The concept of Total Cost of Ownership (TCO) is not new to the industrial world, and has been cited as far back as the Napoleonic era, when his engineers would design cannons to increase availability and reduce maintenance between battles.
TCO can also be referred to as Life Cycle Costs (LCC) or studied using Life Cycle Analysis (LCA).
The study of cradle-to-grave costs of capital equipment is an important one for heavy-industry since many managers and operators in the field often only see the initial cost of capital equipment. Many studies over a cross-section of industries have shown that initial cost for capital equipment is usually one of the lowest marginal factors for TCO.
Figures like that are eye-opening for plant managers and planners around the world. All engineering projects and processes have diverse stakeholders whose vested interests in the procurement do not always align:
- Project Engineering seeks to minimize capital costs,
- Maintenance Engineering seeks to minimize repair hours,
- Production seeks to maximize uptime hours,
- Reliability Engineering seeks to avoid failures,
- Accounting seeks to maximize project net present value, and
- Shareholders seek to increase stockholder wealth.
TCO procurement models attend to each stakeholders needs by addressing each individually, while maintaining the overall goal of reducing the lifetime expenditure.
Slurry pumping is a prime example of procured capital equipment where operating and maintenance (O&M) costs rapidly overtake and exceed the initial procurement cost. Slurry pumps are designed to wear over time due to the highly abrasive nature of the product being pumped. Schurco Slurry® pumps will readily pump sand, gravel, rocks, lime, coal, tailings, and worse, all to deliver cost savings to the end-user whom would otherwise have to seek alternative transportation means for their product or refuse. Despite this harsh process environment our products last significantly longer than non-slurry rated alternatives due to the hardness (greater than 650 Brinell) or elasticity (using elastomers) of our wear parts.
Slurry pumping can quickly become a loss leader, though, if a manufacturer does not specify equipment that will maximize efficiency, reduce maintenance costs, and deliver spare parts at reasonable value to the customer. We have made it a priority to excel in those three areas in order to deliver the lowest possible TCO to our customers. Our manufacturing processes are designed to deliver the high quality that industrial customers expect from an American product, while delivering on value through our spare parts costs, which are consistently some of the lowest in the industry.
For decades in the slurry pump industry the cost model has been to deliver slurry pumps to end users at or below cost, while deriving exorbitant profit from the inevitable spare parts sales. However, in a relatively short time period following the procurement and installation of the “bargain” slurry pumps, spare parts prices will quickly exceed the initial cost of the pump. Often manufacturers will charge near to or over the initial cost of the pump for a single impeller replacement! This is where procuring from a TCO perspective will add value across your organization quickly, often in less than a year. Schurco Slurry® parts are priced such that, although we will not profit as much per part as many of our competitors, we will secure long-term and stable business partners with our end users. By understanding the nature of our customers’ processes and seeing the need for viable and sustainable partnerships, we hope to earn and retain business through consistently delivering a valuable product cycle after cycle.