Most manufacturers are aware that their equipment could potentially break down at some point, for an unspecified amount of time and any reason. When this happens, your machinery is idle meaning that you cannot meet your product line fulfilment as quickly. Production could even come to a complete standstill.
With that in mind, why do so many of us in the manufacturing industry still adopt the approach ‘if it’s not broken, why fix it’?
Over 80% of British manufacturers underestimate the financial impact that equipment downtime has on their business. Often associated with equipment failure, downtime can be the effect of any unplanned event that stops or delays your manufacturing process.
A profitable production line that is continuously in operation is the ideal situation for most manufacturing firms. So not being able to use all of your equipment will have a massive impact on your business’s profitability and productivity.
Manufacturers usually need a variety of equipment to operate successfully. And in today’s technological landscape a lot of hardware is reliant on computer software – meaning that your IT systems and departments must work in unison with the entire operations team.
The total cost of ownership (TCO) should be updated annually for each of your assets. A recent survey indicated that the average small business leverages as many as eight different types of equipment to operate and the average FTSE 100 Company requires more than 100 equipment types.
When considering the TCO, companies tend to focus too much on the maintenance of equipment – when they should be creating clear plans to track, manage and minimise any potential equipment downtime proactively. Doing this is the best way to reduce any potential financial loss to the business.
At what hours of usage do your lift trucks become less reliable? When are your servers more likely to struggle to keep up with data needs? At what mileage does rolling stock roll a little less effectively? You don’t need to analyse data to calculate the precise answers, but taking an educated guess will help you on the road to reducing exposure to end of life maintenance and improve productivity – strengthening your entire operation.
The above example illustrates that if you replaced the equipment in year 6, you could avoid a significant financial loss to maintenance downtime.
Equipment leasing solutions can help you pay for the period of time you use these assets. Short term leasing options offer you the flexibility to lease equipment only for the time when they are not an administrative burden.
For instance, a specialist equipment leasing firm could offer a simple 6-year operating lease that maximises cash flows, reduces capital outlays, keeps you technologically competitive and helps you avoid the financial impact of downtime maintenance.
Alternatively, you could do 6-year lease with a purchase option that gives you the flexibility to use this asset in lower usage operations, reducing the maintenance burden and still enabling an affordable way to put newer assets to work in the higher usage application.
Leveraging equipment leasing options might be the best way to reduce the cost of maintenance downtime, keep you on the cutting edge of technology and potentially be more affordable for your business.
For over 30 years, Somerset Capital Group has been providing customised, equipment finance solutions globally. We have helped some of the UK’s leading businesses by crafting flexible leasing options that are right for you.
Using our extensive industry knowledge, we understand your business requirements and know what your customers want. We are continually evolving so that we can always find the right path to support all aspects of your business needs.