Ever been asked to find ways to reduce fleet cost?
With a significant portion of your organization’s cost tied up in your fleet, it’s no surprise that you’re tasked to reduce fleet costs. So, what are the best ways to reduce costs?
Here at IronUp, we live and breathe fleet optimization. Below, we share five ways to reduce total fleet costs:
- Ensure Idle Times are at a Minimum
- Maintain Equipment Regularly
- Constantly Reassess Equipment Needs
- Respect Utilization and Rent When Optimal
Ensure Idle Times are at a Minimum
Machine Idling is defined as the operation of a fuel-powered engine without any corresponding work production. All pay, no gain.
Idling may be seen as unavoidable by operators, but it’s critical your organization know that it is a significant source of wasted equipment expense. While idling, your asset incurs both ownership costs (fixed costs connected to the initial purchase of the asset, like depreciation and economic life) and operating costs (variable costs connected to the operation of the asset) that, in sum, represent the total cost allocation of a machine. Reducing idling directly helps reduce operating costs.
Beyond reduced operating costs, an asset with reduced hours equates to a higher residual value of an asset whenever it’s sold.
Maintain Equipment Regularly
Maintenance is a crucial part of working with any machine. Through sustainable, frequent, and adequate maintenance, machines and equipment can have a far better economic service life. Maintenance ensures that the machinery and equipment are running correctly, and it can improve the machine’s working conditions.
The best way to go about maintenance is to be as proactive as possible. Doing preventative maintenance will make sure that everything is running as smoothly as possible. Maintenance also increases the equipment’s overall value, allowing you to sell it at a higher price. Through maintenance, you can:
- Decrease the chances of a breakdown
- Minimize the amounts of repairs needed
- Improve function and cost-effectiveness
- Eliminate premature replacement
- Improve equipment safety
Also, the residual value of your own equipment is going to be higher if you’ve maintained it properly.
To efficiently manage your maintenance process, make sure you are using a CMMS for construction equipment.
Constantly Reassess Your Equipment Needs
Contractors know that different jobs require different equipment and reassessing your equipment needs for the job at hand is the first step to cutting down total fleet cost.
When considering an addition to your equipment fleet, are you:
- Resourcing equipment as core fleet or as supplemental assets?
- What utilization data are you using to justify your investment?
- Have you done a rent vs. lease vs. own analysis?
Once your equipment has been resourced, are you:
- Measuring owned equipment utilization? How often?
- Measuring rented equipment utilization?
- Ensuring rented asset agreements aren’t being forgotten, leading to much higher rental costs than planned?
Saving money is all about proper assessment of planned equipment utilization, both owned and rented, and using the appropriate equipment resourcing method.
IronUp uniquely helps you manage your rented fleet for all rental suppliers, helping you drive down total fleet cost.
Respect Utilization and Rent When Optimal
Depending on the industry, equipment costs can range from expensive to ludicrously expensive. One way to reduce total fleet cost is to own no equipment at all.
If you’re an operator who meets any of these criteria, you may be an equipment renter at heart:
- Prioritize fluid capital rather than fixed assets
- Characterize your jobs as short and high in quantity
- Have unpredictable job types, leading to different equipment on every job
If any of the above sounds like you, you may be an ideal renter.
But the promise of rental is based on it being a controllable, variable cost. Just like owned equipment, the less you use a piece of equipment, the most it costs you per hour of use. So tracking the utilization of equipment is critical. If that rented asset has low utilization – call it off and rent again when you have the need.
Contractors have to deal with many types equipment, which can ultimately cost far more than they’re worth. Streamlining your operations is as easy as assessing all your equipment needs, renting out things you need less often, making sure that your equipment is actually put to work.