Evaluating the purchase of new equipment can be a complicated process. There are many stakeholders to consider, vendors are aggressively bombarding you with information and you have limited time to make a decision. It is easy to miss some key questions during the evaluation process which can prove costly later on. Before committing your company to an expensive investment in equipment or systems, make sure you add these questions to your checklist:
1. Have we talked with our employees, suppliers and clients about this?
When evaluating equipment purchases, owners, managers and vendors tend to be the strongest voices heard. While they play an important role, it is a mistake to leave out the input of other stakeholders. Employees can provide practical insight from hands on experience with regard to how different equipment truly performs in real-world conditions. Suppliers can provide insight on the ease of integration with their own systems.
Imagine if two months after acquiring and installing new equipment to automate your plant floor, a key supplier announces a significant change to the design of an important part which is not compatible with your new equipment. Had you discussed it with your supplier, they would have informed you about the upcoming changes. Clients can provide feedback on specific changes they would like to see with your product or service so you can evaluate whether or not the new equipment can execute them.
2. Have we looked at both custom and off-the-shelf solutions?
There is a direct trade-off between cost and flexibility. Off-the-shelf solutions tend to have limited abilities for personalization to your specific company’s needs. In fact, you may need to adapt your processes to accommodate the limitations of off-the-shelf equipment.
But the cost savings can be significant, future maintenance and repairs can be performed in less time and updates obtained more frequently. Custom designed solutions can meet all of your existing needs, but are significantly more expensive to purchase, maintain and repair and may require expensive retrofits to update them. It is important to carefully consider both options.
3. “How have we taken into account the timing of the costs and benefits?”
Like most things in life, timing is everything when it comes to investments in new equipment. Typically, equipment requires a large upfront investment and the benefits in the form of cost savings are earned over time. When taken into account, the timing can have a material impact on the comparison of costs and benefits.
Let’s take a look at a simplified example to illustrate the point.
Go to the article: 3 Questions You Must Ask Before Investing in New Equipment