When purchasing roller chain, low-priced options may initially be tempting. 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, consider the total cost of ownership—all of the expenses you’ll incur over the life of the chain. Total cost of ownership analysis can help to ensure that short-term savings don’t become long-term expenses.
A total cost of ownership analysis starts with operational versus direct costs. Operational costs include the initial product cost, plus additional parts and any labor required for installation.
You might think that purchasing the lower priced chain would save $150. However, opportunity costs—such as downtime, maintenance, and early replacement—can quickly make any difference in purchase price insignificant.
For example, the chart below details the performance 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.
ANSI #50 ACCELERATED WEAR TEST RESULTS
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, we also see 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 cost hundreds of thousands of dollars. As an example, a large global baker experienced downtime costs of $1,050/hour, with three hours required to resume production. The addition of opportunity cost to our assessment reveals the following:
What appeared initially to be a cost savings of $150 actually cost an additional $4,180 over the long-term. With a total cost of ownership analysis, the effects of even a small purchase on profitability are much easier to see.