Equipment Fleet Management Strategies
Proper equipment fleet management is crucial to maintaining your return on investment. A general guideline to follow is replace equipment once maintenances costs exceed 30% of the machine's resale value. Below are some fleet management strategies that help keep your machines as productive as possible for as long as possible.
Stay ahead of maintenance
Enroll your entire fleet into preventive maintenance contracts to ensure routine service is documented and conducted at manufacturer suggested intervals. Proactive maintenance keeps operational costs stable and reduces downtime and associated repair expenses by identifying minor issues before they become costly, time consuming problems.
Follow the 80-20 Rule
80% of maintenance costs are spent on 20% of machine problems. Identify common or repeat issues and take action to fix those things that eat up your operating budget and cause unnecessary and costly downtime.
Use equipment monitoring tools
Understanding how your machines are performing is a key part of equipment fleet management. There are now advanced tools that accurately monitor equipment, collect data, and convert raw data into actionable information. Software is available to help fleet managers determine a machine's resale value, calculate ownership and operating costs, and estimate repairs, parts and labor expenses.
Complete routine fluid analysis
Analyzing fluids and comparing contaminant levels to normal wear rates helps identify potential problems with components before major failures. Routine fluid analysis is a proactive measure to avoid unnecessary downtime and costly repairs.
Maintain tight records
Comprehensive and exact records help managers predict machine productivity and operational costs, such as working hours, fuel consumption, maintenance expenses, and more. Good information will allow you to make the right decisions when choosing to replace or repair equipment. Maintain a vehicle history file jacket for every machine and document all maintenance and repair work.
Pay attention to equipment age
The average total cost of owning and operating equipment follows a parabolic slope. Total cost decreases during the early years of machine ownership as capital costs are spread over a longer period of time. However, operating costs increase during the same timeframe, eventually leading to an increase in average total cost. The point at which the sum of ownership costs and operating costs reaches its minimum is the ideal age for operating equipment efficiently. It is crucial to stabilize fleet average age around this point in order to keep total cost of ownership down.
When to rebuild vs replace
Equipment fleet management sometimes means choosing between rebuilding and replacing a piece of equipment. Use this simple formula to calculate and compare costs:
Cost to rebuild (new equipment price x .5)/equipment life (estimated hours x .75) = cost per hour
For example, a new piece of equipment that is $140,000 with an estimated life of 10,000 hours would cost $14 per hour to operate. To compare, calculate the cost to rebuild.
($140,000)(.5)/(10.000)(.75) = $9.33 per hour
If the cost to rebuild is $70,000 for an estimated equipment life of 7,500 hours, at $9.33 per hour, it is more cost effective to rebuild than to replace.