Investing in Quality equipment: Price vs. Quality

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Capital equipment investments are a huge undertaking and it is important to make sure you have done your homework. Companies commit a great deal of time, effort and energy into planning for the investment. Project planning committees are formed, teams meet to discuss layouts, operations, staffing, and direct comparison documents are created.

In addition, companies generally require the group to identify and contact a minimum of three vendors to provide designs and pricing for the project. Close analysis is required to ensure the best return on investment (ROI) decision is made. The days of simply looking at the numbers are a thing of the past.

Both client and vendor try to ensure projects go smoothly, increasing the importance of a well defined proposal. A clear understanding of scope of work definition, project management procedures and change order processes will go a long way toward eliminating the occasional “hiccup.” It is common, when purchasing capital equipment, for the final decision to take upwards of 9 - 12 months. Given the complex planning process, it is not unusual to see delivery windows compress making scheduling a driving force in the decision making process. The goal is to eliminate as many issues on the front end as possible.

“Pay Me Now or Pay Me Later”

The saying, “pay me now or pay me later” tends to be true in every industry. To be an informed buyer, it is important to review not only the price, but the quality, design, safety features and overall investment before making a final decision. If these factors are not considered, the lowest quote may not be the lowest price in the end.

As mentioned above, quality should play a large role in the decision making process. Research your vendors to see who has an active quality assurance and/or pre-shipment inspection program. Quality products may come at a slight premium, but they tend to outperform and have longer life spans than those not held up to high standards.

Current trends indicate that decision makers are more deliberate in their decision making process, focusing on the total cost of ownership. Many have seen that you get what you pay for, and quality is no exception.

Apples to Apples Comparison
When making purchasing decisions, the “Apples to Apples” comparison should be a top priority. As an informed buyer, it is imperative to ensure each piece of equipment is compared on a level field, not only to your specifications, but also to what is best suited for the application. Don’t overlook the details; meeting with reference clients who can share all the “ups and downs” of previous project and product performance is a good benchmark. Review every proposal element: sortation, accumulation, air piping, hanger steal, warranty, service, etc.

When visiting reference sites, ask questions and test the equipment yourself. Check three references and ask for several more. Work hard at the beginning of the project and resist taking the easy path when selecting your vendor. If you focus on getting the correct equipment for your application, your team of project managers and installation crew will appreciate your work. Capital equipment purchases should be taken seriously, implement the 6 “P’s” - Proper Prior Planning Prevents Poor Procedures! By doing this, you should be able to avoid many pitfalls that can occur with capital equipment purchases.

Safety

When an employee has an accident you not only have to face the skyrocketing costs of workplace injuries, but also lost employee time and knowledge. As with quality products, safety should be high on the priority list as the financial impact this can have on your business can be severe. Check available standards and regulations to make sure the equipment you are purchasing meet all the mechanical, electrical and safety requirements. Ensure all proper safety devices are in place and understand how they work.

Installation

Many vendors will subcontract the installation services for their equipment. This should not be an issue as long as they also have references that can be verified and they have a proven and positive track record.

After Market Sales & Service

Customer service should not be forgotten. This is the team you will count on the once beneficial use occurs. Ensuring that there is a qualified team ready to serve you should be a key consideration. Easily accessible customer service and technical support personnel are always important, but it is essential during the first few months of beneficial use. You, your team and equipment operators may need assistance as well as easy access to that resource.

As part of the manufacturer’s warranty, replacement parts are typically inclusive during the first year of ownership. This is something to pay close attention to when signing your contract. Ensure spare parts are readily available to minimize downtime in the event of a repair. Make sure a reasonable fulfillment time is supplied and a well defined escalation process is in place. Remember, the manufacturer’s service should be supported by well trained teams of technicians that can visit your site and provide training to your staff.

Cost of Downtime

Heavy use of machinery in the material handling world almost guarantees equipment breakdowns from time to time. The financial impact of break downs can be easily calculated based on package flows, but it is important to consider the hidden costs of downtime. Downtime can have a disastrous fiscal effect on your operation.

These hidden costs are not limited to and can include service calls, truck loading time, expedited shipping costs and any overtime cost necessary to recover from the down time.

Conclusion

Due to more informed and prudent clients, manufacturers are challenged to supply the best equipment possible at the best price. Manufacturers and vendors strive to include all the proper safety features, quality and after market services to keep their customers happy and satisfied with the experience.

• Do not fall prey to the lowest price concept and remember that you do not have to accept the highest price. High prices do not guarantee the best quality.
• Remember to implement the 6 “P’s” - Proper Prior Planning Prevents Poor Procedures.
• Do your homework. Make sure you follow up on • past purchases you have made to verify the correct decision was made.
  

As you are aware, there are many factors that influence your final decision. Investments on capital equipment will not only affect you, but everyone who participates in your organization.

Support those that help in making your company a success and work together to make better, stronger and more lasting capital equipment decisions.

About Caljan Rite-Hite

Caljan Rite-Hite (www.caljanritehiteus.com) has been a market leader in the design, manufacturing and installation of loading/unloading solutions in the materials handling industry for over 40 years. The Caljan Rite-Hite product line is comprised of innovative solutions that include telescopic belt and roller conveyors, all produced with the highest standards in product safety, efficiency, and customer satisfaction.

About The Author

Tina Hogel
Account Manager - Midwest Regional Office

Tina Hogel joined the Caljan Rite-Hite team June 2008. She is responsible for developing the Manufacturer and Integrator relationships US market. Currently, she is heading the Midwest Regional Office in Cincinnati, Ohio.

With almost 14 years of experience in the automated material handling industry, her strengths are in high speed distribution utilizing large automated conveyor and sortation systems. She is an expert in building and maintaining customer relationships throughout the material handling industry.

Tina has earned her MBA from Rochville University. She lives in the Cincinnati, OH area where she is an avid girls softball coach and fan.