False economies – Glass storage
I guess its human nature to feel proud and think we've got a good deal when we pay less for something than someone else did, or less than someone else quoted us. But how often is this a false economy? My Dad always told me to "Buy quality shoes and quality fishing gear, spend the money and you'll never regret it". He was right, but does his logic apply to transportation and factory handling equipment for the glass and window industries?
In the last couple of blogs I've looked at the false economy of buying a transportation rack with no poles (low capital cost) rather than a transportation rack with poles (more expensive but a quick payback). Over the next few weeks I'm going to look at various items of transportation and factory handling equipment to better understand what the payback is, and if there is a false economy with the cheaper items.
This week the focus is bulk glass storage.
In New Zealand most of the bulk glass storage in medium and small sized glass businesses is on A-frame racks. The large companies tend to use concertina racks, but many middle sized companies store their bulk glass on A-frames, most commonly the reddy brown coloured A-frames that are shipped with many containers of pack glass.
The benefits of these A-frames are :
1. Cheap to buy (often gifted at no cost)
2. Cheap to install
3. Simple to load and unload
4. Longevity – they rarely break!
5. In laymans terms, they do the job
The design of A-frames means that as you walk along a storage system there is a space for accessing the first pack of glass, then 2 packs leaning towards each other in A design, then another space to access the glass, then two more packs leaning towards each other, and so on. This takes up a lot of floor space as the internal space of the A-frame is wasted, and there is an access space for every 2 packs of glass, where typically only one access is required at any one time.
For storing packs of glass a Concertina rack is far more efficient. Concertina racks have all the packs of glass leaning in the same direction, on separate bays. The space saving comes from not having the wasted spaces in the middle of the A's. The second space saving comes by the Concertina rack having all bays moving on a steel structure so that the bays can be "wound" to the left or right to provide access to specific glass packs when needed. Combined, the two space savings result in a Concertina rack taking up half as much space as A-frame storage.
So what's the payback and is the cheaper A-frame a false economy?
Typical factory space is around $2000 per square metre to buy. This varies according to location and building type, and this is a fair average to use.
An A-frame storage system which is 12 metres long and 3700mm wide will therefore have a footprint cost of around $88,000.
A 10 bay Concertina rack to replace that would be 6 metres long by 3700mm wide, being half the space. The footprint cost for this Concertina rack would therefore be around $44,000.
The Concertina rack will cost around $50,000 installed, and assuming that the total cost for sourcing and installing the A-frame racks is $10,000, then the total costs is $98,000 for the A-frames and $98,000 for the Concertina rack.
So, based on the cost of the equipment and the floor space there is no false economy either way.
However, what we often see is medium and small sized glass companies outgrowing their buildings and requiring more space. The space is usually to fit some new machinery like a double glaze line, or a furnace, or edging equipment, or wanting to stock more bulk glass. When they run out of space in their existing building the options are either to extend the building (if possible), or move to a large premise. Both these options have large capital costs, quite aside from the time required and disruption to the business. For these glass companies the cost of $50,000 for a concertina rack to free up a foot print of 6 metres by 3700mm seems like a bargain and is a logical capital expenditure.
There is also other operational benefits associated with Concertina racks, and having the glass stored in a smaller footprint which have not been factored in to this calculation.