2.2.1 Challenges and opportunities of MTPRO business

The significance of expenses for analytical instrumentation for a potential key account is characterised by two factors: Capital investment/expenses and MRO (Maintenance, Repair, Operation) budget/ period expenses.

Capital investment/expenses

Analytical instrumentation is relatively insignificant in terms of purchasing spend with a large account with regard to total capital investment. Hence providers of such instrumentation like MTPRO are classified [C] suppliers (suppliers with low economical significance). This statement is based on our findings that spend for analytical instrumentation accounts for about 0.1% of the total sum of investment projects. Such projects can be the development of new manufacturing plants, plant expansions or plant modernisation.

Such investment projects are sometimes realised by corporate engineering divisions with bigger corporations. Such projects can also be realised by engineering companies, who are subcontracted by the end-user company.

Due to the rather small share MTPRO faces difficulty in getting middle to high management attention. Beside other beneficial factors the contribution to improve the customers Total Cost of Ownership (TCO) is a valuable tool to gain management attention. The TCO model will be explained in more detail after the illustration of the MRO budget.

MRO (Maintenance, Repair, Operation) budget/ period expenses

Beside the capital investments end-user companies have a separate budget for the maintenance, repair and operation (MRO) of their plant. This budget covers period expenses such as repeat purchases for consumables (e.g. pH sensors), replacements of outdated or worn-out instrumentation, pipes, valves, machines, HVAC equipment (Heating, Ventilating and Air Conditioning). Maintenance and repair costs of these items are also covered.

The share of analytical instrumentation of the total MRO budget is estimated to be about 10%. This percentage is rather significant and can be attributed to the high maintenance efforts required for the proper use of analytical instrumentation. Therefore customer’s management is rather open to a supplier’s contribution to assist them to improve their costs of ownership.

TCO improvements can lead to enhanced sales opportunities

With regard to capital investments as well MRO budgets, the immense significance of TCO for an end-user manufacturing company is shown in figure 6. The TCO consists of the project costs, respectively purchasing costs, and the costs of ownership. The cost of ownership contains the purchase costs for consumables, the potential downtime due to instrumentation malfunction and labour costs for maintenance actions.

Cost of Ownership for analytical instrumentation (Source: On the basis of internal data within MTPRO)" class="wp-image-9043 size-full" height="188" src="https://sgbs.ch/wp-content/uploads/Figure-6-Total-Cost-of-Ownership-for-analytical-instrumentation.png" width="273"> Figure 6: Total Cost of Ownership for analytical instrumentation (Source: On the basis of internal data within MTPRO)

It displays that the costs of ownership can be 4 times higher than the project costs. Therefore sales proposals with a valuable contribution to the customers TCO optimization provides excellent differentiation opportunities for a supplier like MTPRO.