OEM Diagnostic Tools
So far, we’ve created a pretty good model for calculating the annual cost of unexpected downtime for 1 machine in a fleet of heavy equipment. If you have not read part 1, part 2, part 3, and part 4, you may want to go ahead and read them now.
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.
- OEM Dealer Repairs of $5,000 per machine per year
- Our new total cost of unexpected downtime is $37,000 per machine per year.
Now it’s time to start actually reducing the downtime and the costs of it. In the last article, we said that about 80% of equipment downtime falls into the category of minor repair. For many of these problems the answer starts with, and in many cases can be completed with, the right diagnostic tool. This can include anything from diagnosing the problem correctly to getting a machine out of derate. So let’s start with OEM diagnostic tools for heavy equipment.
In other industries, such as automotive and commercial truck, there are numerous tools available, and most OEM tools offer all the functionality needed. In the off-highway world, that is simply not the case. First off, many OEM diagnostic tools are not available, so you’ll always have to rely on their dealer network for 100% of your repairs. Of the ones that do have a tool available, most of their public version diagnostic tools are watered-down versions of what’s used by the dealer. This means we may be able to perform a forced regen, but we probably will not be able to get that same machine out of derate. For that, we’ll need to call the dealer, and from there the costs start adding up. For some OEMs, the diagnostic tools are not even available, which means we’re back to relying on the dealer 100% of the time. So, in reality, using OEM diagnostic tools as a solution is a hybrid model at best, as we’re still forced to rely on the dealer for many things…and at a very high cost.
Speaking of cost, almost all of these tools have a required yearly fee (some are paid monthly), averaging about $1,200 per year, per tool. And when I say required, I mean the software locks us out if we don’t pay for it on time. If we’re managing a small fleet of 20 or so machines, and all of them have the same brand engine, this is a pretty small expense. But if we’re managing a fleet of 100+ machines, made up of several brands, the costs add up quickly.
Let’s see what that could look like. We’ll keep going with our example. Since we’re talking about maintaining our equipment, we’ll need one technician with one service laptop for every 40 pieces of equipment. If we say that there are 5 different brands or equipment types within the 40 machines, we’ll need 5 diagnostic tools on the one service laptop for our one technician. At $1,200 per year average for each tool, that’s $6,000 per year, every year, in required annual fees to keep everything running.
We’ll also have to buy the interface for each tool. Many OEMs have a proprietary interface that we must have to use their software that doesn’t work with any other software. These can range in price from $1,000 to $2,800. At an average of $1,900 per interface, times five, our initial investment is about $16,000. This brings our 5-year cost of ownership to about $40,000.
These are the expenses that are easy to quantify, but there are many costs that are not so easy to identify.
What about training? Some OEMs offer different levels of their tool, with each level adding functionality, offered at a higher cost. Access to each level is dependent on levels of completed training, which comes at a significant cost per person. For the manufacturers that don’t use this model, there will still be training required to use the software, and that training is far from free.
When we’re figuring the cost for training, be sure to add not just the costs charged for the training, but also the time our technicians spend taking the training (they get paid for that), and make sure we keep track of any travel expenses incurred. Then there’s scheduling. If we’re managing a large group of technicians, how will we schedule the classes so that all our techs are sufficiently trained without reducing production? And don’t forget, we’re going through this exercise for every brand of equipment represented in our fleet.
Then, of course, there are brand categories to consider. One manufacturer may have different engines for construction equipment, industrial equipment, and agricultural equipment…and have a different software application for each category. So if we have equipment from one brand in all three categories, we could potentially have to pay for all three tools…and we need to be sure to add in the cost of training for each tool, again!
There are also efficiencies, or should I say inefficiencies to consider. Imagine our technician, out in the field, trying to remember which tool to use and how to use it (they all have different interfaces and look completely different). That technician also needs to remember which tool can do what, or more importantly, what each tool won’t do, so the dealer call can be put in to try to reduce the wait time. What about identifying best practices across the multitudes of software? The list can go on and on.
And let’s not forget about managing the software licenses. Each one has a different expiration date. We cannot miss those, or we’ll be locked out of the tool. Again, we need to do this for each tool, on each laptop in the company. This can very quickly add up to managing hundreds of licenses with many different expiration dates. We may need to hire an additional person just to manage all the licenses.
Ultimately, the takeaway here is good and bad. At the beginning of this article, we set our goal to identify a way to reduce unexpected downtime and the costs associated with it. Using OEM diagnostic tools can absolutely help us move in this direction. But at what cost? It’s obvious that OEM diagnostic tools can show us an ROI by cutting the costs of unexpected downtime. The uncertainty comes from the many costs that are not so obvious. And it’s all of these not-so-obvious costs that take this from a real-world solution to a theoretical solution. Our biggest fear should be that we find out 5 years from now that the cost is 10x more than we thought it would be, and saves us far less than we expected.
Remember, the solution is only a good one if it can be used, and is used. I’m afraid using OEM diagnostic tools has far too many uncertainties to be a viable solution for a large, multi-brand equipment fleet.
I hope you’re enjoying the Equipment Downtime series. Next up, we take a look at the aftermarket for multi-brand tools. Consider downloading my exclusive whitepaper on the subject.
