Most plant managers grapple with the question—how do you reduce costs without hurting output? One answer lies in optimizing current material handling systems and equipment. By following a few simple steps, plant managers can prolong service life, minimize downtime and cut capital expenditures. And these strategies fall under three easy-to-remember approaches—reduce, reuse and recycle.

Reduce

To keep equipment running at peak capacity and thus reduce inefficiencies, managers should implement a performance audit and adopt predictive, instead of reactive, maintenance. These two strategies allow managers to maximize current material handling systems and equipment without accelerating wear and tear or driving up maintenance costs.

The first strategy—a performance audit—represents the most effective, yet underused, way to gauge how efficiently systems are running. In particular, it can reveal if your equipment is functioning properly or if it requires a tune-up. With an audit, you can find out how well system operators are doing and whether they need extra training. Additionally, you can ascertain if your material handling equipment is still meeting the plant's needs and get an idea of the system's overall performance.

A performance audit can help you zero in on productivity drains, evaluating such areas as picking, queuing, staging and sorting rates. A complete audit will analyze systems from both an operational and functional standpoint, including a final report detailing recommended adjustments. Thus, managers can pinpoint and fix inefficiencies, realizing cost savings from improved productivity rates and system performance.

Reliable and cost-effective, predictive maintenance is another way to get the most out of material handling systems and equipment. It can help you determine when components will fail so you can do corrective work on them before they break down. In particular, it allows you to set baseline failure rates over time. Thus, you can keep systems running at peak efficiency and avoid the high cost of malfunctioning equipment, including downtime for emergency fixes and hefty replacement expenses for components beyond repair. As a result, you can cut expenditures on equipment overhauls and maintain your capital.

Reuse

To reuse existing equipment and avoid the high cost of replacement, consider retrofitting, which can boost efficiency by 15-20% or more. By retrofitting, plant managers can allow systems to function beyond initial capacity limits and to satisfy increased production demands. It can involve incorporating new technology, upgrading components or increasing capacity. It represents a feasible solution as many new technologies work well with older models.

Plant managers seeking to retrofit material handling systems and equipment can choose from a number of solutions. For example, they can opt to add adaptive control systems or broaden access to real-time operational data. They can also choose to incorporate volume and weight data for checking and invoicing or integrate sophisticated induction and sorting capabilities. Additionally, managers can perform the retrofit in-house, with illustrated step-by-step instructions, or outsource it to service professionals.

By retrofitting equipment instead of replacing it, managers can enjoy considerable savings. For one thing, the cost of repurposing equipment is often less than 60% of a new machine's cost. Moreover, by retrofitting and modernizing equipment, managers can boost its reliability and renew its service life. They can also improve production cycle times and cut maintenance and operating expenses. Furthermore, by retrofitting, managers can ensure compliance with current federal and state safety regulations, thereby helping reduce work-related injuries and insurance premiums, including workers' compensation. Finally, a retrofit allows for parts standardization, further trimming costs as well as making parts easier to replace.

Recycle

Instead of purchasing new equipment when production requirements change, plant managers can buy remanufactured equipment. They can thus take advantage of lower capital equipment costs, as remanufacturing retains much of the original item's value while removing a big chunk of new equipment overhead, from material costs to transportation. Indeed, the remanufacturing process—disassembling, cleaning, replacing non-working parts, refinishing and reassembling—requires less labor, energy and resources than purchasing new equipment. What's more, remanufactured equipment often offers the same warranty as new machinery.

Plant managers who choose remanufactured equipment may soon enjoy significant tax savings as well. The Remanufacturing Institute, a prominent remanufacturing industry organization, is lobbying Congress to approve legislation giving tax credits of up to 20% to companies that buy remanufactured equipment. If passed, the bill could mean millions of dollars of tax savings per year for some firms.

Aside from offering substantial savings, purchasing remanufactured equipment also benefits the environment. By opting for remanufactured instead of new machinery, plant managers are helping to reduce the following—the amount of raw materials going into the waste disposal stream, material disposal-related costs, and the volume of industrial solid waste headed for landfills. According to the U.S. Department of Energy and remanufacturing industry experts, remanufacturing saves five to nine pounds of original materials for each pound of new material it uses.

The 3 R's

In short, by reducing, reusing and recycling, plant managers can realize considerable cost savings while boosting the return on investment from material handling systems and equipment. While managers must understand that these strategies can't push back new capital expenditures indefinitely, these tactics represent effective ways to get the best performance and value out of material handling systems. By following these three R's, managers can gain months or even years of prolonged service life at lower cost.

Source: Material Handling Economics 101
John Woodrick
Plant Services, June 27, 2003
http://www.plantservices.com/web_first/ps.nsf/ArticleID/CBOH-5NVQWH/