How To Distinguish Between Price And Costs In Equipment Decisions

By John Henry, www.changeover.com

Food manufacturing is notorious for low margins. Manufacturers must do everything possible to reduce their processing and packaging costs. Because of this, it is natural to see machinery purchases as an opportunity to avoid some costs.

Aversion to cost is natural, but not always the best thing to do. I know a bit about that decision. I co-wrote the book on buying machinery — Secrets of Buying Packaging Machinery — with Rich Frain. One of the things I know is that many buyers request three to four proposals for a machine and then simply pick the one with lowest price. To keep capital outlay down, they may omit options such as quick changeover or automated-changeover packages, production monitors, easy-to-maintain finishes, and other features that may benefit production operations.

They may say that efficiency is an important feature, but fail to put their money where their mouths are. They purchase a less-efficient machine because it costs less up front.

They may say that they are concerned about downtime, but then only buy a single set of change parts for the machine because a second set seems to cost too much.