Selecting the right system - assembly system comparison with total cost of ownership methodology

Juhani Heilala (Corresponding Author), Jari Montonen, Kaj Helin

Research output: Contribution to journalArticleScientificpeer-review

6 Citations (Scopus)

Abstract

Purpose - To present theories for total cost of ownership (TCO) methodology in assembly system trade-off analysis and to show benefits of the methodology as a decision support in system selection. Design/methodology/approach - The developed TCO methodology is a combination of factory simulation, system performance and loss factor evaluation using overall equipment efficiency, system life cycle costing, and assembled unit cost analysis including cost of bad quality and rework. Findings - The purchase price of equipment is just one costelement in the comparison. TCO shows how important it is to analyse all the cost, direct and indirect, incurred throughout the life cycle of an equipment, including acquisition and installation, operations and maintenance, and end-of-life management. TCO methodology pinpoints costs that could be easily underestimated, such as quality and rework as well as all the costs of running the system. Research limitations/implications - The methodology is partially based on semiconductor industry standards and other asset comparison methodology, which are now integrated and applied also for electromechanical final assembly. Development continues. Practical implications - The methodology is useful in system integrator and end-user collaboration, where both can use similar formulae in system evaluation and trade-off analysis. Integration to component-based simulation adds system visualisation and simulation analysis and combines system configuration with cost analysis into a tool for the sales engineer. Originality/value - Integration of different analysis methods improves the quality of decisions. The TCO methodology is a systematic way to analyse system cost and performance issues. With proper use of the TCO methodology it is possible to justify investments to automation and modular re-configurable hardware. (19 refs.)
Original languageEnglish
Pages (from-to)44-54
JournalAssembly Automation
Volume27
Issue number1
DOIs
Publication statusPublished - 2007
MoE publication typeA1 Journal article-refereed

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Costs
Life cycle
Reconfigurable hardware
Industrial plants
Sales
Automation
Visualization
Semiconductor materials
Engineers
Industry

Keywords

  • Assembly, Cost effectiveness, Life cycle costs

Cite this

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abstract = "Purpose - To present theories for total cost of ownership (TCO) methodology in assembly system trade-off analysis and to show benefits of the methodology as a decision support in system selection. Design/methodology/approach - The developed TCO methodology is a combination of factory simulation, system performance and loss factor evaluation using overall equipment efficiency, system life cycle costing, and assembled unit cost analysis including cost of bad quality and rework. Findings - The purchase price of equipment is just one costelement in the comparison. TCO shows how important it is to analyse all the cost, direct and indirect, incurred throughout the life cycle of an equipment, including acquisition and installation, operations and maintenance, and end-of-life management. TCO methodology pinpoints costs that could be easily underestimated, such as quality and rework as well as all the costs of running the system. Research limitations/implications - The methodology is partially based on semiconductor industry standards and other asset comparison methodology, which are now integrated and applied also for electromechanical final assembly. Development continues. Practical implications - The methodology is useful in system integrator and end-user collaboration, where both can use similar formulae in system evaluation and trade-off analysis. Integration to component-based simulation adds system visualisation and simulation analysis and combines system configuration with cost analysis into a tool for the sales engineer. Originality/value - Integration of different analysis methods improves the quality of decisions. The TCO methodology is a systematic way to analyse system cost and performance issues. With proper use of the TCO methodology it is possible to justify investments to automation and modular re-configurable hardware. (19 refs.)",
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Selecting the right system - assembly system comparison with total cost of ownership methodology. / Heilala, Juhani (Corresponding Author); Montonen, Jari; Helin, Kaj.

In: Assembly Automation, Vol. 27, No. 1, 2007, p. 44-54.

Research output: Contribution to journalArticleScientificpeer-review

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AU - Montonen, Jari

AU - Helin, Kaj

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AB - Purpose - To present theories for total cost of ownership (TCO) methodology in assembly system trade-off analysis and to show benefits of the methodology as a decision support in system selection. Design/methodology/approach - The developed TCO methodology is a combination of factory simulation, system performance and loss factor evaluation using overall equipment efficiency, system life cycle costing, and assembled unit cost analysis including cost of bad quality and rework. Findings - The purchase price of equipment is just one costelement in the comparison. TCO shows how important it is to analyse all the cost, direct and indirect, incurred throughout the life cycle of an equipment, including acquisition and installation, operations and maintenance, and end-of-life management. TCO methodology pinpoints costs that could be easily underestimated, such as quality and rework as well as all the costs of running the system. Research limitations/implications - The methodology is partially based on semiconductor industry standards and other asset comparison methodology, which are now integrated and applied also for electromechanical final assembly. Development continues. Practical implications - The methodology is useful in system integrator and end-user collaboration, where both can use similar formulae in system evaluation and trade-off analysis. Integration to component-based simulation adds system visualisation and simulation analysis and combines system configuration with cost analysis into a tool for the sales engineer. Originality/value - Integration of different analysis methods improves the quality of decisions. The TCO methodology is a systematic way to analyse system cost and performance issues. With proper use of the TCO methodology it is possible to justify investments to automation and modular re-configurable hardware. (19 refs.)

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