Defence & Obsolescence
major part of most projects and, for this reason, renting or leasing are often good choices to enable organisations to access the right equipment - without the capital outlay and the associated costs of maintenance and calibration. This is particularly important in the aerospace and defence industry, where contracts may demand proof of regular instrument calibration, often specifying traceability of test instruments throughout the lifetime of a project. “As the usage
Nigel Brown, CEO.
benefit if a project changes or comes to an end. According to Nigel Brown, the company’s CEO, “Electronic test and measurement equipment typically forms a
potential is often long- term, many aerospace and defence users opt for a fully-supported managed lease to acquire and maintain equipment used to support projects involving satellite production, core defence, missiles, weapons systems, radar
or associated electronics systems. From a financial perspective, accessing the equipment through operating expenditure rather than capital expenditure means small regular payments
rather than one big hit - and helps to contribute to improved cash-flow balances. As the backlog in orders that companies are working on comes to an end, and fewer long-term projects are now getting underway, the number of shorter projects being undertaken looks set to increase, making this greater financial freedom and asset control even more crucial. Moroever, opportunities in emerging markets which will drive growth can be better costed and controlled by deploying this methodology. “Another way that large-scale organisations in particular can also work towards streamlining operations is through effective asset management. When large volumes of equipment are held across multiple sites, this approach can improve the management and utilisation of existing stock, particularly high-value RF test equipment such as spectrum analysers and signal generators and analysers,” says Brown. The recent headline news confirmed by auditors and reported by the BBC that the Ministry of Defence had lost track of assets worth £6.3bn is a good example of just how important managing inventory can be. Key decisions such as whether or not this asset management takes place in- house, and what systems and competencies are needed, also need to be evaluated.
“RF equipment in particular can have significant long-term residual value, meaning that, when projects draw to an end, it could be possible to release value from owned equipment by working with a specialist partner like Microlease and re-
invest it in new equipment or new rentals,” explains Brown.
“Best-practice asset management should include considered strategies for acquiring equipment, optimising use, management, maintenance – as well as how to dispose of the assets when they are no longer needed. Adopting a combination of all these measures can make a huge difference to an organisation, both in terms of return on investment and, crucially, competiveness.” In recent years, many major operators in the sector have also turned to financial solutions to help financially streamline equipment usage and procurement. One major satellite manufacturer, for example, identified the benefits of an alternative financial approach to its test equipment requirement for a critical project. The organisation, which identified it had very extensive test equipment needs to fulfil the project compared to the capital budget available, was able to secure a one and half million pound equipment investment without having to find the capital expenditure, which it achieved by taking advantage of a financial option and utilising a long-term operating lease. “Not all firms in the supply chain are,
however, taking advantage of these options - and it is arguably these organisations that could benefit the most. While test and measurement may only be one part of the total costs of an aerospace or defence project, in the current climate, it is more important than ever to identify and exploit any potential financial and technical gains.”
Microlease |
www.microlease.com
www.cieonline.co.uk
Components in Electronics
March 2012 17
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