What are some top risks facing manufacturers? Learn about equipment replacement costs, equipment replacement time and other risks.

1. THE FABTECH FIVE: 5 Risks for In-Plant Equipment

3. THE FABTECH FIVE: 5 Risks for In-Plant Equipment
At FABTECH 2014, the metals manufacturing industry convenes to explore increasingly sophisticated technology and equipment.
These innovations can help manufacturers expand production capacity, launch new products and compete more effectively, but they also present new risks.
Each day, Travelers explores key risk topics facing manufacturers.
Here are five risk topics related to in-plant equipment.

5. Equipment Replacement Cost
What would it truly cost to replace a piece of manufacturing equipment like those on display at FABTECH?
The replacement cost for manufacturing equipment is almost always higher than its market value, when you consider other factors, including engineering, logistics and training required to get your team up and running again.
To rebound from the loss of key equipment, manufacturers should regularly review their insurance coverage to ensure it reflects the actual cost.
RELATED LINK:
Identifying Business Threats

6. From the FABTECH floor: Abrasive water jet technology has evolved to reduce fume emissions, heat and the potential for fires.

8. Equipment Replacement Time
Highly specialized machinery, like what is on display here, can take months or even years to replace. Long lead times for specialty equipment can interrupt productivity. Customized over years at a plant, this equipment may be impossible to replace at any price. Manufacturers will want to identify replacement equipment sources and acquire spare parts for equipment repairs. Consider high-value machinery as a key part of the supply chain that should be managed to reduce risk.
RELATED LINK: Identify In-Plant Bottlenecks

9. From the FABTECH floor:
Technology has caught up with robotics, allowing for more reliable performance than ever before.

11. Outdated Insurance to Value Numbers
Equipment replacement costs continue to increase over time. How often do you evaluate your Insurance-to-Value coverage?
Some companies wrongly assume it is safe to rely on the market value of their equipment. Since the value of highly complex manufacturing equipment can increase over time, it’s prudent to index your assets on a regular basis to ensure proper coverage.
At Travelers, we revisit ITV numbers regularly and update based on the government’s Producer Price Index and other indications of fair market value.
LINK
RELATED LINK: Business Continuity Planning

13. Lack of a Contingency Plan
The most effective continuity plans include steps to take when a critical piece of equipment breaks down. Consider this checklist: - List of key equipment - Inventory spare parts - Identify rental equipment - Line up repair contractors - Develop business loss alternatives - Find alternate sites Many business continuity plans fail to address all potential bottlenecks, including contingency plans for business-critical equipment fails.
LINK
RELATED LINK:
Create a Continuity Plan

15. Hidden Repair Times
What happens when equipment is damaged, but repairable?
When purchasing new equipment, it’s a good idea to consider the lead time it will take for repairs. When equipment fails, you will be responsible for repairs up to the cost of a new machine, so consider the following:
- What are the technician lead times?
- How long will it take to get parts?
- Are new machine parts available for older machines?
LINK
RELATED LINK: Supply Chain Management

16. 3D PRINTING
•Allows for rapid prototyping
VERSATILITY
•Today’s equipment handles multiple applications, including laser cutting & welding
ROBOTICS
•Less expensive
•Greater capabilities
•Increased reliability
ENERGY EFFICIENCY
•Equipment that delivers the same performance at reduced energy cost