Cost vs. Value: How to determine ROI in Materials Handling: Part 1

parrot-break-2We’re asked frequently why our Liftomatic “Parrot-Beak®” products cost what they do, or why they’re “so expensive”.  Our answer typically begins with “compared to what?”  The ensuing discussion usually explores cheaper products (in technology and manufacturing technique), the use of pallets, manual handling, and a litany of issues regarding material handling in general.

The primary way we answer this question is to say that if our customers are willing to take the time to talk to us to “truly” determine and investigate the issue of “cost”, we’ll show them how our products are not only inexpensive, but a true bargain.  The answer, you see, is more nuanced than simply reading the number on the price tag of a piece of equipment.  The true value lies not in the expenditure but what that expenditure returns: very simply, “ROI” or Return On Investment.  To study the ROI as it relates to Liftomatic drum handling products, a detailed analysis has to be undertaken to see what it costs you now to handle your drums, then compare it to what it costs using a Liftomatic product.

To determine proper ROI, we ask customers to consider the following things:

  1. The cost of their space (cubic utilization of space using Liftomatic is enhanced)
  2. The cost of operating lift trucks on a per-hour basis (we’re going to reduce it)
  3. The cost of labor (imagine loading 80 drums in 40 minutes instead of an hour!)
  4. The cost of pallets (we’re going to cut your pallet usage in half)
  5. The cost of damaged drums, labels and lost product (we can help here too)
  6. The cost of a single work-time injury or accident that can be prevented using proper equipment.

It is these (and many other) items that help with the development of a true ROI calculation when using Liftomatic products.  In the next issue we’ll describe more of the process and explain why we can back up the saying that “The quality is remembered long after the price is forgotten!”

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