Cost per ton calculations are used for two main purposes: looking forward and looking back.
Looking forward. Cost per tonne analysis is the best method for evaluating a new machine purchase. Buying the cheapest machine and hoping it works likely ranks among the worst methods.
By looking forward, you can work with your equipment suppliers to plug in the production numbers and costs to evaluate new machine purchases.
Granted many of the values will have to be estimated but at the very least, the exercise provides an objective way to compare the merits of the various machines under consideration. Although the model is often used to compare brands, it can also be used to choose between a track or wheel based feller buncher for a given application or to determine the best method of delimbing and bucking logs.
By thinking beyond initial purchase price or monthly payment, you have the potential to save a substantial amount of money down the road.
Tigercat has made available to its dealers a series of spreadsheet based costing models to help loggers evaluate the cost per ton of their operations. These models are easy to use and provide the contractor with a solid foundation for learning about how to evaluate current operations and new machine purchases.
Contact your local Tigercat dealer to find out more.
Looking back. Like factories, mechanized logging operations must run continually, on schedule and with minimal downtime. Successful industrial manufacturers conduct some type of cost versus production program, often in real time, in an effort to improve efficiency and reduce costs.
The paper and sawmills have been doing the same thing. In fact, they analyze your operations for you in order to determine your rate. The problem is the model they use may or may not take into account all of the elements that impact your bottom line. Until you have a full understanding of what your costs are and can present them in an organized and clear fashion, you can never hope to negotiate a better rate.
In looking back, you take a fixed period of time such as the previous year, plug in the numbers and figure out what it cost you to deliver a measure of wood to the mill. By making all your costs transparent, this exercise will allow you to determine different strategies for lowering your costs, possible by replacing obsolete or troublesome equipment or by modifying your processes.