Wednesday, January 18, 2017 Overall Lowest Cost
AGCO Auto Quick Tip:

Did you know AGCO Automotive founder Louis Altazan†studied for several years†with Dr. W. Edwards Deming. The AGCO management philosophy is based on Dr. Deming's 14-points and his theory of continual improvement.

Overall Lowest Cost

At AGCO our philosophy is to provide our clients the overall lowest cost

cost equals price, plus problems, plus what it takes to make it work, divided by how long it last Most people realize that quality always cost less when considered over time. That is the main reason people look for high quality products. Higher quality last longer, has less problems†and performs better. What is also important to realize is the difference in Cost and Price.

Price is the initial amount paid for an item or service

Cost by comparison, includes the price paid, plus other expenses involved, divided by how long the item or service last

For example letís consider a wheel alignment on your vehicle. Suppose the price is $49.99 but because it is not done properly, it wears out two $180.00 tires in one year. Many people have such stories, now letís examine the real cost. Forty-nine dollars for the alignment plus $360.00 for the tires thatís $409.99 for twelve months of driving, or $409.99 per year.

Now consider a proper alignment, that cost $88.00. This alignment and the tires now last five years, with no problems. Your cost would be $360.00 for the tires plus $88.00 or $448.00 for†six years, thatís $74.67 per year instead of $409.99. Now, this does not take into account the time and aggravation involved. The professional service, though higher in initial price, actually cost much less.

Example of Price and Cost

†A good set of tires, properly mounted and balanced may cost $800.00. They last 70,000 miles, give excellent service and offer no problems. The cost is $0.01 per mile.

A cheap set of tires may†cost $350.00†but vibrate and ride badly. You take them to two different shops to have them balanced at $60.00 for each visit. In desperation you decide to live with the poor performance. After 35,000 miles they are worn out, and now the rack and pinion is also leaking. The rack was damaged by the vibration from the bad tires. The cost is $350.00 for the tires, $120.00 trying to make them work, $900.00 for damaged parts divided by 35,000 miles. Thatís nearly four times the cost per mile of the good tires. This does not include the inconvenience or putting up with the poor performance for 35,000 miles.

When you think about it, cheap repairs and parts are just too expensive

It is always less expensive to do it right the first time.† We call it AGCOnomics,†the philosophy upon which AGCO has built itís reputation, since 1974. We think you will be pleasantly surprised.