The decision
A replacement machine costs ₹15 lakh versus ₹12 lakh for the incumbent. Estimated annual savings are ₹1.8 lakh in rejects and ₹60,000 in power, offset by ₹40,000 in maintenance.
How should the seller justify the premium to the buying group?
Worked solution
Reveal the visual and solution
- Map engineering, operations, finance and procurement. Agree a common operating baseline and compare quality, uptime and service terms as well as price.
- Annual net savings are ₹1.8 lakh + ₹60,000 − ₹40,000 = ₹2 lakh. Divide the ₹3 lakh premium by savings for 1.5-year simple payback before financing.
- Propose a line trial with rejects, energy per good unit and downtime measured by both teams. Agree who signs off and when the purchase decision will be made.