from the machine tool builder once a letter of credit has been established to secure payment for the balance of the machine?
  • Transparency: Are there extended payment terms based on a letter of credit 365 days after bill of lading date and at what interest rate?
  • Support: Is freight, software, commissioning and training included with the purchase of the machine? What are the hidden costs after a contract has been signed and deposit paid?

Electronics

  • Continuity: Has consideration been given to reliable power supply and mitigation of damage to the machine through inconsistent power supply?
  • Serviceability: Has your business specified an air conditioner to the electrical cabinet to ensure the electrical switchgear lifecycle is maximised. For every 10 degrees in temperature increase the electrical cabinet experiences expect a budget of 10 years life reduced from the electrical components inside the cabinet
  • Interruption: To avoid mice making a warm home and eating electrical wiring has your workshop specified an ultrasonic mouse device inside the electrical cabinet??
  • Interfacing: Has the machine tool builder referenced or labelled every wire, motor, drive and solenoid to the machine and the electrical cabinet to ensure remote diagnostics is efficient and effective?

Software

  • Streamlined: Arrange a screen- shared software demonstration with the machine tool builders application engineer to measure and identify any limitations with the machine or automation strategy to meet your outcome requirements
  • Backwards compatibility: What is the price for software upgrades or will the machine tool builder include in the contract that software upgrades will be included free of charge for the lifetime of the machine?
  • Interoperability: The commonality between machines in software packages such as Lantek, Tekla or StruMIS presents opportunities and pitfalls for performance and capabilities. Have these been considered? There are risks and rewards to how compatible the machines work with complimentary software These software companies will have inside knowledge of how all machines are performing in most workshops and if there are limitations from a capability or service from shared customers from within the industry. Have you spoken to these network references who your business may end up working with for the machine you are considering?
  • Inclusions: Is software included with the machine or will this be priced after a contract is signed?
  • Integrated or generic? Is the software designed from the machine tool builder or a generic software that can run program all machines?

Spare Parts

  • Mean Time Between Failure: Has data been provided on critical components and their durability? Understanding the tested performance of your machine before it goes in to service can significantly affect how you drive it.
  • Future costs: A price list for ‘nice to have’ and ‘must have’ spare parts and consumables be presented prior to ordering any machine. This avoids the manufacture or agent charging inflated prices for spare parts and consumables after a contract is signed.
  • Inventory: Is your company intending to invest in spare parts to be delivered with the machine. This avoids any duty with the spare parts when the ordered with the machine.
    • SMS advice is to allow for 1% of the cost of the machine to stock spare parts with your machine for the lifetime of the machine to avoid any disappointment for the seller suggesting they only sod that spare part yesterday.
  • Availability: Have you considered the implications of downtime if your workshop doesn’t take the responsibility of stocking key components?
  • Immediate: Can the spare parts be ordered from the country that the machine is operating in? Or is the buyer forced to return to the machine tool builder or agent to purchase spare parts for the lifetime of the machine?
  • Forecast: the TCO (Total Cost of Ownership) is central to the fiscal value of any capital purchase. Clarity of understanding, awareness and costs to access spare parts and related services is crucial; has this been broadly disclosed prior to confirming your purchase?
  • Teamwork: Will the local agent provide service on the buyers machine if the buyer purchases spares or consumables from an alternative provider?
  • Consideration: What is the restocking fee for any spare parts after the machine tool agent suggested XYZ part was required and it turns out the part was not required to fix the issue?
  • Timely: What level of spare parts are held in stock from the machine tool builder or agent?
  • Priorities: Are you aware that several agents require any stock item is required to be sold XYZ/month or quarter for the spare to warranted to be stocked. This is the value of stocking parts in your own workshop to avoid disappointment of machine downtime for critical machinery to run your workshop

