{"id":3285,"date":"2019-08-19T16:40:05","date_gmt":"2019-08-19T14:40:05","guid":{"rendered":"http:\/\/en.advancedfleetmanagementconsulting.com\/?p=3285"},"modified":"2019-08-19T16:40:05","modified_gmt":"2019-08-19T14:40:05","slug":"designing-a-truck-for-total-cost-of-ownership","status":"publish","type":"post","link":"https:\/\/advancedfleetmanagementconsulting.com\/eng\/2019\/08\/19\/designing-a-truck-for-total-cost-of-ownership\/","title":{"rendered":"Designing a Truck for Total Cost of Ownership"},"content":{"rendered":"

\"Achieving<\/p>\n

Achieving the optimal total cost of ownership means weighing the\u00a0benefits of every spec\u00a0on a truck.\u00a0HDT File Image<\/p>\n

Designing a Truck for Total Cost of Ownership<\/h2>\n

Spec\u2019ing and maintaining trucks for the best total cost of ownership is a tricky balancing act to master. There can be so many contradictory elements to every spec\u2019ing decision.<\/p>\n

Should you, for example, spec a truck with three batteries or four? Three would cost less up front and shave off a little weight, but that decision might cost you dearly down the road in no-starts, service calls, and driver dissatisfaction.<\/p>\n

As the name implies, total cost of ownership \u2014 or lifecycle cost, as many fleet managers refer to it \u2014 is a cradle-to-grave measurement that should include all the money you spend on a truck less what you eventually sell it for.<\/p>\n

If you buy a truck for $150,000 and sell it four years later for $75,000, the price of the truck nets at $75,000. If you spend $25,000 maintaining and repairing the truck over four years, the cost of the truck is now $100,000. Maybe maintenance and repairs were closer to $50,000 over the life of the truck. TCO is now $125,000. Or maybe the bottom fell out of the used truck market a week before you put it up for sale and you took a $10,000 hit on it. Now you\u2019re at $135,000.<\/p>\n

That said, the absolute lowest TCO is probably not what you want to shoot for. The best-managed TCO, on the other hand, will keep you more profitable. Figuring out which specs provide the best return on investment \u2014 whether by providing longer life, lower breakdowns, or reducing costs elsewhere in the company \u2014 is the more sensible way to approach it.<\/p>\n

\"Maintenance
Maintenance costs are an important part of the lifecycle cost equation and can affect not only what you spec but also when you buy trucks. Photo: Jim Park<\/p>\n<\/figcaption><\/figure>\n

Spec for the job<\/h4>\n

\u201cThe industry has too many generic-spec vehicles in applications that can benefit from matching individual components to the truck\u2019s use,\u201d says Joe Puff, vice president of truck\u2004technology\u2004and maintenance at NationaLease. \u201cThere\u2019s a lot of easy places to start. For example, choosing high-capacity air dryers for heavy air usage or city applications with lots of stop-and-go driving. Or heavy-duty fifth wheels for high drop-and-hook applications, and disc brakes for extreme grades or severe duty.\u201d<\/p>\n

Many fleets could benefit from a careful evaluation of electrical needs to more closely match batteries and alternators to electrical demand, Puff also suggests. Pay special attention to trucks that encounter extreme cold (high-cranking amp batteries), have high-use liftgates (high reserve capacity batteries), and consider driving charge-times to power-draw requirements.<\/p>\n

By the same token, you want to avoid a boutique spec. Many specialty parts carry a premium price or a high OE upcharge, and parts may be harder to come by on the road in the event of a breakdown.<\/p>\n

And be careful about being the first kid on the block with the new toy. Consider that in the early days of the current trend toward downsped powertrains, many fleets reported driveline failures due to torque overloading. It wasn\u2019t that the components weren\u2019t up to the challenge, it\u2019s that fleets over-estimated the time they spent operating in ideal downspeeding conditions. We saw, for example, trucks spec\u2019d for linehaul service that were doing double-duty as P&D tractors. All that start-and-stop driving tore up the drivelines because of the high torque multiplication in low gears.<\/p>\n

Sure, downspeeding is a great way to improve fuel efficiency and it shows up fast on the bottom line, but the failures started showing up a year or so into vehicle life. The lesson is that today\u2019s highway truck belongs on the highway. Believing they could get two trucks for the price of one, figuratively speaking, proved a costly mistake for some fleets. Yet it wasn\u2019t necessarily a bad spec\u2019ing decision. In some cases, the operations people were not aware of the new drivelines and figured they could improve utilization on the trucks by using them in the city. That might have been the right thing to do in years past, but not with downspeeding.<\/p>\n

\"Aerodynamic
Aerodynamic devices illustrate some of the trade-offs in TCO considerations. They can save fuel, but there are additional up-front and maintenance costs to consider. Photo: Utility<\/p>\n<\/figcaption><\/figure>\n

Whole-company mindset<\/h4>\n

While it may seem so at times, the maintenance department doesn\u2019t work in isolation. Money it spends or doesn\u2019t spend affects other parts of the operation. While achieving the lowest total cost of ownership is a laudable objective, getting there can squeeze other departments and increase the overall cost of doing business for the company.<\/p>\n

Any time you can get the finance, operations, and procurement people around the same table, good things can come of it. \u201cThose three silos will loosely interact with each other, but they never have that one specific common goal, which should be, how do we manage the total cost of the fleet,\u201d says Patrick Gaskins, senior vice president of sales and operations for capital equipment at Corcentric (formerly AmeriQuest Business Services).<\/p>\n

