{"id":11815,"date":"2021-07-14T13:38:31","date_gmt":"2021-07-14T11:38:31","guid":{"rendered":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/?p=11815"},"modified":"2021-07-14T13:38:31","modified_gmt":"2021-07-14T11:38:31","slug":"equipment-2","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2021\/07\/14\/equipment-2\/","title":{"rendered":"Why the equipment \u2018sweet spot\u2019 matters"},"content":{"rendered":"<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">By performing a sweet spot replacement analysis, fleets can determine, based on today\u2019s market conditions, what is the optimum point in time to replace necessary assets.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">What is the sweet spot? When discussing equipment trade cycles, it is the point in time when it is more cost effective to buy a new asset and dispose of the current used asset.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">The real trick is how to determine that specific point in time and the factors that need to be considered.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">If you are defining your sweet spot as a fixed point in time or a predetermined number of miles, you are going to leave money on the table every time. This \u201cold school\u201d way of thinking just doesn\u2019t work in today\u2019s economy or for today\u2019s equipment. The replacement sweet spot is a moving target and the math that defines the sweet spot is complex and needs to be updated every 90 days.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Consider this, if the OEMs developed a reliable new technology that gave us a new tractor that yielded 11mpg, do you think this would extend or shorten your current replacement cycle? The answer is, \u201cit depends.\u201d The following questions must also be considered:<\/span><\/p>\n<ul style=\"text-align: justify;\">\n<li><span style=\"color: #0000ff;\">What is the cost of the new asset?<\/span><\/li>\n<li><span style=\"color: #0000ff;\">What is the current cost of fuel?<\/span><\/li>\n<li><span style=\"color: #0000ff;\">What is the current interest rate on borrowed money?<\/span><\/li>\n<li><span style=\"color: #0000ff;\">What is the sale price for my current truck?<\/span><\/li>\n<li><span style=\"color: #0000ff;\">How many miles do I operate a truck each year?<\/span><\/li>\n<\/ul>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">So, you can see that there is not just one piece of data that can influence the sweet spot equation.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Technology is going to play a very important role in determining the sweet spot in the years to come. Safety devices and electrification are changing so rapidly it is becoming more and more difficult to identify the correct path forward. The 90-day evaluation period will force us to constantly evaluate all our sweet spot influencers. It will also force us to make three- and five-year plans to ensure we have access to equipment when needed.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Over the past six months I have seen many fleets caught flat-footed on their replacement cycles, not being able to take delivery of new units due to manufacturing delays. This same situation has occurred in the past. Now is the time to truly learn. Capex should be submitted and approved years in advance. Every time you miss the replacement sweet spot it will have a negative impact on your bottom line.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Having a long-term plan is the key to projecting cost savings, where the rubber meets the road and savings are realized, is when you perform a truck- by-truck run cost analysis. This is where you determine the total cost of ownership (TCO) of your current assets and project the TCO of a new asset based on historical trends. Now you can rank your assets from worst to first and schedule your new asset deliveries accordingly. This will give you and the company visibility into tangible cost savings.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"color: #0000ff;\">Perform a sweet spot replacement analysis to determine, based on today\u2019s market conditions, what is the optimum point in time to replace your assets. Develop your three-to-five-year plan, present it to finance and treasury, and get a preliminary capex approval. Determine OEM lead times and begin the ordering process, keeping in mind that you will need to make minor adjustments. Then start you ongoing run cost analysis. You will see the savings.\u00a0 \u00a0<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>By <span data-v-c7203d5c=\"\"><a href=\"https:\/\/www.fleetowner.com\/21127193\" data-v-c7203d5c=\"\">Patrick Gaskins<\/a><\/span><\/p>\n<p><span class=\"posted-by\">Source: <a href=\"https:\/\/www.fleetowner.com\/\" target=\"_blank\" rel=\"noopener noreferrer\">https:\/\/www.fleetowner.com\/<\/a><\/span><\/p>\n<h1><a href=\"https:\/\/advancedfleetmanagementconsulting.com\/eng\/who-we-are\/\" target=\"_blank\" rel=\"noopener noreferrer\"><strong>KNOW WHO WE ARE<\/strong><\/a><\/h1>\n<p><a href=\"https:\/\/advancedfleetmanagementconsulting.com\/eng\/who-we-are\/\"><img loading=\"lazy\" class=\"aligncenter wp-image-11695\" src=\"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-content\/uploads\/sites\/3\/2021\/07\/AFMC4000-300x150.jpg\" sizes=\"(max-width: 430px) 100vw, 430px\" srcset=\"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-content\/uploads\/sites\/3\/2021\/07\/AFMC4000-300x150.jpg 300w, https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-content\/uploads\/sites\/3\/2021\/07\/AFMC4000-1024x512.jpg 1024w, https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-content\/uploads\/sites\/3\/2021\/07\/AFMC4000-1536x768.jpg 1536w, https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-content\/uploads\/sites\/3\/2021\/07\/AFMC4000-2048x1024.jpg 2048w\" alt=\"\" width=\"430\" height=\"215\" \/><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>By performing a sweet spot replacement analysis, fleets can determine, based on today\u2019s market conditions, what is the optimum point in time to replace necessary assets. What is the sweet spot? When discussing equipment trade cycles, it is the point in time when it is more cost effective to buy a new asset and dispose&#8230;<\/p>\n","protected":false},"author":3,"featured_media":11816,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[18],"tags":[53],"_links":{"self":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/11815"}],"collection":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/comments?post=11815"}],"version-history":[{"count":1,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/11815\/revisions"}],"predecessor-version":[{"id":11817,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/posts\/11815\/revisions\/11817"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media\/11816"}],"wp:attachment":[{"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/media?parent=11815"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/categories?post=11815"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/wp-json\/wp\/v2\/tags?post=11815"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}