By Steven Friedmann of ebm-papst
This article explores how supermarkets’ buying strategies have affected their cold aisle by looking at the true cost of Refrigerated Display Cabinets (RDC) failures to supermarkets in South Africa.
Major retailers expect more space for produce, less downtime, longer life expectancy, less noise and higher energy efficiency – and the driving factor of lower prices. The market has seen the quality of components falling due to lower quality manufactured goods. This has led to an increased risk of RDC failures in stores.
What is the real cost of failure when considering the Total Cost of Ownership (TCO)?
We all know that buying cheap costs more money in the long run…
The Total Cost of Ownership Iceberg is a metaphor representing how the initial purchase price of a product may not represent the total cost to the buyer during their time of ownership.
The purchase price of the RDC is characterised as the ‘tip of the iceberg’ and the ownership costs (such as maintenance and repair) are the ‘body of the iceberg’. The initial cost is often the focus of the purchaser, however in this article we would like to explore the danger of solely focusing on the ‘tip of the iceberg’.
In recent years, tightening budget constraints and increased pressure from supermarkets for lower prices has led to RDC original equipment manufacturers (OEMs) using cheaper components; simply to ensure their products remain competitive. However, this short-term perspective is not as cost-effective as supermarkets would like to believe. Using cheaper, basic fans reduces the life and performance of the components in the display cabinets. They also are less energy efficient.
We explore some of the costs associated with poorer quality fans below…
If a single fan within an RDC fails, the unit won’t be able to maintain a low enough ambient temperature. The workload placed on the remaining fans often proves too much and the unit will be turned off until it can be repaired.
The average price for a technician call-out can be up to R2 500 per visit. Many supermarkets have predetermined fees in place with service companies, who get the RDC back up and running. Technicians often need to make repeat visits. With this, the cost for repairs and replacement fans starts to escalate. These costs are not accounted for when purchasing the RDC, however, they can be avoided altogether.
Loss of produce
Whether it is a café or a major retailer, ‘cash-flow is king’, and eliminating stock wastage is a key element for all managers. Depending on the type of produce, an RDC could hold on average R15 000 worth of stock; with individual product prices ranging from as little as R12 up to R450.
When a refrigerated display cabinet fails, the supermarket will need to dispose of the stock due to health and safety standards, unless the cabinet is emptied within 20 minutes. In the initial procurement process, it appears that the risk of disposing R15 000 worth of stock is not accounted for when choosing new RDCs. Yet the price difference between an inferior quality fan and a quality fan in the RDC could equate to roughly R230 – or that of a lamb roast.
When an RDC fails, the produce stocked within it is removed and the cabinet is out of action. This merchandising space is then lost and any produce which would have been displayed, is now unavailable. This loss of trading time and space should always be considered when purchasing an RDC.
If, due to ‘downtime’, you can’t use the RDC for 10, 11, 12… days a year, the cabinet isn’t performing the job it was purchased for. Retail space is expensive, and supermarkets know better than most what the value of optimising merchandising space is.
When an RDC fails, the condensation from the unit can cause flooding onto the aisle floor; which is a health and safety hazard. The risk of a customer slipping on the wet floor and injuring themselves is a moral and economical dilemma.
For any supermarket, the safety and comfort of their customers and employees is a high priority. However, some accidents still occur; so many businesses have public liability insurance and legal requirements dictate that employer’s liability insurance is a must. Suddenly, a failing RDC becomes a growing financial burden.
Price-driven buyers have resulted in a market where sacrifices have been made to stay competitive. Cheaper components have gradually been making their way into new RDCs. This has resulted in a reduction in the overall reliability and efficiency of RDCs; due to a shorter life expectancy of the components within it. In South Africa especially, with our ever-increasing energy prices, make sure that your RDCs are fitted with energy efficient fans.
Considering the right RDC with high quality, technologically driven fans, saves supermarkets the expense of the technician, new parts, new stock, and prevents the loss of trading and dangers to customer safety; all of which add up over time. Smart buyers should always look at investing in longer term solutions.
Why is EC technology the ‘next big thing’?
Electronic Commutation (EC) motors are brushless DC motors powered by AC mains. EC fans use permanent magnet motors, running on high voltage direct current (DC) electricity, with built in AC to DC conversions, allowing them to run direct from single phase or three phase main supplies. Our EC fans provide you with high performance, lower noise, speed control and a long-life expectancy in a product which is the same size as the old, power hungry AC versions it replaces.