There’s no question—we are in a recession. Budgets are tight, and every dollar spent faces more scrutiny than ever. But this is no time to sacrifice product quality or take chances when it comes to product inspection. Consumers are reigning in spending, so any question about a product’s safety or integrity may prompt shoppers to switch to another brand.
Explore this issueFebruary/March 2009
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The economic downturn may leave some companies in a challenging position: While looking to save money and trim budgets, they may also be overdue for a metal detector or X-ray system investment or upgrade. Making a case to purchase non-value add equipment may seem difficult. Whatever the reason for an inspection investment, however, it is critical to build a rock-solid case before asking for capital to invest in new equipment. Management teams prefer to see hard evidence showing how the new equipment’s total cost of ownership (TCO) will be paid back over a relatively short period of time. By using a simple payback model, any quality or process engineer can compare the costs of using outdated technology or techniques to investing in a new inspection system and, potentially, show clear savings in dollars and cents.
Most companies choose to invest in either a metal detector or X-ray system to inspect their products for a variety of possible contaminants, from small rocks or metal equipment parts to glass or missing or damaged components in a package. Usually, this investment is driven by an internal mandate or policy, not a law or regulation. Deciding whether an X-ray system or metal detector is right for your inspection needs depends on a number of variables such as possible contaminants, product packaging and, of course, budget. Both types of systems offer clear advantages and disadvantages, but making the right choice begins with understanding the technology and how its limitations will affect your desired inspection process.
Companies choose to install inspection systems for a host of reasons, and the cost of technology varies considerably based on their needs. Most production facilities must comply with hazard analysis and critical control point and/or International Organization for Standards policies and want to select systems that will assure they achieve mandated levels of safety. In other cases, contamination problems may be unavoidable or random and companies want to be proactive, such as when a contaminant must be separated from raw materials. Finally, for some companies, it can be potential customers or past contamination issues that prompt management or engineers to purchase an inspection system. And this can steer them toward a particular technology.
Know Your Costs
The task may seem daunting. To build your argument, you must calculate costs associated with not purchasing new equipment and compare those to how long it will take to earn back TCO. Surprisingly, you don’t need to be a mathematician to gather the information needed to lay out how soon your company will earn back its investment. You simply need a model for calculating payback that is specifically tailored to inspection equipment.
First, you have to know what your costs are over a typical five-year period. The first year of ownership is obviously the most expensive because it includes expenditures like the cost of equipment, installation, and start-up, training, spare parts, engineering services, and, sometimes, the disposal of old equipment. After the first year of ownership, operating costs, maintenance costs, unscheduled downtime, and extended warranties all continue to be expenses.
Second, you have to explain all potential areas in which new inspection equipment will save money. Typically, the most savings can be found in scrap reduction, rework reduction, avoided inspection charges, eliminated product returns, and tax incentives.