There has been considerable discussion recently on this forum regarding the ‘high price’ of some OEM hardware/software/support contract pricing and the desire to move to other viable alternatives.

While the cost of a system is normally not that important to those that utilize the device(s), certainly it is to those to whom a cost justification is required.

While there are probably more than a few US domestic manufacturers of hardware devices (primary data collector/analyzers), I am only aware of two: Emerson/CSI and DLI Engineering. No doubt I will be advised of others as this post solicits OEM input. In reality, I may learn that neither of the aforementioned companies actually manufactures their products domestically. If I am correct in naming the only two domestic hardware producers, why is this the case? After all, the benefits of the technology originated in the USA en masse?

I believe the stark absence of new domestic players entering the market are basically twofold: intellectual patents and cost of new product development. Yea, that doesn’t require deep thinking but patents do present significant barriers to engineering similarities of performance and the cost of hardware development is staggering! Those that have stuck with it and prospered should be applauded. Every cent they charge for products and services allow them to continue as leaders in the field.

Anyone that has used CSI hardware technology appreciates the engineering expertise that went into the development and the resulting power of the system. Put simply, it is currently the best available as far as I am aware. While I was born and raised at IRD Mechanalysis, one must give credit where credit is due. I am totally unfamiliar with DLI but they must be doing something right (and quite well indeed) to still be around and flourishing.

For those of us that count on products to sustain our livelihoods, we want and need the best that is available! Again, we all care little about the cost of what we use as long as it makes our jobs easier and presents true utility. So, where does that leave us all in spite of cost? Cost justification of why we need what is the best system for our operating environment?

We are all extremely busy and trying to do the best we can with the tools we possess but and unfortunately, we all have another job to perform battling the ‘bean counters’ (no offense intended to a critical element of an organization).

Perhaps those fighting for the best products to perform their jobs can be provided with some excellent ‘cost justification’ programs by forum contributors/visitors to assist in their efforts to keep and retain what best works for them in spite of cost.

Actually most prohibitive intellectual patents (IRD) are expired and do not prevent development. Consolodation has proved very cost effective as SKF's DI division manufacturers data collector/analyzers for Rockwell Entek, IRD Balancing, SKF, Bently Nevada, DLI, DI, and many more. Newer players such as Commtest Instruments have taken a large domestic market share by providing quality instrumentation at a much lower price than Emerson, Rockwell or SKF. ADASH from Czech Republic and several Chinese/Taiwan and Swedish manufacturer's are also competing aggressively overseas with more cost effective alternatives, and will see increased exposure in the USA.

CM is a man of few words...

Dave,

Seeing as how this discussion is just between the two of us, am I correct in assuming Emerson/CSI is the only significant domestic hardware OEM (as DI is in Scotland)? Does DLI manufacture hardware in the US?

The more important issue is cost justification.

It would seem that those of us that do this type of work for a living would at least save those for whom we work enough money in a years time to be able to have the tools we need and want to do our jobs!

I wonder if the CMRP's and others frequenting this forum could help by providing guidance or hard-copy cost justification formats one could tailor to specific industries?

DLI's DI instruments are manufactured by DI overseas. The firmware and feature set may be somewhat different than that offered by other vendors on the same hardware platform.

DLI's PCMCIA card used in the Hammerhead products is manufactured in the US, in fact about a mile away from my office in Seattle, Washington. This card was designed by/for DLI Engineering. The ST-101 Vibration Screening Tool was designed by yours truely with the circuit boards assembled in Seattle and the final assembly done on Bainbridge Island, Washington.

Jon - former DLI employee
Spintelligent Labs

Jon,

Thanks for joining in and shedding some light. Although I don’t know much about DLI Engineering I am aware they have/had bright associates as evidenced by your and Alan’s posts to this forum. I wonder if it was a DLI management initiative and recommendation to their associates to contribute knowledge to this forum? One seldom views posts from other OEM’s associates here…I remember at some point during the last days of IRD, upper management set policy that design engineers of hardware products accompany field service associates on jobs to see exactly how it was the products they developed were actually used in the field for problem solving with the thought and hope more ‘user friendly’ products would result.

