Purchasing Capital Equipment --- More Than Just a Machine

Like most things in today's world, purchasing capital equipment for manufacturing is becoming more complex. As North American manufacturers strive to compete in a global economy, the investment in new equipment takes on a more important role. Business leaders are now looking beyond the machinery itself in the purchasing process in order to uncover every opportunity to gain a competitive advantage. Companies now evaluate everything that surrounds the machine tool in addition to the normal productivity and cost savings calculations already commonly used.

There are myriad factors to consider in your individual business environment so we will only explore a few of the peripheral considerations here and perhaps raise a few additional questions to think about during your next purchase.

Fulfilling a current need and intended use of the machine:
This is normally a straight-forward analysis of capacity both for today and projected planning along with the resulting productivity increases expected from the new machine. It is rather easy if the intended use is identical to the process already in place. To gain the most from your investment though you need to consider how taking advantage of newer technology might change the way you process material through the whole manufacturing process.

Think about how you might eliminate steps in your process but not only on the actual machine, think about upstream or downstream operations as well. Does an improved quality in one operation create an opportunity to eliminate a step downstream or reduce time required for subsequent operation in the manufacturing process, like welding? Will better part tolerance allow for easier assembly? What about upstream operations? Can the new machine eliminate a preparation step by using material in a more "raw" state?

When considering the cost of operation it is important to think about future operational cost in the same way that we consider future production capacity. It is difficult, however, to predict future prices of significant cost drivers like energy for example. There can sometimes be large differences in energy consumption for otherwise similar machine tools so it is important that we take some time to consider this more closely. Perhaps tooling represents a major cost, or some other consumable represents a significant cost. Whatever those drivers are, pay close attention to your future needs since upgrading equipment will almost always offer efficiencies that will become even more important in future years as operational costs rise.

Labor is perhaps the most important factor in justifying a new piece of production equipment. Productivity of the factory worker is for certain taken into consideration, but how far? How easy is it for the operator to learn the new machine? How long will it take the operator to "master" the machine functions so the full benefits that are purchased are finally realized? What else is being considered in the work environment to make the new machine and operator even more productive, such as changing the flow of material in the factory or maybe even placing the new machine in a completely different location than the previous tool? In some cases it is even possible that with reduction of set-up time, placement of the machine, material flow or automated material handling that one operator is now capable of tending several machines at once. That would certainly add dramatically to your return on investment calculation, but there are others in the operation that we sometimes forget to include in our calculations.

What about the programmers that support the CNC machines with part programs? Recent advances in CAD/CAM programming software have drastically reduced the amount of time required by the programmer to create CNC programs that produce high quality finished parts while at the same time reducing scrap. Software is sometimes a very inexpensive way to realize significant gains along with a new machine tool. Where is the programmer's time calculated into the justification formula? Is it even considered? The same could be true of plant supervision, especially if one new machine tool can replace two or more older machines. We consider the cost of the floor space, but how often do we consider the capacity or cost of the plant supervisor or other support personnel?

Finally there are soft issues that are extremely difficult to quantify, yet have an enormous competitive impact. Consider how long it takes from the time you receive a customer request to the time you deliver a quality product. This is a service factor that in some industries absolutely makes the difference between growth and stagnation -- or worse yet -- extinction. Lean Manufacturing or Just-In-Time means you need to be highly reliable with your deliveries whether it is from one work cell to another or from you as a supplier to your downstream customer. The flexibility of your machine tools can be a critical factor in this equation. How easy is it to change from one job to the next? How many different jobs can be handled with one machine? How easy is it to move material in and out of the machine? How does this particular machine affect the performance of the other machines in the operation? These are just a few questions to consider if your goal is to reduce your time from order to finished part.

It is only through continuously improving the manufacturing processes and equipment that North American manufacturers can remain competitive in today's global economy. We have the tools and talents to be competitive today and guarantee our success in the future. Hopefully you will find many more factors that apply to your own business model that will help you improve your return on capital equipment investments and gain your own competitive advantage.

Michael J. Zakrzewski is president of Bystronic Inc. , Bystronic supports the customers' success with application-oriented systems and services for the laser and waterjet cutting, as well as for bending. The focus lies on the cutting -- bending process chain and the automation of the complete materials and data flow. Bystronic solutions are found in all industries where sheet metal is processed, in the automotive and construction industry, in glass processing and in the aerospace industry. www.bystronic.com