Buyer tip:Minimize the risk of purchasing pre-owned T&M equipment

North America represents a large 65 percent of the used equipment market while Asia's 20 percent share is growing.

There is risk involved when purchasing any kind of test and measurement (T&M) equipment. The least risky course of action is to buy a new instrument, while the most risky is to buy a used piece of equipment "as-is". Despite the risks, a recent worldwide research study conducted by Agilent Technologies on approximately 250 customers revealed that 68 percent of those surveyed had purchased used equipment in the past 12 months, and 93 percent stated they will consider purchasing used equipment in the future. As a result, the market for used equipment is substantial. Frost & Sullivan estimates the 2003 market for used T&M instruments, not including automated test equipment, to be at least $1 billion (Reference). North America currently represents the largest part of the used equipment market at 65 percent, while Asia represents 20 percent. Asia's share is growing.

Agilent has found many concerns about the risks involved when purchasing pre-owned equipment. In Asia, concerns about service and product quality, which in the past has impeded regional acceptance of used equipment, are high (Figure 1).



When compared to the rest of the world, these percentages are higher in Asia and reflect Asian companies' long-held misgivings towards used equipment suppliers. In fact, 42 percent of the Asian customers surveyed indicate they will likely buy from another used equipment reseller the next time, indicating low customer satisfaction. Not surprisingly, 79 percent of Asian customers surveyed said they would prefer to buy used T&M instruments directly from the OEM.

Available channels for used T&M equipment include:

Original equipment manufacturers (OEMs) - sell reconditioned versions of new products

Distributors - sell used equipment to their customer base in order to maximize sales opportunities to price-sensitive segments

Rental companies - sell off products from their T&M inventory when income stream from renting those products declines

Brokers - act between a buyer and a seller, carrying little or no inventory

Auctions - allow end users to place bids directly on a particular piece of test equipment, for example eBay

The Agilent survey (Figure 2) indicates that 59 percent of Asian equipment buyers tend to purchase pre-owned T&M

equipment directly from the OEM; while 28 percent would consider purchasing from brokers or distributors, and less than 10 percent would consider purchasing from other rental companies or via auctions.



Regardless of the sources used by customers to purchase used T&M instruments, the dominant concern was the increased risk that comes with unknown quality. For example, customers were worried of having to pay for an unexpected repair. As one customer commented, "That breaks your budget right there, if you have to pay for repair."

Another identified issue is that there are no objective industry standards and therefore sufficient quality when resellers refurbish and recalibrate pre-owned instruments.

In addition, there are also cases where products arrive without the proper accessories and manuals. One of the more frustrating practices the survey uncovered was that some resellers do not actually possess the product they are supposed to be selling: "The biggest downfall of some brokers is that they quote without having the product. That's really disappointing."

Minimize the risks
Agilent believes there should not be a trade off between low cost with good quality and service. There are several options available for companies which intend to benefit from low cost equipment without necessarily moving to the top of the risk continuum.

One option is to insist on fully remanufactured instruments. The difference between refurbished and remanufactured is significant and buyers should be aware of the differences. Refurbished equipment is recalibrated, cleaned on the outside and generally checked and tested within its intended use. However, as customers who responded to the Agilent survey noted, there is a wide variation between resellers on what counts as refurbishment since there are no industry standards. What one reseller regards as refurbished, another might call "as-is." What one reseller terms a comprehensive warranty, another might consider a limited warranty.

Fully remanufactured equipment, on the other hand, is checked thoroughly by the OEM with comprehensive internal and external equipment tests. With the OEM conducting the tests, customers should be able to demand a substantial warranty, technical support, full documentation and a new return policy.
To Agilent, remanufactured goes beyond "refurbished" or "recondition-ed." These instruments typically come from demo and off-lease units, are less than three years old and are handled only by Agilent certified technicians.

Fully remanufactured instruments
Truly remanufactured equipment should follow this process:
1) Instrument undergoes full performance verification, and is repaired by certified technicians, if required.
2) The unit passes performance verification; and is updated and installed with compatible firmware and software to ensure operational capability.
3) The OEM's technicians consult the master database of OEM service notes, and install the required safety and performance upgrades. The correct manuals and accessories are included.
4) The unit is moved to the refurbishment process, where technicians rebuild the unit to the OEM's standards. Beyond cosmetic enhancement, technicians reseat internal boards and cables if necessary, and proactively replace assemblies and components with potential problems.
5) After a customer order is received, the instrument is configured to accessories selected by the customer.
6) Measurement automation software is included if available. This allows the customer to control the instrument with a personal computer.
7) The instrument is then tested and calibrated using the same production test procedures developed for new products and on test systems designed and approved by the product's original R&D development team.
8) Customers receive a certificate of traceability for the calibration, and a complete printout of actual test data to ensure complete confidence.
9) Finally, it undergoes a final quality check to ensure that the re-manufacturing process complies with both ISO 9001:2000 and ISO 17025.
10) The unit is then shipped to the customer, in less than or equal to 5 days, upon receipt of order.

By undergoing a rigorous overhaul, the remanufactured unit can be sold with the same warranty, support and return policy as a new instrument. Purchasing "remanufactured" pre-owned instruments that follow the process outlined above is a low risk option for companies who would want to purchase new instruments but lack the resources, or for customers who prefer to purchase used equipment directly from an OEM.
Agilent's CertiPrime (Figure 3) fully remanufactured instruments follows the steps above. Customers purchase fully remanufactured, late-model instruments at 30 to 40 percent less than new instruments and with the same warranty, support and return policy as a new instrument.



Unfortunately, the OEM may not have a unit that the customer is looking for at that moment. In this case, the customer will often turn to other resellers to see if the instrument that they need is in stock. One way to minimize the risk involved in the purchase of pre-owned equipment from resellers other than the OEM is to look for equipment that is covered by an OEM-backed buyer protection program.

In a buyer protection program, the customer purchases a pre-owned instrument from an OEM-authorized reseller. The reseller ships the unit to the OEM, where it undergoes an initial examination; and the unit is calibrated to equipment specifications. In addition to calibration, the OEM provides insurance against all repair costs for some time period, at least one year typically.

In summary
Purchasing pre-owned equipment is no longer associated with poor service and high risk. Companies will experience the benefits of purchasing equipment at significant cost savings; and with the same warranty, support and return policy as a new instrument, by checking whether the equipment is thoroughly re-manufactured by the OEM. Alternatively, when purchasing from brokers, rental companies, or auctions, the customer should consider a unit that is assured by an OEM-backed buyer protection program.

Reference :
Frost & Sullivan, "Strategic Analysis of the World Used Test and Measurement Equipment Market," 2001