10 financial reasons
10 financial reasons

10 financial reasons to justify ordering new equipment for your plant

10 financial reasons that may push the employ or production official to request new equipment, and the most important of these reasons are the financial reasons that are divide into two parts: strong financial justifications and weak or soft financial justifications.

Strong justifications are what require you to present a study and evidence that justifies the return on the company. From the exchange or purchase process. Weak justifications are not supporte by evidence but are logical and have clear benefits.

As a production officer, you should focus on strong financial reasons justifications to justify the investment in equipment and the returns from it to the technical and financial department, which will undoubtedly be refute and seriously studied before accept your request.

For example, you may be able to provide three strong justifications that provide the company about $ 100,000 over three years supported by evidence and financial study and five weak justifications that may not be supporte by similar evidence.

Never try to order new equipment without a strong justification . Rejection of it by the administration, and your position may be weakene later in other requests.

Here are 10 reasons to justify ordering new equipment at your factory:

Reducing or eliminating excess maintenance costs. Even if you track maintenance costs, breakdowns and repairs may not be sufficient to justify the purchase of a new machine for your administration. The key in looking at maintenance costs is to take a comprehensive view of the costs over.

The entire life cycle of the machine, including the costs of spare parts. Increased sales due to increased uptime. You can only realistically use this rationale if you sell 100% of your output, have reached the maximum number of shifts.

Any additional production also sold out complete. Increased uptime or productivity. Does the new machine run with higher production capacity, and requires less time to change mold?

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The people of perishing materials have less?

This may lead to fewer working hours to produce the same amount of product, and thus the labor costs, electricity, etc. associated with operating the machine. Full wear and tear and end of life of the machine.

When a machine reaches its useful life, problems start to occur and you need a new machine to remain competitive. Some engineers have had success in persuading management to replace equipment for this justification in exchange for the use of justifications related to maintenance and downtime.

The machine is outdate or its components are no longer available. Some components of electrical and electronic machines such as HMI control screens, Sensors, PLCs, and Circuit boards do not last forever and have a limited service life and need to be change periodically.

After 8 or 10 years these components may become old and no longer in production. From the factory. Your company should never be mortgage to used parts or unreliable suppliers, as this will put your factory in difficult situations at peak production times.

Also, parts producers themselves change over time, and companies may stop for one reason or another or change their activities and you do not have any source of support.

Future flexibility.

The financial justification here is that the packaging techniques and forms themselves change with time rapidly and require equipment that not only meets current but future and potential needs, in other words, flexibility is a reason in itself.

Make the best use of the expertise available to you. Contact the supplier/expert of raw materials and equipment supplier/expert and ask them to work together for your benefit, for example by using thinner materials or less weight with modifications from .

The machine supplier to fit those materials may save you a lot. The work of the experts available to you together may save you a lot One of the options that you never thought of Savings on materials.

If the new machine uses thinner materials or less weight, this may provide your company a great deal in the long term, but you must support that with an in-depth study. Reducing recycling costs and waste.

Is the loss rate or defective product of the old machine high?

Are the costs involve in the recycling of materials, time and labor high compared to producing a quality product for the first time? You must calculate the difference and provide supporting information in your application. Total cost of ownership.

The total cost of acquisition is the actual value of the machine, installation, operation, maintenance, spare parts and all costs associated with the machine over a certain period of time. The problem in this way is that there is no standard method for calculating it and it depends entirely on the future estimate.

After you explain the situation to the management and approve the purchase. No materials or working hours have been provided . You must study the project well and ensure that this process is fruitful.

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