Factors of the Total Cost of Ownership you need to consider to make the best decision for your company.
Your company is considering the purchase of a conveyor system, and you’ve been charged to identify the proper material handling system. Research and selection can be daunting, even for some seasoned professionals. However, armed with the knowledge we’ll share, you can be the hero and select the best material handling system for your company.
First, conveyor systems can be highly beneficial to a company when the correct system is chosen. Conveyors can be configured in many ways and offer many features, including custom sizes, belts, rollers, low voltage, high voltage, motor driven, manual, automation, etc.
One major factor that must be considered, if not the most important, is the Total Cost of Ownership, or TCO. This is calculated by dividing the Initial Cost + Operational Cost + Maintenance Cost by the equipment’s Useful Life.
In the above example, the system’s cost is $45,000. Also included is the cost to operate the system, $1,250, and the cost of maintenance, $3,000. TCO is then known by dividing the sum of these costs by the number of years the system is expected to be productive until obsolete, $49,250. One can then drill down farther to an annum level and realize a defined annual cost to own the conveyor system.
Total Cost of Ownership is comprised of several factors: Initial Investment, Yearly Maintenance, and Operational Costs.