HOW DO YOU DETECT VALUE FOR MONEY IN MACHINE TOOLS
By Paul Savides, Managing Director, PBS Machine Tools
“Discussion sharpens one’s interest in any subject and accordingly inspires reading and corrects errors.”-Nelson Mandela (1918-2013)
When evaluating machine tools, value for money is not determined by purchase price alone. The real measure lies in the machine’s ability to produce quality parts profitably over its lifetime.
A more accurate way to assess value is through Total Cost of Ownership (TCO) and overall machine optimization, a combination of structural integrity, availability and utilization. In simple terms, the cheapest machine is not always the most cost-effective machine.
Key Indicators of Value for Money:
Structural Integrity
Machine weight is often used as an indicator of structural rigidity, which contributes to accuracy, vibration control and long-term durability. A rigid machine typically delivers better consistency and longevity.
However, true structural value goes beyond physical mass. The real question is, how quickly does the machine pay for itself? A machine that improves productivity, increases output, reduces scrap and lowers labour or maintenance costs often delivers stronger long-term value than a cheaper alternative.
High Uptime and Reliability
Reliability is one of the clearest indicators of value. A machine with minimal unplanned downtime, low maintenance requirements and dependable performance contributes directly to productivity and profitability. Lost spindle time is lost revenue.
Lower Cost per Part
Many manufacturers continue operating at traditional speeds and feeds without fully evaluating their cost-per-part performance. Cost per part is typically influenced by Machine Hourly Cost, Cycle Time, Tooling Cost and Number of Parts Produced.
When these factors are optimized, premium machine tools can often reduce cost per part by more than 15%, while significantly improving gross profit per component compared with lower-cost alternatives.
Practical Method for Assessing Value:
- Analyse Total Cost of Ownership (TCO)
TCO looks beyond the purchase price and considers the machine’s full lifecycle cost:
TCO = Acquisition+Operating+Maintenance+Training+Disposal-Residual Value
A lower-cost machine may appear attractive initially, but can result in significantly higher long-term costs, due to maintenance, downtime, inefficiency or poor resale value.
- Compare Market Value
Benchmarking similar new or used machines helps establish fair value. Factors such as machine age, condition, performance history and remaining useful life, should all be considered before making a purchasing decision.
- Evaluate Used Equipment Carefully
When assessing a used machine, maintenance history is critical. Review maintenance logs for signs of neglect, excessive wear or improper servicing. Machine hours should align with overall condition, as heavily worn components may be costly to replace or in some cases no longer available.
- Match the Machine to the Application
The best machine is the one suited to the job. Purchasing decisions should be based on production requirements, such as material removal rate, precision, repeatability and output expectations rather, than simply selecting the machine with the most advanced features or the machine with the fastest delivery time.
Value versus Price – Understanding the Difference
Quality over Cost
Higher-performance machines often generate a better return on investment than lower-cost alternatives. While the initial purchase price may be higher, improved productivity, reduced scrap, greater reliability, and lower cost per part frequently justify the investment.
Watch for Hidden Costs
The purchase price is only one part of the equation. Training, electricity consumption, spare parts availability, tooling compatibility, maintenance requirements and downtime costs, should all form part of the buying decision.
Consider Resale Value
High-quality machines generally retain value better over time, reducing ownership costs and improving long-term investment returns.
Final Thoughts/Conclusion
Although Total Cost of Ownership is still not a common purchasing approach in many manufacturing environments, it is becoming increasingly important for maintaining competitiveness.
In an industry facing growing pressure from imported products and tighter margins, investing in equipment based on lifecycle value rather than upfront cost, can provide a meaningful competitive advantage.
For more detailed, industry-specific guidance on calculating machine ownership costs and evaluating value for money, feel free to contact us.
For more information please contact PBS Machine Tools – Tel: 011 914-3360.