Speaking of IRD, I recall a cost justification program I employed as a sales tool in selling contract services to companies not willing or prepared to have an internally managed PdM project. I must assume that more sophisticated programs have evolved since then. In fact, I am amazed that OEM’s have not themselves taken the lead in developing and distributing such programs! They would seem the ones that would most benefit from the existence of such tools. Could it be that Mom & Dad recognize their ‘children’ contribute such small amounts of revenue to the bottom line that parental guidance is lacking in teaching their acquisitions to do better?

My issue is simply this and I suspect I am not alone: I want the best tools to do my job! I am not bad-mouthing any product OEM, I just want the most powerful products available to perform my job the best I can in the least amount of time so I can spend whatever time remains doing stuff necessary to take my program to the next level of efficiency. I don’t care at all about the cost of ‘support contracts’ (and feel those for whom I work shouldn’t either-if I am not doing the job required to sustain my existence, get someone else) nor am I personally inclined to develop a cost justification program to retain the tools I want (I thought the mechanical problem I discovered yesterday that saved $100K in lost production time alone would be enough).

Is my thinking here flawed?

Are there not cost justification programs available to help product users justify keeping what they want & have?

Terrence, are you out there and able to provide some motivational help?

I thought Japanese cars has got a lot of engineering inputs & technical expertise but still affordable and favourable in terms of price and quality. I guess they manage to spread their development costs due to mass production and volumous sales because customers demand it (supply & demand).

Should the expensive producers lower their prices instead of losing market to alternatives?

Hi Gary,
Thanks for the kind words! I can tell you that our prices are as low as they can be relative to the volume we sell. I can also tell you that we spend an inordinately high percentage of our budget on R&D. (way higher than companies much bigger than us) - this is just to keep us in the game and ahead of the curve on taking advantage of emergining technologies (like Internet and Communications connectivity).
On the cost justification side of things. I agree there is alot of work to be done in this area. John Mitchell wrote a good article a couple of years back that basically said that the PdM technology vendors failed to make a good economic case to management (for PdM) in terms they could understand. (He did NOT say there wasn't a case to be made - and - he has in fact continued to try to make that case!)
One of the more interesting economic justification ideas I have seen is called an OEE (Overall Equipment Effectiveness)calculation. This basically relates things like uptime, quality etc. to the bottom line - or profitability (I can give you the exact relationship if you like). In the past we looked at production losses (or potential production losses) - increased up time, reduced spare parts purchases or inventory, reduced preventive maintenance actions etc. as savings associated with PdM. The OEE model gets right to the core of it and relates the machinery (and its condition) to the profitability of the organization. This is something that the bean counters can understand. It is also a model that can be agreed upon before a program is implemented in order to calculate the benefits of the program in dollar amounts (which in most models dwarfs the cost of the system itself by a long shot!).
That said, one of the things that most frustrates me is when cost becomes an issue in the sale of a data collector while little to no thought is given to how it will be used and why it is being used. I suppose it frustrates me because I know that if used correctly you should be able to get a 20:1 ROI... or in an easier to understand sense even 1 or 2 correct diagnosis more than pays for the system (any of them). I also know that the amount of labor ($) required to gleen an accurate diagnosis from a lesser priced system far outweighs the extra cost of a system that does most of the analysis work for you. My job of course is to educate people to understand this....
There are a couple more forces at play here that relate to the whole history of PdM and the success or lack of success experienced by individual organizations. This has a lot to do with how they use the technology today or plan to use it in the future. One aspect of this is that companies that have not received the promised rewards (because they didn't use DLI's approach of course! ;-)) are looking for inexpensive vibration equipment for simple "go" - "no go" tests or in order to be compliant with ISO or some other regulation - they are not using the technology to determine machine health or for PdM - this is one of the markets the low cost players are going after and this is why it doesn't matter that they lack alot of features (not on paper but when you actually try to diagnose faults on a large population of machines and report on them in a timely fashion). Those whose programs failed in the past may also decide to outsource or automate their programs - and we are seeing increases in both of these markets.
I'd add that most of DLI's clients are long term and have been successful with their programs - and this is one of the big reasons we have stayed around despite our much larger competitors. We don't just sell equipment, we sell an approach to using it that we know works and that we use ourselves - but that doesn't result in enough volume sales to dramatically lower our prices (especially when our latest software is still compatible with our first data collector from the 1980's!!! - I guess that's what happens when you let engineers run a company instead of business people!)
I think this is an interesting topic that needs to be discussed more. I look forward to hearing all of your comments and I hope the focus leans more to the side of "why are we doing vibration analysis and how are we calculating its economic benefits" rather than why one data collector costs $1K more than another.
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- Alan
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www.DLIengineering.com
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PS - I try to remain active on this board both to be a member of the community as well as to understand what people are looking for in the products and services we provide (besides that they be free of course ;-)) I also try to learn from everyone that contributes.
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I would think that the capital costs of whatever system is chosen are small in relation to the labor costs of running a vibration program or any other PDM program. So, if the decision to implement vibration rests on the cost of the instrumentation and software (whether it's $10k or $40K) then something is wrong with the overall cost justification.

