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September 30, 2011Posted by on
FORK TRUCK NEWS – Don’t buy forklifts on price alone
It is still the norm that forklift buyers and renters make the initial acquisition cost paramount in their buying decisions yet this attitude often leaves buyers short-changed over the long term. Forklift suppliers have for many years emphasised the importance of life cycle costs when acquiring trucks so why has the industry failed to get the message across?
It is a difficult question to answer, says Tony Wallis, operations director for Toyota Material Handling UK. “We constantly try to identify the pitfalls of not considering whole life costs during acquisition,” says Tony, but “One of the problems we have identified is the separate management within business for acquisition and operational running costs.” Most buyers are measured on acquisition costs but the running costs are allocated to the relevant department. This usually means that the buyers are tasked with buying at minimum costs, while the running costs sit outside their remit.
Leading forklift companies like Toyota make the effort, if opportune, to try to involve purchasing and operational managers to talk the whole life cost approach and where successful the result is a greater buy in and understanding of how Toyota is trying to drive down costs in damage, accidents and efficiency to make sharp cuts in lifetime costs.
Lifetime costs are important since, over a typical 5-year rental period, they far outweigh the initial acquisition cost. Admittedly, the problems of estimating lifetime costs are eased by contract rental deals with full maintenance and these now account for at least 70% of UK market deals but even so, while the running costs are fixed and therefore give the buyers certainty and some peace of mind, that does not mean buyers should drop their guard. The fact is, some trucks are 20% more productive than others and while repairs and replacement parts are not an issue in contract rental deals, frequent downtime certainly is, especially if call out times are not met within agreed parameters.
Simon Brown, MD of Translift Bendi, makers of articulating forklifts, takes the issue of lifetime costs one step further. “Forklift costs should not be isolated from the cost of storage as a whole,” he says. A few illustrations of different storage concepts and rough calculations would reveal the crucial importance of interface costs, like warehouse rents and rates, fuel and utilities. Generally, however, these considerations are not discussed and so “I think we are selling ourselves and the customers short when we don’t discuss them,” says Simon.
All this goes to show that the process of assessing lifetime costs is a comprehensive exercise and one that is probably beyond the negotiating disciplines and time of small-scale businesses with a demand for only a few trucks. Only large fleet buyers are likely to invest the time examining all the issues of various truck makes in terms of their productivity and after-sales issues, and even then they may come up short owing to inadequate data form competing brands. Yet, such an exercise should pay handsome dividends.
In the days when brewer Bass Charrington operated over 1,000 forklifts life was a little easier for other buyers because Bass published its forklift best-buy research findings, probably the most exhaustive UK buyer analysis of leading forklift brands. It looked at all issues of truck productivity, downtime and after sales matters. It would be helpful if another such exercise was conducted but the message is clear: Don’t buy on price alone. Toyota would add to that by saying: “Find the right supplier who can adapt to meet the needs of the business…In this market those that fail to adapt will fail.”
from “Warehouse & Logistics News”