Caveats of Buying Second-Hand Equipment

A dollar saved might be a dollar wasted: Frequently the success of an improvement project is measured by its return on the equipment investment. As a result, project leaders are tempted to lower costs while hoping to get the same level of benefit from the system modification. One tactic used to reduce the cost of a high-priced line item is to opt for used material handling equipment instead of new.

Buying used equipment can save you money up front. But it can also cost you more in the long run. Keep these stipulations in mind when considering preowned equipment.

When is old too old?
If equipment is more than five years old, it is most likely not worth reusing. In five years it will have experienced a fair amount of wear and tear, especially if it was not optimally maintained. Spare parts might not be readily available.

In most cases, material handling equipment more than five years old should be used only if a company is working within a tight budget or on a tight deadline. If the decision is made to install used equipment, a budget and plan to replace it during the next few years should be included in your evaluation.

Looks can be deceiving
Equipment that appears to be good might not be. An engineer with an equipment design background should evaluate the purchase before the check is signed. A challenge with used equipment is that it’s hard to evaluate, because generally you do not see it in operation. You also have to be cautious of installing equipment that your company had placed in storage. It could have hidden defects, which is why it was put in storage in the first place.

Most second-hand equipment comes without a warranty, which means the seller has no accountability for its performance. There are also many hidden costs in used-equipment purchases: Find out if the seller or the buyer will be responsible for the cost of dismantling, refurbishing, storing, packing, shipping, and myriad other necessary services.

Information, please
All too frequently, little information about the used equipment and its past can be verified. The seller often works with limited information about the previous user, so important questions may have to go unanswered. The make and model of equipment such as racks, pick modules, and mezzanines can be difficult to identify. Some manufacturers have product information stamped on the rack. If not, features such as capacity and seismic ratings are dangerous mysteries.

Ratings in manufacturers’ catalogs may not be accurate years later. Regulations and standards are continually amended; what was considered safe five years ago may not be safe today. What’s more, equipment performance declines with time and use. And because a rack has had its rating lowered, for instance, doesn’t render it safe. Many manufacturers are reluctant, or even refuse, to install used rack. They don’t want to be held accountable for the collapse of a rack and the possible damage it might cause.

Used-equipment dealers and online auctions depend on quick action by the purchaser. Most don’t have an inventory. They make their money by moving things as quickly as possible. Because it takes time and initiative to verify information regarding used equipment, work with a dealer. Start by submitting questions, and ask for documentation regarding manufacturing facts. Then confirm the dealer’s information with the manufacturer. Verify what the equipment is rated and determine if it meets the Rack Manufacturers Institute established standards or those of other professional, appropriate organizations.

Objectivity and accountability
If you’re planning a distribution improvement project and are considering the inclusion of used equipment, have objective experts examine the equipment. A source separate from the buying and selling process can separate usable equipment from equipment that should be discarded. The right third party should be familiar with the variety of brands and models as well as have knowledge of spare-parts availability and the cost for the necessary refurbishment.

If you purchase used equipment, having a supervisor or a project manager onsite can ensure the jobs of dismantling and loading are done right. Dismantling equipment correctly requires meticulous attention and knowledge. Intimate knowledge of the new configuration into which the used equipment will be installed is also required. Hastily ripping out material handling equipment could render it useless. Tagging components according to the new engineered drawings will facilitate the installation process, providing easy identification and organization.

Can you mix and match equipment?
The heart of your distribution system, including accumulation and sorters, needs to be reliable. New equipment is best placed in critical areas where sophistication is required. Placing used equipment in noncritical areas, such as carton flow racks, pick areas, gravity conveyors, and manned accumulation lanes, is less risky.

Resourceful engineers can transform used equipment not suited for critical areas into less-sophisticated roles. For example, an old power conveyor can be made into gravity conveyor by removing the motorized components.

For every opportunity to employ preowned equipment, there are numerous costly risks. Budget-conscious companies set on incorporating used equipment into their systems can attain impressive returns on investment if they mind the caveats. Companies benefit by working with an objective resource that has proven design engineering and implementation expertise. This third party should work as an extension of the project team to ensure the best design to meet the objective of continuous process improvement.

Robert Babel is vice president of engineering at Forte (www.forte-industries.com), a Mason, OH-based supply chain consulting and engineering firm.

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