What elements make up the Total Cost of Ownership in the Material Handling Equipment Category?

September 10th, 2014

SafeSourcing has recently seen double digit savings in this category.

Today’s Blog is by Ryan Melowic Director of Special Projects at SafeSourcing.

Today I will be reviewing the items required in constructing the Total Cost of Ownership (TCO) for the Material Handling Equipment (MHE) Category.

Experience teaches us that in the MHE category, there are five major items that require review in order to understand the TCO for the MHE category.  Understanding these items in detail, how they interact and what part they play in the TCO for MHE provides key stakeholders and other decision makers the information needed to make strategic award of business decisions.   The five major items that make up the TCO in MHE are as follows.

  1. Purchase Price
  2. Maintenance
  3. Labor
  4. Electricity
  5. Interest

Over the life of your company’s spend for MHE equipment; your company can expect to see a breakdown in these items weighted as follows. Labor is the largest piece of the spend with actual purchase price being second and maintenance third and typically a few points below the purchase price. Electricity is the fourth component of TCO followed by interest which generally represents three to four percentage points. 

Understanding these components of your total price will provide you the opportunity to pull the various levers required in order to maximize price control of your MHE spend.  SafeSourcing has extensive experience in this category and knows what these levers are and how to manipulate them.

SafeSourcing has recently seen double digit savings in this category.

For further information on how SafeSourcing can help your company with the MHE category, please contact a SafeSourcing Customer Service Representative.

We look forward to and appreciate your comments

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