Is servicing a JIT function?

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The FLTA’s campaigns have boosted the industry’s safety record. But that could be put at risk as recession has forced some companies to adopt a less systematic approach to servicing. Johanna Parsons reports.

There has been a noticeable shift to a just-in-time approach to servicing and maintenance of forklift trucks among some operators. That is hardly surprising, given the difficult economic conditions that companies have faced. But at what point does lean running become corner cutting? And as we emerge from the recession, what other factors make the best service and maintenance contracts?

The thin end of the cost cutting wedge has been the widespread trend over the past few years to prolong the life of equipment by delaying any replacements that may be due. This of course puts pressure on ageing machines, which makes the quality of service and maintenance all the more important. Toyota Material Handling has seen a significant number of its clients extend their existing contracts, while still demanding the same levels of operation from older equipment.

In fact, Tony Wallis, operations director for Toyota, says it has even seen instances of the most extreme trimming, where service and maintenance was thought of as an extra cost which could be postponed. This worrying observation led Toyota to join as an official partner for the EU-run Healthy Workplaces Campaign which aims to cut work related accidents by 25 per cent by 2012 by promoting safe maintenance practices.

[asset_ref id=”1302″]One reason why the recession has caused a more relaxed attitude to forklift maintenance is simply that there are fewer orders, and less work to do. So with less running, there is less stress on equipment, causing fewer breakdowns and enabling more regular check-ups.

Linde has seen a shift towards just-in-time servicing, with maintenance visits taking place only when needed. But this raises the question: at what point should servicing be ramped up again? Jeff Aylott, head of after sales at Linde says: “Post recession, one of the biggest potential issues will be the ability of service providers to maintain effective and efficient service levels as the truck parc grows and utilisation levels once more increase.”
Simon Barrell, sales manager at Translift Bendi, says that far from providing leeway for more sporadic maintenance, even during the recession better servicing was required.

He says customers “will seek to use less equipment where possible so the uptime of machines becomes more critical to day-to-day operation”.

The pattern of fleets being reduced, without provision for reduced productivity, has unsurprisingly resulted in an increased demand for maintenance assistance. Martin McVicar, managing director of Aisle-Master agrees and adds: “This requires flexible local service partners with spare parts immediately available.”

In many quarters, the economic pinch on customers has heightened their focus on performance from sweated assets. Gavin Wickham, operations director of Briggs Equipment, says it has been pushed to provide more and more dynamic solutions to ensure maximum performance from the minimum investment for some years now.

A recent rise in sales, as reported by BITA, could signal an investment boom as the alternative to this pattern of extended contracts and reliance on prolonged use of old equipment. It reported that 2011 sales up to June 2011 were up by 25 per cent from the same period last year.

Discussing its financial results, Jungheinrich UK managing director, Hans-Herbert Schultz, said: “recovery from the recession is quicker than most of us expected.”

But this uplift in sales is perhaps as likely to be explained as balancing out the depression in sales over the recession. Wickham says: “Our industry is not a glory industry our machines are necessary. It’s got to the point now where the industry is having to replace machines that it avoided replacing over the recession.”

When forced to make purchases that have been delayed over the recession, for many, the initial price of the equipment will be the first factor to consider. But there are many options such as long-term rental, used equipment, and even tailored payment plans that can make initial price less decisive.

Maintenance packages are a considerable ongoing cost that cannot be ignored. But the value of after sales care can also affect equipment price.

Residual value of materials handling equipment will reflect its condition which will in turn be affected by the servicing and maintenance it has undergone, as well as its hours in service, application, the scope of the warranty offered, the service interval, the number of operators that use each truck, and for how many shifts.

McVicar says that customers are increasingly savvy about how to factor the real costs. He reckons the slower rates of business through the recession meant customers had more time on their hands to monitor truck up time, and the complexity of costs. “The recession has allowed many companies to take stock on how to grow in a more profitable manner… Customers are now taking into account running costs, fuel, downtime caused by changing batteries, etc… Customers now budget for total life cost.”

But not everyone is so wise. Along with those few who put off their maintenance cover, there are also those who underestimate service costs and buy on price.

[asset_ref id=”1303″]Sticking point
“Unfortunately some companies still prioritise the rental cost and undervalue the service, assuming it’s the same. The overall running costs associated with running a fleet of lift trucks, however, actually outweighs the upfront rental and there can be big differences in the service level between providers,” says Roger Massey of Barloworld Handling.

Barrell agrees that after sales care is often a secondary consideration for truck purchases, but says that because it is still a buyers’ market, it can be a sticking point. “Existing users will take advantage of the current competitive nature of the market place and if suppliers are not giving the desired sales service the customer will use the opportunity to look for better elsewhere, and this can be the deciding factor on a new purchase.”
And when looking around for the best deal for a service contract, there is more to value than just price. Too strong a focus on the bottom line can blinker customers to the potential costs of having that equipment out of action.

Aside from lower rates of productivity, further ramifications of decommissioned forklifts could also include lost business. Linde says these factors can easily account for an operator’s biggest cost. The important things to consider are how quickly these can be remedied. “Response times, first time fix and quality of work, measured by frequency of repeat visits, are critical key performance indicators,” says Aylott.

Bill Goodwin, sales director of Jungheinrich, says: “The things that differentiate a good supplier from the others are, firstly, the frequency between technical problems and then the ability of the supplier to have an engineer on site in the shortest possible time.”

Toyota has a similar focus on call out times, and guarantees a response within four hours. It aims to deliver parts within 24 hours and for any longer delay will provide a courtesy truck. Briggs also offers a national guarantee that an engineer will be on-site and working on the repair within three hours.

