Many air compressor users adhere to the principle of “spending less and earning more” when purchasing equipment, and focus on the initial purchase price of the equipment. However, in the long-term operation of the equipment, its total cost of ownership (TCO) cannot be summarized by the purchase price. In this regard, let us discuss the TCO misunderstandings of air compressors that users may not have noticed.
Myth 1: Purchase price determines everything
It is one-sided to believe that the purchase price of the air compressor is the only factor that determines the total cost.
Myth correction: Total cost of ownership also includes ongoing expenses such as maintenance, energy costs, and operating costs, as well as the residual value of the equipment when it is resold. In many cases, these recurring expenses are much more than the initial purchase price, so these factors should be considered before purchasing decisions are made.
In the field of industrial manufacturing, a recognized method for calculating the total cost of investment for business owners is life cycle cost. However, the calculation of life cycle cost varies from industry to industry. In the air compressor industry, the following three factors are generally considered:
Equipment acquisition cost-What is equipment acquisition cost? If you are only considering the comparison between two competing brands, then it is the purchase cost of the air compressor; but if you want to calculate the entire return on investment, then the installation cost and other related costs also need to be considered.
Equipment maintenance cost-What is equipment maintenance cost? The cost of regularly replacing consumables according to the manufacturer’s maintenance requirements and the labor costs incurred during maintenance.
Energy consumption cost – What is the energy consumption cost of equipment operation? The most critical point in calculating the energy consumption cost of equipment operation is the energy efficiency of the air compressor, that is, the specific power, which is usually used to measure how many kW of electricity is required to produce 1 cubic meter of compressed air per minute. The overall energy consumption cost of the air compressor operation can be calculated by multiplying the specific power by the air flow rate by the operating time and the local electricity rate.
Myth 2: Energy efficiency is insignificant
Ignoring the importance of energy expenditure in a continuously operating industrial environment, thinking that energy efficiency is only a trivial part of the total cost of ownership.
Misunderstanding correction: All the expenditure costs of an air compressor from equipment procurement, installation, maintenance and management to scrapping and discontinuation of use are called life cycle costs. Practice has shown that in the cost composition of most customers’ expenditures, the initial investment of equipment accounts for 15%, the maintenance and management costs during use account for 15%, and 70% of the costs come from energy consumption. Obviously, the energy consumption of air compressors is an important part of long-term operating costs. Investing in more energy-efficient air compressors not only meets the goal of sustainable development, but also can bring considerable long-term energy-saving benefits and save a lot of operating costs for enterprises.
When the equipment purchase cost is determined, the maintenance cost and operating cost will vary due to the influence of some other factors, such as: annual operating time, local electricity charges, etc. For compressors with higher power and longer annual operating time, the assessment of life cycle costs is more important.
Myth 3: One-size-fits-all purchasing strategy
Ignoring the differences in air compressor requirements for different industry applications.
Myth correction: A one-size-fits-all purchasing strategy fails to adequately address the unique needs of each business, which may result in higher total costs. Dynamically tailoring air solutions to specific needs and operations is critical to achieving an accurate and optimized TCO assessment.
Myth 4: Maintenance and upgrade are “small matters”
Ignore the maintenance and upgrade factors of air compressors.
Misunderstanding correction: Ignoring the maintenance and upgrade factors of air compressors may lead to equipment performance degradation, frequent failures, and even premature scrapping.
Regular maintenance and timely upgrade of equipment can effectively avoid downtime, reduce maintenance costs, and ensure operational efficiency, which is an indispensable part of the comprehensive cost saving strategy.
Misunderstanding 5: Downtime costs can be ignored
Thinking that downtime costs can be ignored.
Misunderstanding correction: Equipment downtime leads to productivity loss, and the indirect losses caused may far exceed the direct cost of downtime itself.
When purchasing an air compressor, its stability and reliability need to be fully considered. It is recommended that enterprises choose high-quality air compressors and maintain effective maintenance to minimize downtime and the total cost of ownership of the equipment, which can be reflected by the equipment operation integrity rate.
Maximizing the equipment operation integrity rate: The integrity rate of a single device refers to the proportion of the number of days of normal use of this device after deducting the failure downtime in 365 days a year. It is the basic basis for evaluating the good operation of the equipment and an important indicator for measuring the level of equipment management work. Every 1% increase in uptime means 3.7 fewer days of factory downtime due to compressor failures – a significant improvement for companies that operate continuously.
