Whenever a firm lists its requirements for any system, be it for the management of fuel, maintenance, or real-time tracking of assets in the field, that list typically revolves around two basic ideas: record keeping and control. We want to make sure certain things get done at certain times, some things only happen under specific conditions, and reports exist to account for whatever has already occurred. Spec requirements often specify the exact reports the fleet managers look for and how operations are to be conducted, but they rarely detail how exceptions are to be handled.
Many fleets spend tens or even hundreds of thousands of dollars to implement a vehicle maintenance management system. They pay recurring license fees to use that software to handle crucial maintenance related areas such as parts, maintenance plans, vehicle recalls, and work orders. However many of those companies then turn around and act as though all the time and money they spent putting those maintenance systems in place was just burning a hole through their pockets!
The importance of a preventive maintenance system in any fleet operation cannot be overstated. Repairs tend to be much more expensive than maintenance, and unforeseen breakdowns can have a direct impact on the bottom line.
However, there is one benefit of a PM system that doesn’t come up as often and yet has a potentially significant financial impact. Good maintenance management software can help you decide when to stop maintaining a vehicle in favor of a replacement.
Anyone who has had an old car has come to a point where repairs became more and more frequent and expensive. This situation typically leads to yet another expensive repair that begs the question: “should I repair this old thing and keep it alive, or bite the bullet and invest in a new car?” The answer to that lies within the repair history of the vehicle versus its capital cost.
In this context, what is capital cost? Here is the short version: when a business acquires a vehicle, that vehicle’s value depreciates over time. The depreciation amount over the course of a year is tax deductible. Also, the dollar value of that depreciation goes down from one year to another since it is calculated as a percentage of the remaining value of the vehicle.
In parallel to a vehicle’s capital cost, the total cost of maintaining a vehicle tends to increase from one year to the next, as it gets older and needs more and more TLC as a result.
Capital cost goes down over time; maintenance cost goes up over time. Inevitably, those two curves will intersect at some point. Once that point of intersection is passed, it is time to sell the vehicle and get a new one because now the cost of maintenance is greater than the savings derived from the tax deductible cost of capital.
None of that analysis would be possible without tracking the maintenance history and cost of a given asset. This is another example of how crucial measurement and tracking are to proper management. Implementing a proper PM system is essential to anyone managing a fleet, not only to avoid breakdowns and extend the useful life of vehicles, but also to properly assess when to replace a given asset.
When people think of fuel management systems (FMS), the first thing that usually comes to mind is some kind of terminal at the pump identifying users and vehicles via cards, key tags, and ID numbers punched on a keypad. In other words, they think of what is mostly the control aspect of a FMS. Although control is an important dimension of such a system, there needs to be more going on than that.
If you have had the misfortune of having to take the car to the garage due to a major breakdown at some point, you can attest to the fact that, over the long-term, repairs always cost considerably more than maintenance. In F. Aboulfath’s research paper titled: “Optimal Maintenance Schedules for a Fleet of Vehicles…”, published by the University of Toronto’s Department of Engineering, expands on the optimal challenges of fleet vehicle maintenance and proves the benefits of Preventive Maintenance as an essential solution to cutting costs and extending the life cycle of your fleet.
This fact is crucial when it comes to fleets of dozens, hundreds, or thousands of vehicles and pieces of equipment. Not only is equipment longevity at stake, but also company operations and productivity, the safety of employees, and the public safety in some cases. In 2016, Chalmers University of Technology published a research paper by Donmez & Zenmouri, definitively illustrating the higher cost of corrective maintenance can be exponentially increased when managing fleets.
When your company relies on the smooth, predictable, coordinated, and safe running of equipment, efficient maintenance management is more than best practice, it can mean the difference between profit and loss.
Let’s start by getting the obvious out of the way. After labor, fuel represents the highest cost of running a fleet. If you have your own fuel tanks and pumps, you need a fuel management system. No ifs, ands, or buts about it. The level of sophistication and control required will vary from one place to the next, but the need to have a minimal level of distribution control is undeniable. Fuel is expensive, and constantly buying it without knowing who takes it, how much of it and where it goes is as unacceptable as having a bank account without the same level of control.
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