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How Looking at Whole Lift Costs can Make Life Easier

PRCSH12 23rd January 2009

When it comes to purchasing of a materials handling fleet, decisions are often made based on initial purchase price and monthly contract rental costs. However by understanding the lifetime costs involved in running a fleet, many companies are already saving thousands of pounds whilst simultaneously improving the productivity and efficiency of their operations.

An end user of forklift trucks recently attended an industry seminar where people were invited to openly discuss their experiences of buying forklift trucks. A purchasing manager of a large logistics firm openly commented that several leading brands of trucks are over-priced, and that cheaper brands can come in at 80% of the price of leading brands. Whilst there were a lot of heads ready to nod in agreement, his argument was quickly countered by the supply chain director of an international food manufacturing company. This manager argued that assessing suppliers on initial purchase price is short sighted.  He went on to share his experience of how cheaper machines can end up costing a company three times the price of a more expensive brand in 5 years’ time.

But how does this come about? What factors contribute to the overall running costs of a fleet and how can these be managed in such a way that the operation becomes leaner and meaner? How can an organization meet the dual objectives of reducing costs whilst increasing productivity?  The secret lies in controlling the hidden costs of running a fleet and taking a long term view working with an expert partner to manage lifetime fleet running costs.

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.  Research by Cooper Specialised Handling, conducted across its customer base, 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.

David Cooper, managing director at Cooper SH, explains, “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, companies will reduce costs and improve the efficiencies of their drivers.”

Sophisticated technology, such as Cooper SH’s EcoDrive, can help monitor the finest detail of drivers’ performance, including idling time, hydraulic usage, and number of lifts.  Simply through measurement, and there-in management, of drivers cost savings of up to 7% in fuel consumption can be made. In this respect, technology reinforces positive behaviour that managers can reward to build a culture of best practice.

In order to fully understand lifetime cost, Cooper SH has conducted 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 its lifetime. But with fuel monitoring systems and technology such as load-sensing variable displacement hydraulics, the more expensive machine actually uses nearly 11 litres less fuel per hour resulting in a saving of £85,000 over 12,000 hours of operation.  Taking into account this 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.

Tyres are also expensive items that are relatively easy to damage, and because of this, they can eat up large proportions of a company’s maintenance budget. In order to extend tyre life, trucks can be fitted with intelligent devices such as tyre and transmission protectors and auto transit devices to ensure optimal load positioning.  For The Malcolm Group, a leading provider of logistics services in intermodal operations, a set of tyres for one of its larger reach stacker trucks costs £10,000. In an arduous application with rough surfaces and many turns and manoeuvres, the company was getting through up to four sets of tyres per year.  Working closely with its materials handling partner, Cooper SH, the company is aiming to reduce that by half thereby saving £20,000 per machine per year in tyres alone.

Steve Sugden, fleet engineer at The Malcolm Group, explains, “The main cause of tyre wear on these larger trucks is the rear axle steer; the 90 degree turning circle can put undue strain on the rubber. By fitting a steering lock to reduce the turning circle whilst specifying a shorter wheel base machine, Cooper SH has helped us to significantly reduce tyre wear whilst not sacrificing manoeuvrability.”

Of course these are just some of the factors that need to be considered when looking at lifetime costs.  A strong materials handling partner can help companies build all these considerations into account. However, a final thought should always be given to the drivers of the machines. Steve Sugden adds, “Operators can be spending 10 to 11 hours a day in these machines, across 24 hour shifts, so it is critical that they are happy and comfortable in their work. At the Malcolm Group we get the drivers involved in specifying the machines to make sure that they have the comfort and ergonomics in the cab that they need. This involvement helps with drivers’ acceptance of the machines, which means they are more likely to take pride in looking after it and drive it sympathetically and safely.”

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 through minimising lifetime cost and maximising productivity.

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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.