specialhandling
if it ain’t broke, should you fix it anyway?
IS THERE AN OPTIMUM TIME TO INVEST IN
new equipment? Is there an ideal point during the
business cycle for spending money to modernize a
distribution center? Could this be such a time?
At first glance, that suggestion might seem
absurd. Why would anyone spend precious capital
to upgrade equipment—especially equipment
that’s running well—during a severe downturn?
But there’s a case to be made for doing just that.
For one thing, there are the obvious advantages of
using a slow period to make operational upgrades,
particularly if the changes will be far-reaching and
potentially disruptive. “This is the time to reduce
costs by modernizing, not when you’re going gang-busters,” says Bruce Buscher, vice president, sales
and marketing for equipment maker Jervis B.
Webb Co.
And it’s hard to imagine a better time to buy new
equipment and systems than when vendors are
under intense pressure to offer deals in both pricing and financing.
But what about that old adage “If it ain’t broke,
don’t fix it”? “That makes some sense sometimes,”
admits Juergen Conrad, director of sales for material handling equipment maker Westfalia USA. But
there are also potential disadvantages to holding
onto equipment for too long, he adds. For example, you might eventually run into difficulty finding replacement parts.
Plus, you could be missing out on all the benefits
that come with new and improved technology.
These might include better fuel efficiency for lift
trucks, faster conveyor systems, and improved
accuracy, speed, and safety in today’s automated
storage and retrieval systems.
That’s not to suggest that anyone should run out
and buy the latest equipment just because it’s new.
Investing significant sums right now to increase
automation in a warehouse might be downright
imprudent—especially if your operation is running at perfectly acceptable levels of efficiency.
However, at some point, all industrial and distribution center equipment will face obsolescence in
terms of functional competitiveness. Simply put,
industrial trucks, racks, and conveyors as well as
floors and computers wear out eventually. They
then must be replaced by newer, faster, more efficient equipment.
The trick is to know just when to replace them.
But what is that optimum point? Some say it’s
when you can see big cost
savings in the new.
“Everyone is always looking
for ways to cut costs,” notes
Joe Ginnetti, vice president
of sales for lift-truck maker
Raymond Corp.
But it’s also true that the
timing may be dictated by
competitive factors. Every
so often, a new material
handling technology—one
whose potential benefits are
too great to ignore—hits
the market. When that happens, what ain’t broke
must necessarily give way to the superior technology. That’s particularly true if your competitors are
converting over to the new systems or equipment.
If they are, you’ll likely have no choice but to
upgrade. Whether that day comes in the trough of
a recession or at the height of a boom is almost
irrelevant.
The point is, the decision of when to modernize
should not be a matter of whether your present
equipment is five years old or 25. The decision to
modernize depends on your unique circumstances
and on what enables you to serve the customer in
the best of all possible ways. If that means replacing what ain’t broke, then so be it.
George Weimer has been covering material handling, supply chain management and related
industrial and business issues for nearly 40 years. He is now an editor at large for DC
VELOCITY, specializing in material handling topics.
