Ask the Expert

August 20, 2010 

By Shane Ottesen,
General Sales Manager

I think most business owners today would agree that the importance of process efficiency is at an all time high. Labor and equipment costs related to mobile equipment in many industries are at an unacceptable level and methods should be established to reduce any avoidable costs. As operating costs for equipment make up the largest component of ownership it also makes sense to balance supplier choices and purchase decisions on total cost of ownership.  This cannot be done without utilizing proper tracking methods.

Tracking and assessing process costs for mobile equipment can seem intimidating to some but it doesn’t have to be a difficult undertaking. Measurement of costs can be done in a variety of ways including the use of computerized maintenance tracking programs.  However, the solution for cost tracking can be as simple as updating a spreadsheet or a ledger when costs are incurred and reviewing results against established benchmarks.  Equipment maintenance costs should fall into two specific categories that provide opportunities to control maintenance costs in their own way.

The first category to focus on encompasses quantifiable costs such as regular preventative maintenance and fuel consumption which are fixed against the actual hourly usage of the equipment. My experience is that many companies don’t spend as much as they should in this category particularly when funds are tight. However, if you don’t change your engine oil per the required schedule there is simply no question that your engine life span and repair costs will be negatively affected.

It’s a good idea to work with your OEM equipment dealer to establish your benchmarks for quantifiable costs. All manufacturers provide realistic preventative maintenance schedules which provide a framework for establishing maintenance costs on a per hour basis. Items such as fuel economy can be measured with a simple cycle test if data is not already available. OEM dealers should also be a valuable source for industry benchmarks on more variable items such as tire wear. There is simply no better source for benchmarking than the OEM equipment dealer as they have access to information that is not available anywhere else.

The second category to consider covers non-quantifiable costs that include unscheduled maintenance items like a starter replacement and repairs due to impact damage.  This category can also include general repairs associated with a lack of scheduled maintenance. Many owners spend far too much in this category and controlling these costs through proper planning often provides the biggest payback.

Any cost outside of scheduled preventative maintenance should be considered controllable and reviewed. This review might drive process improvements including maintenance planning and warehouse traffic pattern changes but should include a look at operator training initiatives. My greatest successes with helping customers reduce maintenance costs have always started with the operators. They are the best source of information related to the machinery and the first line for reporting maintenance issues before they become severe.

No matter how you track maintenance costs, it’s always worth engaging equipment suppliers in the process. I believe that equipment dealers cannot only supply mobile equipment today and then react to customer needs for aftermarket services. There should also be an obligation to ensure customers have all of the information and support they need throughout the life of the products to be able to operate as efficiently as possible. Any request for consultation on mobile equipment costs should be treated as an opportunity to fulfill our obligation to be a good partner to our clients. Should you be interested in discussing mobile equipment process cost tracking and control I can be reached at 604-214-7899. I would be happy to share my experience with you.

July 19, 2010

Signs of economic recovery are all around us.  Even though times are changing, the majority of BC companies are still recovering from what was certainly the most difficult economic time since the Great Depression.  A bigger focus has been placed on conserving capital resources while maximizing employee productivity.  Although economic conditions have improved, many companies are still conducting a critical review of their expenses, with a considerable focus on how to minimize operating costs while supporting employee morale.

If you’re considering replacing or upgrading your current fleet of lift trucks, you should definitely consider a long term rental solution.  Here are just a few of the benefits of fleet management:

Conserves cash: One flat monthly fee covers equipment and maintenance.  You can simply treat the monthly cost as an expense with no capital investment required.  This also eliminates the risk of price increases and unexpected repair bills, reducing the cost of using a lift truck considerably!

Better “People” Solution: A long term rental solution saves valuable administrative time in issuing P.O.’s and processing invoices every month.  Also, employee productivity can be maximized by using newer equipment and eliminating the need to have back-up units on site.    

Flexibility:  The equipment rental program can be tailored specifically to your needs.  The solution will allow you to consolidate your fleet and eliminate unnecessary infrastructure, considerably reducing your expenses.  Also, long-term rental solutions provide favourable tax benefits!

Long term rental solutions help you evaluate and manage the total cost of ownership for your fleet of lift trucks.  Learn more about our fleet management solutions here.