Why TCO is so Important
Tuesday, Nov 29, 2022
Total Cost of Ownership (TCO) is a financial estimate intended to help determine the direct and indirect costs of a product or service. Not unlike an iceberg however, there is often a tendency to focus solely on visible upfront costs and overlook the hidden smaller details.
Understanding why TCO is so important can help lower operating costs and increase uptime and productivity. Understanding TCO can help you a better long term investment and purchase decision. When determining Total Cost of Ownership of a diesel engine you should consider as a minimum :
Fuel Consumption: This is obviously a very important parameter and can tell you a lot. For some applications and industries fuel can make up more than 90 per cent of the lifetime cost of an engine. Getting a clear picture of how much fuel different engines consume is often vital, however it is also important to factor in some of the less obvious costs, such as time and logistics involved in refuelling.
Service Costs: Knowing the service intervals for different engines can not only let you plan services better, but also compare them to each other. Apart from the direct cost of servicing, spare parts, maintenance and repairs, there is also the transportation and distance to a dealership. This can be significant for machinery in inaccessible locations, such as forests and mines.
Uptime & Productivity: Breakdowns and downtime are costly for any business so sometimes paying more for a durable and reliable engine will save you a lot more in the long run. Splurging on genuine parts can often be more cost-effective long term.
Purchase & Resale Value: The difference between the two has a huge impact on your TCO. A premium product might not necessarily cost more if it can also be sold for more on the used engine market. This is why maintaining resale value is so important to improving TCO.
Learn more about TCO for industrial diesel engines and learn why-total-cost-of-ownership-is-so-important. To learn more please navigate to www.volvopenta.com and search News or follow the Volvo Penta website link below.
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Anthony Squire Diesel Services
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Ashbrook Diesel Pty Ltd
14 Elizabeth St, Port Macdonnell SA 5291
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Can Do Marine
38 Chatfield Terrace, Wallaroo SA 5556
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West Coast Diesel Service
32 St Andrews Terrace, Port Lincoln SA 5606
Phone: (08) 8682 1753