Competitive edges through total cost analysis

18th December 2015
Posted By : Jacqueline Regnier
Competitive edges through total cost analysis

When selecting new system suppliers it is important to take many varying influencing factors into consideration and to calculate the realistic total costs for a solution on this basis. VOSS Fluid compiled the decisive factors on the market for hydraulic connection technology and figured out that assembly errors cause additional costs of up to 9% of the original procurement volume. According to the company's calculation, these could be reduced by at least 3% by taking the right measures.

The pure procurement costs are never congruent with the total operating costs of a system since from assembly to maintenance many additional factors enter into the economic appraisal. A sample calculation by VOSS Fluid demonstrates that it pays off to calculate all cost points also for the C-parts of the hydraulic connection technology. Based on a general observation of the market, the company assumes an average reliability of assembly of 97%. Based on this calculation, 3 of 100 assemblies are faulty. At an assumed procurement volume of €500,000 for 100,000 connection points, that already adds up to 3,000 leaking points that represent a cost and safety risk.

Cost factor faulty assembly

The model calculation by VOSS Fluid comes to the conclusion that the faulty assemblies cause additional costs of about €45,000. That corresponds to 9% of the original procurement volume. When ascertaining this key factor, the company takes into account that half of all leaks are rectified already during the assembly phase. 35% are noticed in the test area before commissioning; another 15% only after delivery to the final customer. In the various phases, rework generates costs of varying degrees that result from the individual expenditures and the skills of the personnel.

Cost advantage through quality suppliers

In VOSS Fluid’s view, by selecting the right system partner additional costs for rework can be reduced from 9% to 3% of the original procurement volume. That simultaneously optimizes a significant factor of the total operating costs for hydraulic connection technology. As additional influencing factors, the company identifies the assembly time, the process reliability, the procurement costs, the ease of maintaining the system, the consulting and training level along with long-term corrosion protection. In all of these mentioned points, VOSS Fluid sets itself apart from the competition, allowing it to offer total solutions that tap lasting cost advantages through its long-term orientation. Reliable, assembly-secure products from the quality manufacturer are not only more cost effective; their reliability also leads to an image gain for the supplier and the user. So when selecting their partners in connection technology, it pays off for the company to be highly attentive and to calculate long term.

A plus in quality

At VOSS Fluid, the high product standard already starts with the selection of the unfinished material, which is obtained solely from audited partners. From unfinished material, production and surface coating up to the logistics, quality and customer benefit are the clear focal point. Another plus for the company is the high advisory skills of its employees developed across decades. They select the correct system for every application through precise analyses. The basis for competent consulting is created by the wide VOSS Fluid product range that covers all market requirements: from the standard application up to customized special solutions. On top of that, the guiding philosophy includes personally imparting our own expert knowledge to our customers through appropriate training concepts and practical tutorials. This close cooperation increases assembly reliability to a maximum.

 


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