Feature Sourcing instruments The technological edge
In an ever more competitive business environment, having the technological edge can be what makes the difference between resounding commercial success and abject failure. But with today’s high end test equipment offering higher levels of functionality at greater cost, can renting the equipment be a cost effective solution? David Hollywood from Livingston comments
s the breadth of features and level of functionality supported by each new generation of test equipment increases, so the task of how to cost-effectively source it is also becoming more complex. As a result, the list price for pieces of high end test kit is starting to prove prohibitive to a growing percentage of the market, and a change in philosophy is called for. Traditionally companies have tended to source the test hardware needed by direct purchase, however they are now starting to re-evaluate if this is the best tact to take. Once acquired, equip- ment still has a number of ongoing operational costs which must be taken into consideration, including general upkeep (maintenance, repair, recalibra- tion, etc), financial (insurance, interest on payment plans, etc) and various logistical activities (downtime cover, transportation between sites, storage and eventual disposal).
A
If a piece of test equipment is only in use for a relatively small proportion of the time, then both the purchase price and the operational costs accrued after that will be hard to cover. Often, test equipment is acquired for a specific project, then actually doesn’t get used again after that project has been completed. Once it is no longer being employed in test activities, then not only does it cease to be a way for the company to generate income, but it actually starts to deplete the company’s financial reserves.
Furthermore, modern test require- ments do not tend to stay static for any length of time, evolving as new industry standards and performance benchmarks are established. This increases the odds that companies will need to upgrade equipment in their inventory on a regular basis and that older items they have in stock will quickly become outdated. Availability must also be considered. If there is a sudden testing need that must be addressed, then equipment must be sourced rapidly. Having sev- eral weeks of manufacturer lead time to contend with may result in the window of opportunity being lost. Likewise there can be fluctuations in demand that cannot be easily foreseen.
Keeping equipment on standby just in case there is a sudden surge does not make particularly good commercial sense, as it magnifies the operational costs already discussed and is also a flagrant waste of resources.
Equipment rental is gaining a great deal of traction as an alternative way to gain access to the tools needed by com- panies to satisfy their test requirements without having to make heavy financial investment. It gives them a greater degree of freedom when specifying equipment, so that if a particular model proves not to be ideal for the task it has been specified for, then another option can be tried instead. In addition, rental provides a well-defined route to move to higher spec equipment as conditions change. Since capital expenditure is avoided, it also means that money is not tied up unnecessarily in inventory. Sourced equipment no longer repre- sents a financial burden when it is not in use – if the need ceases, then the rental term can be brought to an expedient end. So, if a project fails to come to fruition, companies are not left exposed to monetary loss through procurement of new test hardware. Quiet periods, or conversely any rise in activity, can also addressed in a more fiscally optimised manner.
Focusing on what matters By applying economies of scale to a situation, test rental firms are able to store enough equipment to deal with the peaks and troughs in business activity that companies experience. Employment of highly-developed, regularly-updated asset management systems, means the companies that part- ner with them don’t have to worry about
logistical issues, such as provisioning of equipment, tracking its whereabouts, storing information on when it was last serviced/calibrated, or its delivery to different sites. They can therefore focus on more important matters that affect their business. Companies can also benefit from their rental partner’s application expertise and in-depth knowledge of the different equipment models that are on offer – helping them to decide on the best way to proceed.
Meeting test criteria
If the frequency with which an item of test equipment is utilised over the course of its entire operational lifespan is low, then the need for it to be pur- chased must be brought into question. A more sophisticated supply channel approach, taking into account the regu- larity with which equipment will be in use once it has been sourced and what length of time will elapse before it finally becomes redundant, will allow companies to decide whether a short term or even long term rental option might actually be a better fit for their particular test criteria.
A diverse range of different industry sectors are now starting to recognise the value in following a test rental strategy, including elec- tronics, telecommunications, industrial, defence, informa- tion technology, avionics and transportation. More forward-thinking engineering management can see that this is a way for the companies they work for to outperform the competition.
Livingston T: 0208 614 4055
www.livingston.co.uk
measurement & sensors directory 2012-2013
Additional costs of purchased test equipment over operational lifespan
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Equipment rental is gaining a great deal of traction as an alternative way to gain access to the tools needed
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