Many of the original Vib companies, CSI, IRD Entek have been purchased by larger companies whose primary business is not maintenance. They are more process control oriented. These larger companies have higher overhead and therefore require larger margins for their shareholders.

In some part, their name recognition, reputation, etc allow them to charge higher prices.

The longer technology companies are in business the larger their legacy costs are. What I mean is that it takes a large amount of R&D to keep supporting all the existing systems out there and keep current customers happy. You see this in the consumer software industry as well with Microsoft. Engineering around the decisions they made years ago it a huge expense. Yet, if they design a new system compeltely from scratch it will be incompatible with all of these legacy systems.

Newer companies from China and Eastern Europe will probably have some advantage in costs for several years until they become overburdened by the code they wrote several years before.

To some extent the larger producers don't worry so much about market share....they don't see this as a rapidly expanding market at this time. It's a more mature market, so gaining or maintaining market share are not their primary goals. They are more interested in current profits and therefore choose not to lower prices. They bank on the fact that they've beeen around for many years and will question whether the less expensive competitors will be around tomorrow when you need support or a repair. I'm not saying this is a wise strategy, but it's our North-American, short-term, stock-market driven by quarterly results paradigm.

I think the biggest reason to stay with a current supplier or even upgrade with a current more expensive supplier are that the change-over costs are HUGE. However, they are difficult to quantify.

I know from the consumer software side that I'm always reluctant to upgrade to the latest software unless it has a very compelling feature I need. Everytime I receive an upgrade there is a learning curve and lots of wasted time because the software supplier moves features around in their menus, renames features, removes features, add new features with new names that do the same thing that old features did before.

If you are being pressured ot make a change to a new lower cost system, then there are probably lots of training costs and the risks of missing a problem will probably rise as you "tweak" the alarms in the newer systems.

My editorial for the day

What would be a functional spec for an integrated condition monitoring software? Is this idea considered an emerging or mature technology?

Mr. Petersen:

Thank you for your input (Editorial for the day). The realities you point out are somewhat painful but concise and to the point. In retrospect, product users may have been better off if no acquisitions had been made. It seems that focus has been lost somewhere in a spreadsheet.

Josh:

I sometimes find I spend way too much time trying to assimilate your responses! I guess I need to develop into a more ‘well rounded’ thinker…

Does anyone have a cost justification program that could be provided (that may be modified for specific industries) to assist in retaining equipment currently employed in a PdM project?

This message has been edited. Last edited by: Gary Forsythe,

Gary,

A good reference can be found here:

http://www1.eere.energy.gov/femp/pdfs/omguide_complete.pdf

Operations & Maintenance
Best Practices
A Guide to Achieving Operational Efficiency

This government publication covers the range of predictive maintenance technologies snd does provide some cost justifications for various machines.

Jon
Spintelligent Labs

Jon,

Thanks for the link and all your help and input.