(This is the final article in a 6-part series: Part 1, Part 2, Part 3, Part 4, Part 5)
Aftermarket Multi-Brand Diagnostic Tools
In our last installment, we came to the conclusion that OEM diagnostic tools can offer some significant savings in the cost of unexpected equipment downtime, but there is a great deal of uncertainty as to just how much of a difference they can make. So the question that is still before us…Is There A Better Solution?
As I mentioned in part 5, in other industries, such as automotive and commercial truck, there are numerous diagnostic tools available – both OEM and aftermarket. While an OEM tool works only on that brand’s equipment, an aftermarket tool is multi-brand, meaning it has coverage and functionality on numerous brands in its specific industry. In these industries, there are many multi-brand tools available. So why isn’t this type of tool available for heavy equipment?
Well, it is. In fact, there are 2 multi-brand tools for the heavy equipment world. Both of them work exceptionally well. Both tools have been designed to mirror-image the OEM tools commands, with near dealer level functionality. They offer coverage on over 80 brands of construction equipment, agricultural equipment, and industrial engines – in one piece of software. The only real limitations that both of these tools have are flashing and reprogramming ECMs, not to be confused with changing settings and parameters which both tools can do.
So let’s think about that…one tool for each OEM in your fleet or one tool for all OEMs in your fleet? Training for each OEM tool or training for one tool that covers your entire fleet? A support line for every OEM tool or one support number to call when you need help, no matter what you’re working on? Time to compare some numbers.
In the previous article (part 5), we created the following example:
- One Service Laptop with 5 OEM tools.
- The average cost of the proprietary interface is about $1,900 (one-time purchase).
- The average yearly cost of an OEM tool is about $1,200.
- The total initial investment is about $16,000.
- The total 5-year cost of ownership is about $40,000.
Now let’s look at the breakdown for a multi-brand tool:
- One Service Laptop with 1 multi-brand tool.
- The average initial cost of the multi-brand tool is about $8,000.
- The average cost of yearly renewal is about $1,000.
- The total initial investment is about $8,000.
- The total 5-year cost of ownership is about $12,000.
So for the multi-brand tool, the initial investment is about half the cost of OEM tools, the yearly cost is about $5,000 less and the 5-year cost of ownership is almost $30,000 less. Remember, we said that one tech with one service laptop could service 40 machines? That means if you’re running 400 machines in your equipment fleet, you’ll see a savings of about $80,000 upfront, $60,000 per year, and nearing $300,000 at the 5-year mark.
Here’s the best part (as if saving $300k isn’t good enough)…you’re also going to save through efficiencies. Remember all the points covered in part 5…it will take far less time to train your techs on one tool than it will to train them on several tools. Your techs will become proficient with the tool in far less time due to the simplicity of everything being in one piece of software, one layout for all of your equipment. And with everyone on the same page, best practices and common procedures will be easy to institute. There are many more things I could list, but by now I’m certain the point is clear.
ROI
The remaining question is…How much can a tool like this decrease the cost of unexpected downtime? Looks take a quick look at what we have added up for the downtime cost of one machine for one year.
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.
- Using OEM Dealer For Repairs…
- 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.
The fact is that when our technicians are equipped with the right tool, they should be able to take care of about 80% of unexpected downtime. This means cutting up to 80% of the cost of a machine sitting idle, replacement rental equipment, job delays, lost productivity, and the high invoices from OEM dealers for simple repairs. That brings our yearly cost of unexpected downtime per machine per year down from about $37,000 to about $7,400. That’s a savings of almost $30,000. Per machine. Per year.
As we went over above, one tech with one service laptop can handle up to 40 machines. Staying true to our model, that means that one tech with the right tool (covers all machines and has the needed functionality) can save an equipment fleet $1.2 million per 40 machines per year. If you are running 400 machines in your equipment fleet, add a zero to that number.
That’s an incredible return on investment for a tool that runs about $8,000 upfront, with a 5-year cost of ownership at $12,000. It’s easy to conceive that a tool like this can pay for itself in as little as 30 days and continue delivering a return for years to come.
Conclusion
We started this journey recognizing that unexpected downtime is typically looked at as an everyday cost of doing business. We created a model to identify and understand the many costs included in downtime. From there we looked at the standard model for dealing with downtime, using the OEM dealer for all repairs, which is actually just another cost to be added into the overall total.
We rounded the final corner looking at two solutions for reducing the total cost of downtime. Ultimately, we looked at multi-brand tools, inarguably the absolute best way to reduce unexpected equipment downtime for a fleet with multiple equipment brands. In the end, the conclusion to be gained is that there simply is no better way to substantially reduce cost in your entire operation.
I hope you’ve enjoyed the series – there will be more posts talking about this subject. Consider downloading my exclusive whitepaper on the subject. Please watch for me, and thanks for your interest. If you’d like to talk further about reducing the cost of downtime in your equipment fleet, please fill out a brief form and I’ll get right back to you.