Myth 6: Direct costs are all
Only focusing on direct costs, while ignoring indirect costs such as services, training and downtime.
Misunderstanding correction: Although indirect costs are difficult to quantify, they have a profound impact on the overall operating costs. For example, after-sales service, which is increasingly gaining attention in the air compressor industry, plays a vital role in reducing the total cost of ownership of equipment.
1. Ensure stable operation of equipment
As an important industrial equipment, the stable operation of air compressors is crucial to the continuity of the production line. High-quality after-sales service can ensure that the equipment is repaired and maintained in a timely and effective manner when problems occur, reduce downtime and improve production efficiency.
2. Reduce maintenance costs
Professional after-sales service teams can provide reasonable maintenance and maintenance suggestions to help users use equipment reasonably and extend the service life of equipment. At the same time, they can also formulate personalized maintenance and maintenance plans based on the actual operation of the equipment to reduce maintenance costs.
3. Improve equipment performance
Through regular maintenance and maintenance, the after-sales service team can promptly discover and solve potential equipment failures and problems to ensure that the equipment is always in the best working condition. This can not only improve the performance of the equipment, but also improve product quality and production efficiency.
4. Technical support and training
High-quality after-sales service usually includes technical support and training services. When users encounter problems during the use of the equipment or need to understand the technical details of the equipment, the after-sales service team can provide professional technical support and answers. At the same time, they can also provide users with equipment operation and maintenance training to improve the user’s technical level.
Myth 7: TCO is immutable
Thinking that total cost of ownership is static and unchanging.
Misconception correction: Contrary to this misconception, total cost of ownership is dynamic and changes according to market conditions, technological advances, and operational changes. Therefore, the total cost of ownership budget of the equipment should be regularly evaluated and adjusted to adapt to variables, and continuously optimized to ensure maximum return on investment.
For air compressor equipment, TCO includes not only the initial purchase cost, but also the costs of installation, maintenance, operation, energy consumption, repairs, upgrades, and possible equipment replacement. These costs will change over time, market conditions, technological advances, and operational changes. For example, energy prices may fluctuate, the emergence of new technologies may reduce maintenance costs, and changes in operating strategies (such as operating hours, loads, etc.) will also affect the energy consumption and life of the equipment.
This means that all cost data related to air compressor equipment, including energy consumption, maintenance costs, repair records, etc., need to be collected and analyzed regularly. By analyzing these data, the current status of TCO can be understood and potential optimization opportunities can be identified. This may include reallocating budgets, optimizing operating strategies, adopting new technologies, or upgrading equipment. By adjusting the budget, you can ensure that the return on investment is maximized while reducing unnecessary costs, thereby bringing greater economic benefits to the company.
Myth 8: Opportunity cost is “virtual”
When selecting an air compressor, you ignore the potential benefits that are missed due to improper selection, such as potential efficiency losses due to outdated technology or systems.
Myth correction: Evaluating the long-term benefits and disadvantages associated with different options is essential to reducing costs and keeping the air compressor project up and running. For example, when a low-priced air compressor with a low energy efficiency rating is selected, the opportunity to choose a high-priced air compressor with a high energy efficiency rating is “abandoned”. According to the greater the on-site gas usage and the longer the use time, the more electricity bills are saved, and the opportunity for this choice is a “real” profit, not a “virtual”.
Myth 9: The regulatory system is redundant
Thinking that the regulatory system is an unnecessary expense ignores its important role in reducing TCO.
Myth correction: Integrating advanced systems can minimize unnecessary expenses by improving overall operating efficiency, optimizing performance, saving energy and controlling downtime. Good equipment also requires scientific maintenance and professional management. Lack of data monitoring, drip leakage of pipelines, valves, and gas-using equipment, seemingly small, accumulates over time. According to actual measurements, some factories leak more than 15% of the production gas consumption.
Myth 10: All components contribute the same
Thinking that each component of the air compressor accounts for the same proportion of TCO.
Myth correction: Choosing the right components for specific applications and industries is essential to achieve efficient and economical operation. Understanding the different contributions and qualities of each component can help make an informed decision when purchasing an air compressor.
Post time: Jul-15-2024
