A Critical Logistical Consideration For Every Company Is Business Equipment Investment

The tools of the trade, as the machinery or systems one uses to accomplish the job, are as unique as each place of work. What they have in common is they are used by one set of personnel, but purchased by someone else. Depending on the product or service being developed, the business equipment investment can be a major cost of daily operation.

In the case of the Japan railway system, the employees and customers were established, but the process had to be significantly changed to create a profitable enterprise. The first place new management looked was the trains themselves. If the cost per passenger mile could be increased, the system could be induced to become a profitable business endeavor.

There are some industries where the machinery used in developing the core of the business is so enormous that it must be uniquely and individually crafted, and selecting improperly can have devastating effect on the entire company. Deep water oil drilling is such an enterprise, as the selection of where to drive is an educated guess, even with the most accurate geologic analysis.

Once a plot or span of ocean floor has been successfully negotiated and authorized for drilling, the parent company has to decide what it will use to first determine if there is oil there, and how to extract it. The cost of a single actual drilling rig used in the Gulf of Mexico, for example, exceeded one billion dollars. Given such a price tag and the very real dangers of such complicated drilling, if the site had not panned out, it could have caused company bankruptcy.

While the service of transportation was one that could not be ignored, there were, even in space constricted Japan, alternatives to the trains. If the companies selected poorly, either with inadequate seat capacity or timeliness, for which the trains have always been famous, ridership would fall. The key was in offsetting poor revenue routes with higher revenue routes and doing it all at lower costs bit in machines, tracks and personnel.

Before major changes could be made, leadership had to know they could implement the new routes, purchase new trains, and incorporate new computer systems to make the whole thing practicable, all while attracting new riders, advertising dollars and the like. They also had the restriction of standardized track widths, politically determined maximum speeds, and the need to synchronize with a city bus system.

There is no question about who ultimately has the final word on which brand, type and level that will ultimately be purchased. That falls to the owner or senior leader, because they are charged with fiscal responsibility. But as it is not usually their area of expertise, they must tread carefully into the potential minefield of business equipment investment.