The document proposes reducing material handling costs at the Sun Products Baltimore plant by eliminating forklift leasing and instead rehabilitating old forklifts owned by the company and purchasing the current leased forklifts. This could save over $1.8 million over the lifetime of the project with an initial investment of $182,000 and a return on investment within 7 months. The proposal involves reconditioning old forklifts in the company's possession and gradually replacing the leased fleet with the reconditioned forklifts and purchasing the leased forklifts at the end of their lease terms.

1. SUN PRODUCTS BALTIMORE PLANT
PROPOSAL FOR SUBSTANTIAL MATERIAL HANDLING
COST SAVINGS
Overthe past several years,Ihave observedwarehouse forkliftoperationsthroughclose interaction
withboththe lifttrucks andoperators.Afterdiscussionswithwarehouse andmaintenance
management,Ifeel there are some very real opportunitiesto significantly reduce material handling
costs,specifically complete eliminationof forklift leasing. The suggestionsare asfollows.
FLEET SIZE
The firstline lifttruckfleetnumberscanbe reducedbyrehabbingandactivatingcompanyownedHyster
forkliftsthathave beeninlongtermstorage.Thisis economicallyfeasible asthe Baltimore Planthasa
great quantity of partsin stock.Both machinesandpartswere fullydepreciatedlongago.These trucks
wouldthenbe assignedtolowcycle applications(Repack,TPM, ect.) releasingthe truckscurrentlyin
those rolesformainstreamuse.Whencomplete,thisallowsforthe six 6 Toyota8FB trucksto be
returnedatlease expirationwithout needof replacement.
MAIN FLEET
I suggestthe fleetof Toyota7FB forkliftsbe purchasedatthe expirationof the currentlease.Theyhave
proventobe verydurable,andwithcontinuationof the comprehensiveinhouse maintenance theyhave
receivedsince new,Ianticipate aviable service life of 12 yearswithno appreciable increase in
maintenance costs.Ibase thisuponexperience withprevioustruckswe purchasedoff lease;one study
unithas 22,000+ hours and performsas new.(Itreceivedareconditioninguponpurchase asisstandard
procedure) Refurbishmentof the truckswill happenduringthe time remaininginthe 8 series leaseto
insure anadequate supplyof trucksduringthe process. Alsosupportingpurchase of the 7FBsisparts
commonality;we are well stockedand alsohave onhandall majorcomponents,the resultof aunitthat
was scrappeddue toan accidentduringUnileverownership. Ididnot considerpurchase of the newer8
seriestrucksas theyare a radical redesignwithwhichwe wouldlose the advantagesof commonparts
and operator/technical training. These,alongwithtruckspreviouslypurchasedshouldbe more than
sufficienttohandle anyforeseeable workloadwithacomfortable reserve.

2. Pg 2
SAVINGS VS INVESTMENT
The savingswouldbe $27,000 per monthforthe first2 years.Due tobatteryreplacement,the next5
yearsthe savingswouldbe reducedtoapproximately$22,000 permonth. Potential savingsoverthe life
of the projectis inexcessof 1.8 milliondollars.
I can onlyapproximate investmentasIhave no currentpurchase price for the trucks andbatteries.
However,the lasttruckspurchasedinthis mannerwere $7,100 eachincluding2batteriesanda charger.
As there wouldbe nochargersincludedinthistransaction,evenaccountingforinflationtheyshouldn’t
be more than$7K, sothat is the figure Iwill use forthisexercise.Total investmentwouldbe $182,000
witha ROI of 7 months.We can reduce thisinvestmentabitif,as I wouldsuggest,we returnthe MES
three wheel forkliftatlease expirationandreplace itwitha7FB Toyota. There shouldbe no discernible
rise inforkliftmaintenance costsovercurrentlevels.
IMPLEMENTATION
In several ways,implementationhasalreadybegun.Storesof Hysterpartshave beeninventoried.
Batterieshave beenhypermaintainedtofacilitate lifeextensionfromthe standardfive yearstothe
sevenenvisionedinthisproject.Goingforward,several Hysterswouldbe reconditioned.These trucks
wouldthenbe placedinservice where 7FBToyotasare now used.The Toyotaswouldthenbe
reconditionedandplacedinservice andthe cycle repeateduntil the entire7FBfleethasbeenserviced.
Again,Ianticipate nomore than normal maintenance partscostduringthe rehabprocess.The final step
isthe returnof the 8FB Toyotas(three wheelerneedstobe discussed) whichhave provideda“cushion”
duringthe process.
ASSUMPTIONS AND CONCLUSIONS
Thisproposal assumesnochangesincurrent mobile equipmentshop(TBM) staffingoravailableman
hours.It alsoassumesproductionlevelsof the BaltimorePlantremain stablealthoughsomerise in
productioncouldbe accommodated.Ihave beenmullingthisoverforseveral monthsandhave every
confidence yourTBMshopcan deliverthe promisedsavings.We all have avestedinterestinthe
efficientoperationof ourplant,andI am proud to offerthisproposal,the resultof assetsnootherSun
ProductsPlanthas.I feel itisour obligationtoutilizethese assetstotheirfullestpotential.
Please understandmy limitationsinproposal writing,I’msure youwillfindmyreal talentisinexecution.
Let’sRoll!
Bob Adams
SunProducts Baltimore.