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Now is the time to reduce operational risk with new equipment.

by Eamonn McMahon

We lost one of the great business leaders over the weekend with the death of Lee Kun Hee, the 78 year old chairman of Samsung. Mr Lee held legendary status for his success in driving the hyper successful South Korean conglomerate becoming the world's leading manufacturer of smartphones and becoming a top 10 global brand.

He was well known for his uncompromising view on product quality, once famously reacting bad to a product range and telling his engineering staff to change everything except for their wife and children!

Less well known, was Mr Lee's superb management of operational risk.

The fact is; in tight margin industries like transport, logistics, bulk manufacturing or construction; effective operation risk management is key.

Today I will look at three such risks that can be partially mitigated by employing new equipment. All of this equipment can be sourced on Equipment Connect.

Operational Risk 1: Staffing disruption.

With the current pandemic we are all aware of the commercial impact when labour supply is disrupted. But beyond pandemics, union strikes, natural disasters and other factors can also lead to worker absenteeism.

Solution 1: Invest in Automation and Robots equipment

Particularly in time-sensitive industries, for example fresh food provision, it is essential that production isn't disrupted and having some degree of automation and robotics can help mitigate risk. Of course, all production and supply systems require human oversight and we are not advocating for the replacement of human labour - The aim is to have the optimum mix.

As little as ten years ago, a well-engineered robotics system was typically a multi-million pound investment restricted to larger manufacturers but these days, many small and medium sized businesses can quickly and cost effectively integrate a robot solution into production or logistics. We list many of our robotics and automation partners here:

We recently looked at the effectively daily cost of leasing a robot system and it was surprisingly affordable. Our partnership with Comau for instance, allows for up to £100,000 of equipment to be leased from just £73.78 per working day!

Operational Risk 2: Transport and logistics disruption. With 'just-in-time' customers expecting punctual delivery of goods, delays from transport and logistics are problematic. And its not just Brexit which threatens disruption to exports and imports for the supply chain. Traffic congestion costs the economy about £8 billion a year. Some reports show that less than 80% of freight journeys are currently on time.

Solution 2: Invest in Warehousing and Logistics equipment. Once the exclusive realm of larger businesses like Amazon, many mid-sized companies are now investing in regional warehouses thanks to increased flexibility in leasing. With distributors of forklift and warehouse equipment from across the country and our first truck cab manufacturer going live on our platform in a few days, Equipment Connect is ready to assist businesses.

Operational Risk 3: Health and Safety breaches. Insurance is a growing cost of UK business with many businesses carving out large excesses to reduce cost. Of course this leaves liabilities that pose significant risk to the company. Investing in good equipment is key.

Solution 3: Health and safety equipment.

We work with some vendors who offer equipment that helps reduce risk of claims, For instance, VWS weighing solutions, based near Reading offer OPW (overload protecting weighing) systems for the recycling and waste management industry, while Fairway Wheels, based in Shropshire, offer electric mobility vehicles that allow event organisers to safely transfer vulnerable members of the public.

It was Albert Einstein, with his keen awareness of relativity, who shouted enthusiastically that "In the midst of every crisis lies an opportunity". For companies who have reasonable certainty on cash flows, now is a great time to invest in equipment. Here are some reasons:

  1. Rates are low. Very low. In fact it has never been cheaper to lease equipment as a small business in the UK.
  2. Particularly, with established businesses, funders are now more inclined to consider funding for longer terms (beyond a five year term) in asset finance. We worked on one deal recently for lab equipment where a funder was happy to fund out to 96 months! Smaller repayments helps affordability and ensures the finance cost is better matched to the useful economic life of the asset.
  3. Given the economic and business uncertainty in 2021, equipment suppliers are more inclined to exhibit flexibility in pricing and terms to help shift equipment over Q4 2020. Our marketplace is set up to facilitate this. Register here:

In conclusion, reducing operational risk with investment in new equipment makes a lot of sense right now.

To finish with a quote from JFK.. 'There are two brush strokes to write the word 'crisis.' One brush stroke stands for danger; the other for opportunity. In a crisis, be aware of the danger but recognize the opportunity."

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