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Reduced Maintenance Cost
A customer had been running the same type of reducer (reducer A) on a conveyor pulley system for 25 years. Reducer A had historically failed and been replaced every 2 years. This process cost the customer 8 hours in maintenance to replace the failed reducer. Maintenance cost was $40/hr.
A Bearing & Transmission representative traveled to the customer site and inspected reducer A and the conveyor system. The representative realized that he could supply reducer B which is better suited to the application and would work in production for 5 times as long, but costs twice as much as the current reducer being used. The representative gathered all the appropriate information necessary to illustrate to the customer that reducer B would work as well, if not better than, reducer A,
and would fail less frequently. The customer agreed to purchase reducer B from Bearing & Transmission.
| Cost of Reducer A: |
$5,000 |
Cost of Reducer B: |
$10,000 |
| Maintenance Cost: |
$320 ($40x8 hr) |
Maintenance Cost: |
$320 ($40x8hr) |
| Cost of Downtime: |
$ ? |
Cost of Downtime: |
$ ? |
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Total cost to change reducer A:
$5,320 x 5 changes per decade
= $26,600 every 10 years
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Total Cost to change reducer B:
$10,320 x 1 change per decade
= $10,320 every 10 years |
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Total hard cost savings: $26,600 – $10, 320 = $16,280 |
In this instance the customer would initially have a greater cost to purchase the new reducer versus the old reducer, double the cost to be exact. However, the benefits in the future greatly outweigh this cost. The customer will realize savings in only having to replace the new reducer every 10 years as opposed to every 2 years on the old reducer. In addition, the customer will realize cost savings on maintenance costs and down time by having to replace the new reducer less often.
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