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Are You in it for the Long Term?

PRCSH11 3rd December 2008

Recognising the complexities involved in the overall cost of ownership of a materials handling fleet, David Cooper of Cooper SH, examines some of the factors to consider to help you save thousands on your bottom line.

A customer of ours recently ran a seminar at which it invited customers to openly discuss their experiences. The managing director of a small logistics firm stood up and said, “Your trucks are too expensive; I can get [another brand] for a third of the price if I look around.”  The room fell silent. However, before my customer could reply one of its clients, a Supply Chain Director of an international food manufacturing company, stood up, “You are being very short sighted if you only look at the initial purchase price.  I can tell you right now, from experience, the cheaper machine will end up costing you three times the price of this brand in 5 years’ time.”

For many of you reading this article, your key business drivers, those factors that allow you to build long term shareholder value, will be to reduce operating costs, increase service reliability and improve performance.  By taking a lifetime cost approach to your fleet provision, you could end up saving hundreds of thousands over the lifetime of your fleet.

Take fuel costs for example.  Although prices have abated over the last few weeks, increasing diesel costs are here to stay. A large fork lift truck will have a 12L engine and can guzzle up to 20 litres of fuel per hour.  Our research has shown that some drivers can use up to 30% more fuel than others, simply by the way the machine is specified and the way they drive.  There is a belief amongst drivers that the engine needs to operate at full speed to achieve optimum hydraulic performance – this is simply not the case. The maximum torque can be achieved at just 60-70% of engine speed.  By measuring and controlling fuel consumption more thoroughly, you will reduce costs and improve the efficiencies of your drivers.  Sophisticated technology, such as our EcoDrive, can help you monitor the finest detail of your drivers’ performance, including idling time, hydraulic usage, and number of lifts.  Through measuring, and there-in management, of your drivers savings of 5-7% can be made alone. It further affords you the opportunity  to reinforce and reward them when they are doing a good job to build a culture of best practice.

In order to fully understand lifetime cost, at Cooper SH we have done an extensive study looking at the overall cost of ownership of a variety of competing brands of products, all of the same build and performance. The machine that was 12% cheaper to purchase was 33% more expensive over it’s lifetime. But with fuel monitoring systems and technology such as load-sensing variable displacement hydraulics, it uses nearly 11 litres less fuel per hour resulting in a saving of £85,000 over 12,000 hours of operation.  Taking into account the more expensive machine’s lower maintenance cycle (which was twice as long between service intervals), its owner will save nearly a third in maintenance costs and with residual values that sustain twice the value of the cheaper machines, overall savings amount to £115,000 per machine. This figure comes straight off the bottom line.

Companies who truly understand the costs of running a materials handling fleet take a long-term view and look at overall cost of ownership.  Instead of seeing the supplier relationship as a short term arrangement where cheapest initial price wins, they treat their suppliers as a strategic partner who can add value to their business.  By seeing suppliers as collaborative partners who can help you to build long term value for your customers and shareholders, and significantly reduce your costs, you will not only build competitive advantage but also reduce the hassle involved in managing your materials handling fleet.

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Editor’s Notes

Operating in all sectors of heavy lifting across the UK and Ireland, Cooper Specialised Handling is the exclusive UK distributor for SveTruck, RAM Spreaders, Telestack bulk material handling conveying systems and Sany mobile handling equipment, sole UK importer and exclusive distributor for Mantsinen cranes, Movella Translifters, TEC Containers and a long-term specialist in Konecranes lift trucks.  The company, which celebrated 20 years in business in 2018, also has a dedicated after-sales division, Cooper Specialised Handling Ireland, which specialises in engineering support.

Independently owned, Cooper offers total solutions in both solids and bulk handling. Its customised solutions comprise high quality, high value products and reliable service for businesses operating in the most challenging heavy handling environments, including ports, freight handling, inter-modal terminals, manufacturing and other heavy lifting industries.