Linde reckons its 800 field-based engineers provide a 95 per cent next day availability of replacement parts. Barloworld’s engineers receive 40 hours of additional training each year, and keep a huge range of equipment including those from rival manufacturers, to boost first time fix rates.

Customers are now looking beyond just who offers the cheapest rates or the quickest call outs. Users of forklift trucks are now also keen to use their equipment more intelligently. To that end they are increasingly taking up the telematics systems and other technology on offer. Aylott explains that this is because its customers need to analyse their efficiency, but don’t necessarily have the resources to run complex measurements the whole time. He says they want a total logistics solution “that releases them from fleet management to concentrate on running their core business”.

Toyota has installed shock sensors to all BT Reflex reach trucks as standard since September as a way to monitor potential damage. It also supplies its I_Site fleet management system to monitor the entire fleet remotely, providing greater visibility to assess efficient running.

Barloworld offers consultation on the best fuel for each set up, and also has its own telemetry device which captures live performance data.

The idea of a total logistics solution can go beyond IT systems to mean the relationship with the supplier. “Every forklift company can talk a good fleet management proposal, but few have the capability to draw up an action plan that delivers quantifiable results,” says Goodwin.

He reckons that the consultation process is key, and that customers should make certain that their supplier actually has the wherewithal to deliver results even if they appear counterproductive to their own profit stream. “I mean, a truck audit will often recommend reducing the fleet size which, on the face of it, is not in the supplier’s best interests.”

Massey mirrors this idea that understanding, and supplying the most appropriate solution is imperative. “It’s important that the service provider understands the application and has the experience to correctly assess its support needs, otherwise costs could be absorbed by the customer further down the line.”

The recent focus on squeezing as much as possible out of existing equipment has made forklift truck condition a critical factor. Reducing downtime and maintaining the residual tuck values are both big money concerns that pivot on after sales care. And as the market shifts to redress the imbalance of the recession, forklift truck users are making more investments than they were a year ago, and service and maintenance contracts are becoming more and more key to purchasing decisions.

As we enter the final quarter of 2011, the economy may well dictate the nature of further investments. There is plenty of innovation to explore, and certainly many fleets will need expansion and upgrades. And while there are different ways of valuing your service and maintenance contract, one way or another it’s a vital investment.

[asset_ref id=”1304″]The latest forklift deals

  • DIY retailer Homebase has awarded a contract worth £10 million to Briggs equipment, to supply and maintain its materials handling equipment for the next five years. Over the course of the contract Homebase will buy some 170 Yale machines which will be serviced and maintained by Briggs.
  • Lift truck company Samuk has expanded its dealer network with the addition of MacBrown Fork Truck Services, which is based at Ossett in West Yorkshire. MacBrown offers sales, support and parts service.
  • Mentor training has become the first UK distributor of the Accu-tilt forklift tilt level indicator (pictured). The device displays the angle that the fork has reached to help stop operators from using incorrect tilt angles. Misjudged tilt angles are a leading cause of damage to racking, pallets and products, and HSE statistics show at least ten UK workers every month are injured by objects toppling from the forks of lift trucks.
  • Doosan has won a contract to supply more than 2,000 counterbalance trucks to Saint Gobain sites around the UK including Jewson, JP Corry and Gibbs and Dandy builders’ merchant networks. The deal follows Saint-Gobain’s £100m agreement with national supplier Rushlift which was announced in May.

The Lithium-ion powered pallet truck

Lithium-ion batteries are already widely used in devices such as smart phones and computers because of their power to weight ratio. Now Jungheinrich has launched what it reckons is the first lithium-ion powered forklift to be commercially available in the world the Jungheinrich EJE112i powered pallet truck which has been purchased and is being delivered on 1st October for trial by Tesco.

The versatility of the new battery technology has led Bill Goodwin to claim they are “absolutely maintenance free”. This is because they don’t require auto-watering, gassing or ventilation, and work best with opportunity charging.

A 30 minute charge will fully repower a half drained battery. This compares favourably with other battery technology which needs longer charging sessions, and is harmed by such short bouts of charging.

Goodwin says lithium-ion batteries offer ten times better performance density, offering longer performance times from a smaller, lighter unit. He says lithium-ion has a life span twice as long as lead acid batteries, anecdotally sometimes four or five times as long, and are a quarter of the size of an equivalent lead acid battery.

In reality, the mechanism of the truck itself will still need service and maintenance attention, but it’s difficult to argue with a technology which performs better and requires less power and electricity. Even though the initial cost of lithium-ion batteries is four or five times higher than lead acid batteries, Jungheinrich reckons the increased up-time will allow payback within three years for high use, multi-shift operators, with significant savings thereafter.

What role does technology play?

As technological developments make trucks safer and more efficient, what effect will these innovations have on service and maintenance patterns and contracts?

Many technological innovations are geared towards keeping trucks working for longer, with fewer shorter breaks. Simon Barrell of Translift Bendi says “maintenance can also be less frequent which can result in this element being taken away from the customers altogether and rolled into an all inclusive contract.”

As well as keeping trucks going for longer, new batteries also reduce energy costs which Martin McVicar of Aisle-Master says can be used to offer longer battery warranties.

Higher levels of performance afforded by new technology does not bypass the need for fleet maintenance, however advanced the equipment. In fact, higher rates of productivity, and less downtime may put more stress on equipment and perhaps even increase the possibility of breakdowns.

Jeff Aylott of Linde says: “The use of advanced technology brings the need for more advanced monitoring systems and more complex electronics and control systems, which make the need for well managed service and maintenance regimes even more critical.”

David Ellison, chief executive of the Fork Lift Truck Association agrees: “Technological enhancements can be a double edged sword, with productivity benefits, but greater complexity and perhaps more to go wrong.”

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