Do you know when to replace equipment?
All fleet decisions begin and end with one simple analysis, a Replacement Standard (RS). We all face limited funding for vehicle and equipment replacement, but you can take the guesswork out of which units to replace.
How? By monitoring the duty cycle as well as Total Cost of Ownership (TCO) of any asset. In other words, know what any vehicle costs on an annualized basis for operating costs (i.e. fuel, preventative & predictive maintenance, general repairs, interest expense, lease costs).
Industry standards and actual experience suggest that the first few years of life on any asset are frequently the lowest costs, but we all know the truth: The older the unit gets, the more expensive it is to keep in fleet – unless you only use the asset on a limited basis. And, if that’s the case, then you should ask, “Do I need this piece of equipment?” If it is not used, then eliminate it from fleet, although that decision may not be popular with the users.
Bottom line, do your homework and when the unit has reached its point of “diminishing return,” eliminate it from the fleet. Simply stated, don’t throw good money at bad equipment/vehicles – get rid of them, and use what would have been spent on patching a unit together over many years to recapitalize a new unit.
Folks, make the right decision – stick with your RS and cycle assets in and out accordingly; you will lower expenses, have happier operators, increase “time on task” and run a more efficient fleet department. It also does wonders for employee morale 😉
PS: There’s always another way to skin the cat, so if you have some advice or question for me, let me hear from you using the comment box below. I’ll share with your colleagues nationwide.
Kelly Reagan is the Fleet Administrator for the city of Columbus, Ohio.