Everyone knows that the purchase price of a piece of assembly equipment is only a fraction of the true lifetime cost. Nevertheless, the prevailing corporate culture is all too often tightly focused on minimizing the initial outlay regardless of the long-term consequences.
In nearly every case this is not only shortsighted, but actually counter productive because saving 5% or 10% up front typically costs a fortune over the life of the program. It happens over and over because the people that purchased the equipment is long gone by the time someone looks at the real cost.
They’re typically off at another company, buying more cheap equipment because they did such a good job saving money on the last system they purchased, and probably pushing their new suppliers for lower cost on the next piece of equipment.
Dealing with the bargain assembly equipment
It’s the operational people on the shop floor who have to deal with this bargain equipment and endure the wrath of corporate management when operating costs skyrocket, or it stops working altogether. They get blamed for the added operational costs of excessive maintenance and downtime while the quality issues remain well hidden.
The assembly equipment supplier usually gets a black eye and is blamed for supplying a substandard machine or system. It’s rare for anyone to dig deeply enough into the problem to see that the real cause was the “negotiated” price that could only be met by seriously compromising the quality of the machine in the first place. Penny wise and pound foolish applies here in spades.
The assembly equipment supplier is caught in a lose-lose position. They are fighting to win the order, so they are forced to compromise machine quality to get the cost down. If they don’t, they lose the business. But, if they are successful, they still lose because the end user gets an operationally sub par machine and they get the blame.
The short-term thinking at the root of this dilemma is an unintended consequence of the prevailing corporate structure that separates the team specifying and buying manufacturing equipment from the team that has to use it once it’s installed. The buying team usually has the best of intentions but too often it is subconsciously programmed to prioritize initial purchase cost over the harder-to-determine long-term operational costs.
It’s understandable. The initial price tag is usually staring them in the face while the long-term operational cost, though just as real and usually with far more impact, is harder to determine. The fact that most of the time the consequences are someone else’s problem can’t be ignored either.
So, what’s the answer? Perhaps an analogy will help. When you shop for tools you will use personally, do you buy the cheapest brand you can find or do you pay the extra money to get the better quality tool that is going to be ready when you need it? Chances are it’s the latter because the tools are for you not someone else.
Why then, should the decision process be different for something as important as the equipment to keep a manufacturing process going? Yet, as we’ve seen, it’s all too common to cut corners there because those doing the buying aren’t those who have to use the equipment.
The solution seems obvious. At a minimum, get the operational people involved in purchasing as part of the team. Or, better yet, give them the responsibility for the decision with the knowledge that they will be accountable for the long-term results, pro or con.