\u201cFinance is looking for the lowest interest rate \u2014 the cheapest dollar \u2014 but that doesn\u2019t mean it\u2019s the most cost-effective dollar,\u201d he continues. \u201cThat would be like procurement buying the absolute cheapest truck. That doesn\u2019t mean it\u2019s the best truck for the job or the most cost-effective truck. And if operations wants to hang onto a truck for a million miles, that\u2019s not a very effective use of the asset, either. Those three areas of the business have to talk.\u201d<\/p>\n

Decisions made by procurement or operations can affect maintenance, too, with some long-term implications. Gaskins cites an example of a fleet that lets it trucks age beyond five years or so. \u201cAs the fleet ages, you\u2019ll incur more shop time, and that will put stress on technician availability and shop costs,\u201d he says. \u201cYou might need more full-time people in there, but if that fleet were to suddenly bring in a high number of new trucks, it would soon have a bunch of techs with nothing to do. They make pretty expensive floor sweepers.\u201d<\/p>\n

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\"For
For the best total cost of ownership, spec trucks for the job they\u2019ll be doing. Specs that make sense for on-highway operations may not stand up to the demands of urban delivery. Photo: Deborah Lockridge<\/p>\n<\/figcaption><\/figure>\n

Who pays for what?<\/h4>\n

Along the same lines, how do you address the TCO question when a spec benefits one part of the company, but costs more in another area?<\/p>\n

For instance, nobody will argue about how the scarcity of drivers has prompted changes in truck spec\u2019ing. Offering drivers more appealing trucks has driven up costs, but from which silo does that money come? The procurement office would take the initial hit, but the recruiting department might be the ultimate beneficiary. Should procurement have to defend its decision to spend more for a comfortable truck? No, says limited-time executive and truck spec\u2019ing specialist Greg Hart.<\/p>\n

\u201cI have never gone wrong giving the driver a truck he or she wants to drive,\u201d Hart says. \u201cI tend to spec premium seating, more comfortable interiors, and the features they need to keep them safe, like predictive cruise, collision mitigation and all the rest.\u201d<\/p>\n

Hart says those sorts of options add to the cost, but they pay back big-time over the life of the truck and at trade-in. \u201cThere\u2019s very little maintenance associated with driver amenities or safety systems,\u201d he says. \u201cThe cost will usually net out over the life of the truck, so it\u2019s not really a matter of who is paying for it. It all contributes to a healthier bottom line.\u201d<\/p>\n

Another example: Fuel economy specs can be seen to add cost to the truck, and thus the total cost of ownership \u2014 unless you factor the fuel savings into that math. In addition to the up-front investment, they add weight (potentially reducing payload), and can make routine maintenance more complicated. They sometimes create maintenance issues of their own, such as with collision damage.<\/p>\n

\u201cAerodynamic devices will pay for themselves, but sometimes the payback isn\u2019t as healthy as you might have expected,\u201d says Darry Stuart, DWS Fleet Management, who acts as a limited-time executive to help fleets with spec\u2019ing and maintenance issues. \u201cData collection helps here, tracking the performance of the devices along with the fuel savings and the direct maintenance costs. If after a year, the payback isn\u2019t there, don\u2019t buy another one.\u201d<\/p>\n

It\u2019s been proven that some devices perform well in certain applications, but not in others. Again, document the changes by doing some fleet testing and make your next purchasing decision armed with that information.<\/p>\n

It\u2019s also possible that being armed with data might help you in dealing with what Hart calls the \u201cactivist president.\u201d \u201cIt\u2019s a new trend that I\u2019ve seen more and more over the past four or five years, where the president, not the company owner, but a hired gun, will start pretending he\u2019s the VP of maintenance,\u201d he says. \u201cThe owner of the company knows the VP of maintenance knows best, but the executive orders a change based on some outside opinion. It can wind up costing the company millions.\u201d<\/p>\n

\"How
How many batteries you spec is a good example of the trade-offs that must be considered in determining the best approach to TCO for your business. Photo: Jim Park<\/p>\n<\/figcaption><\/figure>\n

Good old-fashioned maintenance<\/h4>\n

Maintenance is a variable cost and rarely 100% predictable, but it plays a part in TCO.<\/p>\n

One thing you can predict is that trucks will cost more as they get older. Adjusting the preventive maintenance schedules to the trucks\u2019 actual condition can reduce the costs of unscheduled maintenance and improve uptime.<\/p>\n

\u201cToday\u2019s trucks tell us a lot about their condition, and all that data is readily available through the OBD [on-board diagnostics] port,\u201d says independent maintenance specialist Lew Flowers.<\/p>\n

It\u2019s the difference between scheduled and predictive maintenance. Predictive is the ability to respond to fault codes that are showing so they can be addressed at the earliest opportunity. It\u2019s usually less expensive to replace a part before it fails and lets you down, or instead of relying on an approach Stuart describes as \u201cload up on warranty and hope for the best.\u201d<\/p>\n

Kidding aside, warranty can help keep TCO down without sacrificing quality for cost. In the trucking business, managing cost is key. In fact, the only thing more important than managing cost is knowing your costs.<\/p>\n

Ultimately, calculating and spec\u2019ing for total cost of ownership provides the big-picture view fleets need to make critical spec\u2019ing decisions.<\/p>\n

by Jim Park<\/a><\/p>\n

Source: https:\/\/www.automotive-fleet.com<\/a><\/p>\n

FLEET MANAGEMENT AUDIT<\/h3>\n

Fleet management is the use of a set of vehicles in order to provide services to a third-party, or to perform a task for our organization, in the most efficient and productive manner with a determined level of service and cost.<\/p>\n

Fleet management activities are shown in the following graph 1:<\/p>\n

\"fleet<\/p>\n

Graph 1: fleet management activities<\/p>\n

The proposal audit analyses and assesses all fleet management activities shown in the graph 1, and its main goals are:<\/p>\n