By: Peter Carr EROAD Director, Regulatory Market Development ANZ
The Chinese strategist Sun Tzu is credited with saying that “Strategy without tactics is the slowest route to victory. Tactics without strategy are the noise before defeat.”
Vehicle maintenance is a task, technical and tactical in nature. Vehicle management is a behaviour, a way of going about the job and actively remembering to link operations back to the business’ strategy.
Both vehicle maintenance and vehicle management – good tactics and good strategy – are needed. While vehicle maintenance is something that can – and should – just be ‘done’, it is wise to ensure that it is being done with a bigger picture in mind: optimizing the total cost of ownership for the circumstances of your business.
This does not justify cutting corners on maintenance! If anything, it is the opposite. Trucks like all assets, have life-cycles, they go through stages, and their cost profile changes with age. In particular, minimum maintenance costs go up. But even in the short term, a dollar spent maintaining something today may prevent spending much more than that tomorrow when it breaks.
Vehicle management is about having vehicles that fit the business strategy. Vehicles need to be of the right types and capabilities to operate according to the way your company makes money. On top of that, the total cost of ownership for those vehicles, both how much and when those costs fall over the life of the truck, also needs to fit within a profile optimized for the financial realities of the business.
So, for example, and keeping in mind that the average age of a truck in Australia is around 16 years, give-or-take (i.e. many trucks are even older):
- A truck in the first two-to-four years of its life needs less maintenance. If a business rotates trucks out of its fleet at around that two- to four-year point it is leveraging its capital budget and the salvage value of selling relatively new trucks into the second-hand market to minimize maintenance costs and, especially, down-times.
- A truck in the second stage of life needs more maintenance, but only reasonably so. If sold on at four-to-eight or so years it should retain reasonable salvage value. The advantage of holding on is one of managing capital costs in exchange for normal downtimes and operating and maintenance expenditures.
By the time a truck passes those first four to eight years and into its ‘middle age’ and beyond, maintenance becomes much more important. Older trucks are carrying a lot of accumulated wear-and-tear. They are becoming more exposed to the risks of a lack of replacement parts and possibly also the loss of people with the knowledge to maintain them best. This all means higher maintenance expenditures and greater downtimes, but with the benefit of lower purchase prices if bought used and greater spreading of capital costs over time.
At all life stages, you can sweat the asset. This requires more attention to detail, not less, or you risk the deferred expenditure – it is only ever deferred – turning into a major cost of money, time, and even reputation.
Vehicle management, then, is about aligning the costs and benefits your vehicles are actually generating with the costs and benefits you need them to be generating. It is about being able to recognise when opportunities arise to nudge actual performance, so it is better than the planning profile requires. And it is also about being able to recognise early when and where things are falling behind the necessary profile so action can be taken to minimize or even avoid the incipient harm.
About the author
Peter Carr is the Director Regulatory Market Development with EROAD Ltd, responsible for working with government policy agencies and regulators across Australia and New Zealand on road safety, funding and taxation matters. Prior to joining EROAD, Peter was responsible for advising the New Zealand government on: the operation and performance of the land transport revenue, funding and investment systems; the rates of Road User Charges and Fuel Excise Duty; the use of tolling, debt and public-private partnerships; and the regulatory settings for heavy vehicle dimensions, mass, and access.