Investing in more efficient cooling equipment can save time, cost and reputation. This study shows how applying capital expenditure to the right areas of an SME business can save valuable time and cost and even strengthen customer allegiance to secure future business.
Observation: For over a decade this company had secured repeat business of a specific type that required all components to be tested on hydraulic oil for a prescribed duration and temperature. Tests were completed within good time and eventually the customer awarded the company additional business for larger equipment but with increased testing demands.
When testing the larger equipment, the additional demand caused the Oil temperature to rise rapidly. When the temperature exceeded test specification parameters the testing had to be halted until the oil returned to the specified range. This delay caused the customer to book overnight hotel accommodation at short notice, it also put strain on production planning as unrelated projects were also delayed. Despite this, company leaders were reluctant to buy larger coolers, referring to prior austerity measures and the immediate impact on cashflow.
After a detailed review of the facts we convinced the team to purchase larger, more efficient cooling equipment that ensured tests could be completed without interruption. Whilst sizing this equipment we consulted the customer to assess business potential of a larger size. The coolers were replaced, and additional business was won without impact on other projects.
This capital expenditure was recovered quickly, but it was obvious past austerity measures within this SME had left historical leaders scared to use their skills and judgement in the best interest of the business and customers.
Summary: Regardless of company size, All spend should be monitored with appropriate delegation of authority in place, but if we allow leaders to express their opinions based on experience, they usually add value.