The current state of infrastructure often dictates fleet asset planning and procurement, but what about the future? We all know that planning for infrastructure is important, but it’s just as important to guard against major disruptions like the October 2017 hurricanes. Protection against the unforeseen is one of the key roles of a procurement department.
With the fleet industry focused on reducing costs, managing growth, and improving reliability, there is a continuous emphasis on reducing the fleet’s operating costs. As a result, there is an increased emphasis on finding ways to minimize the potential for asset failures. One of the simplest ways to do this is to ensure that the fleet operates as frequently and as safely as possible.
What are Fleet Asset Life Cycles?
The Fleet Asset Life Cycle (FLAC) is a method for maintaining, replacing, and upgrading an organization’s fleet assets over time. Many organizations use it to guide the replacement of their fleet assets and justify purchasing new assets. For example, an organization might decide to replace several vehicles in the fleet every five years or purchase a new asset every three years.
Given that a fleet’s life cycle is not static but instead can change over time, it is important to think about the maintenance and repair needs of a fleet and how new technologies can influence that process. In order to do this, we need to understand a fleet’s Asset Life Cycle (ALC). The ALC is an understanding of a fleet’s strategic, operational, and physical needs and its drivers (such as growth, maintenance, and reuse). This understanding is used to design and justify the upgrade and replacement of a fleet’s assets (parts and vehicles) through a life cycle.
Here are important factors to consider in extending fleet asset life cycles with technology:
Whole Of Life Costs
The global transport industry is currently spending billions of dollars on fleet maintenance, vehicle rehabilitation, and fleet management processes. Fleet management is often referred to as the single largest cost in any trucking company, yet most companies continue to invest in outdated systems and processes. It is one of the most critical parts of running a transportation company. Costing out the entire fleet allows fleet managers the opportunity to plan for their fleet of vehicles and their technicians properly. Fleet maintenance and repair costs should be evaluated and budgeted for each vehicle in the fleet to ensure that the maintenance costs do not outweigh the cost of replacement.
Maintenance costs are an important component of an organization’s total cost of ownership (TCO), but many businesses are unaware of these hidden costs. The average truck owner spends $1,200 a year on maintenance, with vehicle service and repair costs accounting for only one-third of this. In fact, according to the Federal Motor Carrier Safety Administration (FMCSA), the average driver is responsible for more than $2,800 a year in maintenance alone.
Delaying Replacement Of Vehicles
The automotive industry is currently experiencing a growing focus on the importance of extending the life cycles of vehicles. With vehicle sales on the rise and prices dropping as a result of oversupply, it is becoming increasingly important to try and generate a greater return on investment for the fleet owner.
Calculating Your Business Vehicle’s Useful Life
Fleet asset management is key to reducing waste and fuel stress on vehicles and increasing productivity and profitability. It also plays a key role in marketing and sales, as it helps identify and analyze the life cycle of a vehicle. This is the end of the vehicle’s life cycle, where the vehicle is no longer useful and is eventually disposed of. Fleet managers need to know the age of these vehicles, as well as their useful life. Useful life is determined by the expected useful life of the vehicle, which includes a range of useful life based on vehicle usage. It is also determined by additional factors, such as maintenance and wear and tear.
On an operational level, the availability of new technologies to improve asset performance is an integral part of a transportation and logistics department’s ability to meet customer satisfaction and return on investment. However, a transportation and logistics department also has to manage a fleet of assets that are aging.