Ross Grassick argues that true value can only be judged by considering whole of life costs.
There are many products today that are marketed on price, and it is all too easy to be fooled into believing that when a piece of equipment is cheap it is good value. Forklifts are definitely among the products that fall in this category.
When you purchase a forklift or other materials handling equipment it is only natural to look for a bargain. You will doubtless be influenced by where the equipment is made and whether it looks good.
However, rather than basing the final decision on the purchase price, the real question you should be asking is “What are the whole of life costs?” or “Do the savings in the purchase price offset the running costs?”.
Let’s look at what makes up the “whole of life costs” and in turn look at the value angle of those costs.
Fuel is the single largest everyday cost of an internal combustion forklift, yet few people consider fuel efficiency in their purchasing decisions. However, the difference can be a lot more than you think. For example, the latest electronic injection engines offer up to 10% less fuel usage.
To put this in perspective, if you use three cylinders of LPG per week over five years that comes to a total of 780 cylinders. A 10% fuel saving would save the cost of 78 cylinders of LPG.
A quality tyre will deliver up to twice the life of a cheap one
The next biggest cost is tyres. There are many factors that contribute to tyre costs, but for this exercise we will look at tyres on a new purchase.
The questions to ask are whether the tyres supplied with the unit are of a well known brand and whether they are supported by a warranty in Australia.
Low cost tyres are exactly that: they are built to a cost. The quality brand name tyre will generally deliver double the performance and twice the lifetime.
In most cases, maintenance costs are less than tyres and fuel over a five-year cycle. The preventive maintenance recommended is similar across most brands, yet there are many owners that think they are saving money by not having these services carried out.
Preventive maintenance avoids damage to other components by replacing wearing parts before they fail. This misguided cost-cutting idea will cost time as well as money in the long run.
Preventive maintenance avoids damage to other components
In maintenance the biggest problem is time lost due to poor availability of spare parts. You need to know that the supplier of the equipment both carries the parts in stock to suit the units you are buying and is also backed by the manufacturer. The reality is that the unit could be out of service for 5-10 days if parts need to be imported - and even longer if the wrong ones are sent.
The last cost is that of disposal at the end of use. And the basic fact is that well known and well supported brands always have a higher residual sale value.
In summary, when you next look to purchase a new forklift don’t just stop at the price. You need to look more deeply at the savings the forklift can offer over its whole lifetime.
Support is a key factor in this: how long has the seller been in business, and do they offer after-sales service? Do they carry spare parts for the model you are buying, do they deal direct with the factory, and can they offer the warranty?
Check that the warranty covers both parts and labour, check the term of the warranty, and check what is covered.
Most of all, the value of the purchase should be measured over the full term of ownership - not just on the day of purchase.
Lencrow Materials Handling
1300 536 276