Repair vs Replace Decision Making with Susan Lubell
Without questions, organizations in the world need their assets to be optimal and to run efficiently. They can’t afford downtime because of the production targets they have to achieve. That is why they have to make a smart decision. They can either refurbish the assets or replace them. But the question is, when is refurbishing preferred over replacement? With refurbishment, you check the life-cycle cost of an asset. Sometimes, companies make small repairs because it’s relatively inexpensive and they can easily get the asset up and running quickly versus replacing the asset which may take time in lieu of internal approval process and purchase lead time.
In this episode, we covered:
- Repair vs Replace: Is it an easy decision to make?
- Why would an organization choose to repair or refurbish versus replace an asset?
- Why would an organization do a business case to replacing an asset?
- Considerations in making the decision.
- Models/citeria in making repair or replace decisions.
- Are there any standards that help guide these decision-making?
- Type of assets that are generally just not worth refurbishing.
- And much more!
In other words, if need is immediate and budget is constrained, companies would choose to refurbish the equipment instead of replacing it. At other times, companies would choose to replace an asset because it has already run its life. But how can they decide if it’s a good idea or not? When there is an advancement in technology and or if multiple systems can be replaced by a single advanced system, then it is usually a good decision to make the replacement. The companies see an increase in ROI and production because the new system will be efficient and cost-effective in the long run.
These decisions can be evaluated before implementing using different analysis tools like Life-Cycle Cost Analysis run in a spreadsheet or a software. There are a lot of factors involved which you have to base your decision from using a model for better decision-making. The best thing an organization can do is to be realistic while analyzing the condition of an asset. All they need to do is follow the standards and they will be able to make a good decision. It is always the best practice to maintain an asset properly instead of letting it degrade to a point where replacement is needed.
When an asset has run its life and can’t be used for production anymore, it is always good to just replace that asset. When an asset is costing you too much to maintain and in making the repairs, replacement will be the sound option. There are a lot of other cases where replacing an asset might be a good idea. Whatever decision an organization makes, it should be based on the realistic data like total repair cost, downtime cost, life-cycle cost, and lack of production.
One can look at their internal resources to gain the knowledge for making an informed decision regarding an asset. Most companies have their own template for analysis where they incorporate different what-if scenarios and their solutions that anyone can use. While it’s true that we can’t always make good predictions but it will make a huge difference to do something rather than nothing. When you try an empowering approach where people can create scenarios by themselves, they learn fast. As a result, they can make a better decision when similar situations arise next time. All you have to do is to be objective.
You might be interested to check our other episodes with Susan Lubell.
- HP Reliability
- A Smarter Way of Preventative Maintenance Free eBook
- inspired Blended Learning (iBL®)
- James Kovacevic’s LinkedIn
Susan Lubell Links:
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