Sharing on demand to improve the utilization of test and measurement equipment

According to a Frost & Sullivan survey, many companies operate in silos, often purchasing the same expensive test instruments multiple times for different engineers, labs, or office locations. However, these test instruments are rarely fully utilized, resulting in low utilization and unnecessary costs. Their data shows that the typical utilization of test assets in many companies is in the 30% range. Our cross-industry experience shows that utilization is even lower, often as low as 20%, which is far from the 70% to 80% that can actually be achieved.

In today’s on-demand sharing economy, companies share underutilized assets such as cars and homes to increase ROI. Clearly Uber and Airbnb have proven that the concept works, and the same principle applies to electronic test and measurement equipment. With the right technology platform, test assets can be shared to reduce capital and operating expenses, increase utilization, and improve ROI.

Time-to-market pressures continue to increase in major industries such as semiconductor and automotive manufacturing, telecommunications, and aerospace and defense. In addition, the level of scrutiny on R&D budgets and asset spending has increased. Essentially, test engineers and managers should do more with less.

Since test costs in these industries represent a significant portion of the overall R&D budget, a data-driven solution is needed to ensure that test operations are performing at or near peak operating efficiency.

Why are costs increasing?

Capital expenditure and operating expenditure costs continue to rise due to too much equipment on hand and the increasing cost of maintaining ownership. Here are some common issues we see:

Operational inefficiencies: Test assets across the team were severely underutilized, resulting in higher-than-necessary capital and operating expenses.

Lack of information: Accurate and up-to-date information about the location of test assets is not available. Without centralized search capabilities, engineers spend too much time searching for equipment and away from core R&D activities.

Lack of Control: Lack of purchasing control means unnecessary purchases of test equipment, which increases test costs. Making smart asset acquisition decisions can have a significant impact on the bottom line.

Obsolescence: Test equipment is purchased without considering future needs and requirements. After the project is completed, the equipment is shelved or stored, and engineers primarily look for newer equipment as technology accelerates. Older and unused equipment increases fleet operating costs for items such as calibration and maintenance.

Unnecessary calibration: Many companies typically calibrate all equipment according to OEM recommendations. With a centralized system that uses real-time data, calibration can be performed only for upcoming projects or as needed.

Low asset sales recovery rates: Most companies hold onto old assets for too long, reducing the value they can receive from selling old or unused assets.

Improve information transparency

Lack of transparency into equipment ownership and usage is a significant contributor to high capital and operational expenses. A centralized asset optimization system provides transparency and visibility into equipment location, project status, and calibration schedules across the organization.

Everyone from engineers and lab managers to procurement and finance teams can see which assets are available, which are in use or reserved, as well as project costs and calibration schedules. With this information, asset sharing programs can be implemented to reduce costs and improve operational efficiency, productivity, and utilization.

Gain real-time insight into asset utilization.

Using timely data to understand asset location, usage, and dispatch helps companies make better decisions about equipment selection, planning, spending, and procurement. Improved asset intelligence also enables users to share equipment, a key driver of increased utilization. Deeper insights into usage data also allow organizations to flag unused assets for early disposal, maximizing recovery value.

Better decisions: For example, strategic leasing allows companies to reduce costs by avoiding the majority of upfront and long-term ownership expenses while reducing the number of devices owned in the asset base Improved calibration management: With accurate, real-time scheduling and reservation systems, engineers and lab managers can be assured that equipment will be calibrated during each project, increasing efficiency.

Improved Equipment Search: Searching for test equipment by part number simply indicates whether the specified model is available. With parametric search, users can search for equipment by entering the features or parameters they require to see which machines can meet their current needs.

Timely disposal: As various test assets depreciate, there is an optimal time in the second-hand market to maximize value. We can recommend ideal time windows to dispose of certain types of equipment.

What can asset optimization do for you?

With all asset-related data in one place, better decisions and deeper insights become possible.

• Engineers, lab managers, finance and procurement staff can quickly find the equipment they need. Finance and procurement teams can access detailed project and equipment ownership costs.

• Executive management can monitor improvements in key metrics over time, leading to higher throughput, lower costs, and increased return on invested capital.

While companies around the world are investing heavily in test and measurement equipment to support accelerated R&D and manufacturing activities, much of this investment is not being effectively utilized. In fact, too many companies are still plagued by low test equipment utilization, rapidly rising asset ownership and test costs, and low levels of operational efficiency and productivity.

While asset optimization is a comprehensive solution that involves a large portion of an organization, the financial benefits are significant. Electro Rent’s asset optimization solutions help companies make smarter decisions regarding asset acquisition, leases vs. purchases, and “right-sizing” portfolios, including selling underutilized assets and reducing unnecessary purchases.

To learn more about asset optimization, read our latest white paper, “A Smarter Way to Manage Test Equipment.”