Replacing Equipment Versus Maintaining Equipment
It's tempting to replace equipment whenever it shows signs of a recurring issue, but the decision on replacing equipment versus maintaining equipment isn't so simple.
Reliable equipment is the lifeblood of a small business manufacturing operation.
You simply can't live with the uncertainty of not know whether your equipment can keep pace with your production cycle. Breakdowns and recurrent maintenance issues interrupt the manufacturing process, resulting in inventory reductions and a potentially dissatisfied customer base.
As equipment ages, it eventually reaches the point where replacement sounds easier than another round of repair and maintenance. But replacement isn't always the best option. Although a shiny, new piece of equipment may seem like a no-brainer, the cost benefit of prolonging the machine's useful life almost always outweighs the advantages of replacement.
The solution to the "replacing equipment versus maintaining equipment" conundrum lies in an honest evaluation of its current condition rather than its age. With that in mind, there are several scenarios that may indicate the equipment's current condition makes it a viable candidate for replacement.
- High maintenance cost. A careful cost analysis is a must when it comes to equipment evaluations. Obviously, new equipment will require a significant upfront investment and the possibility of finance payments on a go-forward basis. But if the maintenance costs of your current equipment have become intolerable, it may be time to bite the bullet and start shopping for a replacement.
- Productivity drain. Equipment that is in poor condition breaks down more frequently than equipment that is in good working order. In addition to maintenance costs, you'll need to consider the productivity losses that result from frequent breakdowns. When one machine consistently brings production to a standstill, an equipment replacement decision is on the horizon.
- Out of standard. There is no room for negotiation when it comes to manufacturing standards. Your equipment has to be capable of meeting precise production standards without constant adjustments. When one piece of machinery threatens manufacturing standards or jeopardizes your ability to produce quality products, replacement is probably a better choice than repairs.
- Safety questions. Safety concerns are a trump card in the replacement vs. maintenance debate. If equipment safety is a question mark, replacement is inevitable - even if the machine is still capable of meeting other production standards.
Share this article
Additional Resources for Entrepreneurs