Life-Cycle Cost Analysis of Industrial Pumps

Minimizing total cost involves trade-offs between the elements of LCC analysis.

Written by:
Anusuya Ramadoss, Beroe
Published:
November 22, 2013

Reasons for Higher Energy Usage

  • Installing oversized pumps into the system causes the system to operate at a higher flow rate. It will lead to increased energy consumption and reduced life.
  • Piping work with more twists and turns requires more energy to run the pump.
  • Energy use depends on the nature of the liquid being pumped. When the viscosity changes or the amount increases, the energy requirement increases.
  • Corrosion on pipe walls may increase energy use.
  • Energy use may increase when the performance of pumps is not monitored and controlled properly or when the pumps are not maintained.
  • When the pump system operates far away from its best efficiency point, maintenance and energy costs will increase.

How to Mitigate Higher Energy Usage

  • Select the pump system wisely based on flow rate and liquid characteristics.
  • Do not use oversized or undersized pumps. Instead, install two or more pumps in parallel based on system requirements. Run these pumps based on the system requirements. It helps reduce energy costs by as much as 20 percent.
  • Use variable speed drives, also called variable frequency drives (VFD).
Table 1. Possible reasons for higher energy consumption and ways to mittigate them.

Reduce Downtime Costs

To reduce machinery downtime, all the spare parts required for operation-critical machinery need to be kept onsite. Usually, buyers purchase larger amounts of high-critical spare parts to prevent equipment downtime. As a result, they tend to pile up more spare part inventory when the demand for spare parts is fluctuating. As a result, the buyer pays higher inventory holding costs. For a pump original equipment manufacturer, 40 percent of its revenue comes from spare parts sales.

To have a win-win situation for the buyer and the supplier, a consignment stock option is a preferred solution. Consignment stock is an inventory of spare parts that is stored at the buyer’s location but is still the property of the supplier. The buyer is required to pay for the parts only when he /she picks it up from the stock to use. Therefore, the buyer pays later, but the stock is readily available at his/her plant to reduce downtime. This type system benefits the buyer and supplier because the buyer has the spare parts onsite whenever the demand arises, and it is another avenue of profit for the supplier.

Consignment Stock Model

If end users are able to segregate the kind of spare parts to be kept at the consignment stock versus the supplier warehouse, they can save on the following:

  • Storage space
  • Premium to be paid
  • Insurance cost

Based on the nature of the spare parts—such as criticality and design—buyers are able to group the spare parts through formulated sourcing strategies such as:

  • Scenario 1—In the case of customized and high-critical spare parts, buyers should choose a consignment stock model with their supplier to keep parts onsite and available around the clock, which can reduce downtime.
  • Scenario 2—The critical but standard spare parts do not need to be kept onsite at all times because standard parts are easily available. In such scenarios, buyers can eventually save on insurance costs and inventory holding costs when they adopt a just-in-time sourcing practice. However, this depends on the proximity of the supplier to the production site.
  • Scenarios 3 & 4—When the spare parts are non-critical, buyers are advised to order standard spare parts when demand arises and non-standard parts based on their historical demand pattern.
Contractual terms and conditions—consignment stockFigure 4. Contractual terms and conditions—consignment stock

Conclusion

LCC analysis of pumps helps pump users make better choices in the life of the procurement arm of industrial pumps—including the decision between buying a new pump versus overhauling an existing pump. Maintenance, repair, energy and downtime costs constitute a major part of pumps’ LCC, and these costs can be significantly reduced if the required measures are followed. A different maintenance strategy should be adopted for each machinery type based on its criticality and nature.

Choosing correctly sized pumps for a particular application helps reduce energy consumption. However, when the flow requirement varies greatly, installing two small pumps in parallel instead of a larger pump is recommended to reduce energy consumption. To keep the plant operational at all times and reduce machinery downtime, a consignment stock strategy should be adopted with the parts supplier.

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See also:

Upstream Pumping Solutions

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