Service

  • Schedules: Prior to ordering a machine have you witnessed the daily, weekly, monthly and yearly maintenance and inspections tasks that will be the responsibility of the operator.
  • Planning: Have you requested from the agent of machine tool builder for a service and consumables price forecast for the first 40,000 hours of the machines operation? If considering a C02 laser cutting machine we advise to request the price to replace the laser tubes that some agents consider these items a consumable to avoid including these expenses in the 40,000 hour forecast.
  • Consistency: Applying the same metrics and procedures in the FAT and commissioning is essential. Without this there will be unknowns that can affect calibration and establishing baseline performance upon acceptance.
  • Tested: Have you asked what any FAT test will look like so you can value its relevance to your business and the machines functionality that you are ordering?
  • Credible support: Will remote diagnostics be provided for the lifetime of the machine and will the machine tool builder include this in any contract?
  • As needed: Is there 24 hours remote support and does this mean the support technician can dial into the machine remotely to support diagnostics?
  • Added support: Are any additional service contracts or extended warranty available with the machine?
  • In service inspection: What are the costs to visit the machine tool from the manufacture once the warranty period has expired?
  • Tutorials: Does the machine tool builder have videos on how to service or calibrate the machine?
  • Neutral servicing: Can the buyer use a service contractor they are familiar with or is the buyer captured to use the machine tool local agents in house service?
  • Remote reach: What is the cost to visit a regional client 100km from a capital city?
  • Deferred cost: If the service contractor arrives at 9am and needs to wait to contact a European machine tool builder for remote diagnostics, what does this cost the buyer per hour?
  • Whose margin?: Is the machine tool agent sending a service contractor to your workshop dressed in the agents t-shirt and hat and marking up a contractor that your business could be working with directly?
  • Incremental cost: Will the agent or machine tool builder charge your workshop for remote diagnostics support by the hour?
  • Relationship network: Has the agent or machine tool builder introduced your workshop to the relevant service contractor prior to sign off on the machine so a service and support relationship and training can be started with the machine tool builder and local service contractor?
  • Frequency of support: How many service visits have been allowed for in the first 12 months of the machines installation?
  • Informed costs: Does your workshop know the cost per day including travel for the machine tool builder or agent to send someone to your workshop inside or outside of warranty for additional training or support?
  • Rate of charges: Is training priced at the same rate as a service visit?
  • Travel costs: Is the cost of travel for a service technician to visit your machine the same price of when the technician is attending your machine?
  • Distributed costs: If your machine requires service from an agent or machine tool builder where flights are required. Will they split the cost of the fights between all the customers they visit in that country or city or will every workshop the technician visits be billed for return flights?

Customer Testimony & FAT

  • Blurred lines: Be aware of inferred enticements that may influence selection preferences.
  • Peer reviews: Have representatives of your evaluation committee visited 1-2 references sites to witness all the machines capabilities and automation strategy working?
  • Peer disappointment: Has your workshop asked to speak to unhappy customers regarding service and how the challenges were overcome?
  • Consistent metrics: How is your workshop evaluating all the capabilities to avoid the other machine tool builders saying ‘me too’, ‘we have that capability as well’ when in reality these functions may not be available or don’t work as well as the seller suggested.
  • Witness review: Has your team witnessed the full capability of the machine in operation in the country that you operate in?
  • Satisfaction: Would the current buyer invest in the same machine again?
  • Verification: Have the capacities offered to the buyer been reached after commissioning?
  • Effectiveness: What are the limitations of the machine and machine tool builder / agent? NB: Clients of SMS have offered prospects who are interstate and not in competition with each other to visit their workshop for additional training once they have commissioned their machine for more advanced training. If prospects of SMS request a FAT visit to our clients workshops this will only be facilitated by SMS if the prospective buyer offers a reciprocal factory visit to our client who is showing them their factory, machine and sharing their intellectual property.
  • Set-up: Do you know how long the machine tool builder or agent will be commissioning and training your staff? Have you asked if it is possible to pay for additional training?

Capability

  • Awareness: How is your workshop evaluating the limitations of the machine tool?
  • Ramp-up: Is the machine tool builder or agent discussing limitations of the machine or automation strategy with your business? If not why not?
  • Value proposition: How is your workshop evaluating the ROI?
  • Farming: How is your workshop evaluating selling any excess capacity to the market?
  • Similar but different: How is your workshop measuring how this machinery investment is providing differentiation to your capability and why your clients will give you work?
  • Versatility: How is your workshop evaluating the flexibility this capability will provide?
  • How has your business evaluated how this capability will provide competitiveness against low cost labour countries?
  • Output: How is your workshop measuring how any machine will improve schedule and quality?
  • Fewer hands: How many man hours from your manufacturing will this machinery automation strategy be re-tasked?
  • Growth ambitions: Will your workshop be winning more work or making more money? Hopefully both?

The world works well when everyone does what they say they are going to do. It’s not what is being said that generates gaps or areas of improvement for the buyer of complex capital equipment and the relationship they require with the agent and machine tool builder. Closing any gaps in a specification buying process prior to an order being placed will mitigate any buyers remorse or resentment so every machinery investment maximises the ROI and the intent the machine was purchased for.

Learn More

Contact Specialist Machinery Sales today to discuss a superior machinery strategy for your business.

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