Before we dive into this section, if you have not read part 1, part 2, and part 3, you may want to go ahead and read them now.
OEM Dealer Repair
Here is a quick recap:
- Machine cost = $300,000
- Expected years of use = 10 years
- Annual cost of ownership = $30,000
- Annual expected hours of use = 1,200 hours
- The hourly rate needed to cover annual cost = $30 per hour
- There will be a little leftover to cover scheduled maintenance
- Unexpected equipment downtime runs in the range of 20-30%
- This means a machine sitting idle unexpectedly could cost $7,200-$10,800 per year…per machine.
- Replacing machines with rental units potentially adds $14,000 per year
- Job delays can easily add another $5,000 per year
- Loss of worker productivity tacks on another $2,000 per year.
- Our total cost of unexpected downtime so far is $32,000 per machine per year.
Keep in mind the one machine part. If you are running 10 pieces of heavy equipment in your fleet, add a zero. If you are running 100 machines in your fleet, that’s a yearly cost of over a staggering $3.2 million.
As I pointed out in part 1, you’ll never completely eliminate this cost. But you can definitely find ways to reduce it. That’s really the focus here. What is the best way to reduce the amount of time a machine is inoperative, from the point the machine goes down to the point where it’s repaired and back up and running?
Many companies running equipment fleets rely almost completely on the OEM dealer for repairs, big and small, simple and complex for a way to lower downtime numbers. There are many reasons for this, and I’ll go more in-depth with this in part 5. But for now, I think we can all agree that for many equipment fleets, this is one of the primary ways that unexpected downtime is dealt with.
That being said, let’s expand on our example a bit…
- The annual expected usage of our example machine is 1,200 hours.
- We’ll label the average wait time combined with repair time as one day. To stay conservative, we’ll say that the one day exists within the 30% unexpected downtime (360 hours) figure from part 2. It does not add to the 30%, and it doesn’t reduce it either.
- Let’s also say that 80% of the repairs are fairly simple ones, taking about 4 billable hours to get the machine running again.
- OEM dealers typically charge about $125 per hour.
- Service fees, travel, and diagnostic/repair time can drive the cost of something like a simple forced regen to $500 – $1,500.
- Based on these numbers, we’ll say the average dealer call costs about $800 (without the cost of replacement parts). This is a low number, but let’s keep it conservative.
- If this happens an unrealistically low 6 times per year, we’re now adding about $5,000 to our unexpected downtime total, bringing it up to $37,000 per year, per machine.
So really, using the OEM dealer for repairs is not a solution at all, but rather a cost of doing business in dealing with the problem.
I hope you’re enjoying the Equipment Downtime series. Next up in part 5, take a look at OEM diagnostic tools, how much of a difference they can make, and at what cost. Consider downloading my exclusive whitepaper on the subject.
