You Get Exactly What You Pay For

You Get Exactly What You Pay For

When looking to purchase roller chain, it’s tempting to consider the many low priced options. But making a decision based on purchase price alone can actually cost you more in the long run.

Instead of focusing on short term cost savings, focus on the total cost of ownership – or all of the expenses that will be incurred. Total cost of ownership analysis is an ideal tool for ensuring that short term savings don’t turn into long term expenses.

A total cost of ownership analysis starts with a look at two different types of expenses, the first of which are operational or direct costs. Operational costs include product cost plus additional parts and any labor required for installation. For example:

LOW PRICE ROLLER CHAIN DIAMOND SERIES ROLLER CHAIN
Roller Chain Purchase Price $350 Roller Chain Purchase Price $500
Installation Labor(2 people at $40/hour for 3 hours) $240 Installation Labor(2 people at $40/hour for 3 hours) $240
Total Cost $590 Total Cost $740

Based on the cost of these two chain options, it would seem that $150 could be saved by purchasing the lower priced chain.

What isn’t being taken into account though are the additional expenses that are incurred over the life of the chain. These additional costs are opportunity, or downtime costs, which by comparison, can quickly make any difference in purchase price seem insignicant.

To help illustrate opportunity cost, the chart below details the performance levels of two products, a #50 chain from an Asian manufacturer and a #50 Diamond series chain.

Both products were tested under the same operating conditions with supervision by an independent third party. The results indicate the number of hours the roller chain ran until it reached an elongation point of 0.096 inches or 0.002 inches per pitch.

In this instance, the roller chain from an Asian manufacturer ran for 120 hours while the Diamond series chain ran for 384 hours. From this, we can calculate that it would take three chains to meet the equivalent run time of one Diamond series chain as shown in the illustration below:

In addition to an increase in direct costs from having to purchase three roller chains to meet the performance level of a single Diamond series chain, there are also three instances of downtime.

Downtime costs vary significantly by industry and can range from several hours up to several weeks at a loss of production dollars that can be anywhere from tens to hundreds of thousands of dollars. As an example, a large global baker was experiencing downtime costs of $1,050/hour with three hours required to resume production. The addition of opportunity cost to this assessment reveals the following:

LOW PRICE ROLLER CHAIN DIAMOND SERIES ROLLER CHAIN
Roller Chain Purchase Price (3 roller chains @ $350/chain) $1,050 Roller Chain Purchase Price $500
Installation Labor(2 people at $40/hour for 3 hours) $720 Installation Labor(2 people at $40/hour for 3 hours) $240
Lost Production / Opportunity Cost $3,150 Lost Production / Opportunity Cost $0
Total Cost $4,920 Total Cost $740

What appeared initially to be a cost savings of $150 in actuality would end up costing an additional $4,180. With a total cost of ownership analysis, the affects of even a small purchase on profitability are much easier to see.

For more information on total cost of ownership analysis for your location, or to receive additional information on the Diamond Chain Company and its roller chain products, please contact your local IBT branch.

Accelerated wear testing was performed on all chains to compare their wear performance. The test conditions were as follows: 1172 RPM%u2019s, 91 lbs. of tension, 3.5 chain horsepower, and 21T x 21T sprockets. The accelerated wear test was run until chain elongation was above 0.096 inches or 0.002 inches per pitch. The time for each chain to reach elongation limit can be found in the chart above.

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