If your team has ever come to you asking about purchasing a replacement vehicle and you’ve wanted to run out of the room faster than an Olympic sprinter, you’re not alone. More often than not, vehicle replacement and procurement processes cause a slew of headaches for fleet managers and analysts. Questions start ricocheting off the walls: does this vehicle need to be replaced? Replaced with the same vehicle or a different one? How much are we spending on it now versus on a new one? Is this in the budget? Can it be purchased now or later? And on and on the questions go.
Fortunately, you don’t have to answer all of these questions by yourself, or with your own analysis of raw data. Capital Asset Management (CAM) is the only integrated fleet management solution that receives, analyzes and models fleet life-cycle data. Along with providing visual representations for procurement and disposal, CAM also integrates through vendor platforms and mobile checklists. Let’s look at some of the biggest challenges that it solves:
1) If a vehicle is running, how do I know when to replace it?
There comes a point when it costs more to maintain a vehicle than it does to replace it. A life-cycle cost analysis can illustrate an asset’s optimal replacement time. While a traditional model may recommend something along the lines of 10 years/100,000 miles, your actual operational and maintenance costs may be sky-high well before you reach. In some instances, these comprehensive models have demonstrated that a fleet’s vehicle model “X” typically starts to cost more in maintenance and operation than a new vehicle would around year seven of ownership. If a fleet consists of hundreds or even thousands of that same vehicle mode, consider how much money the fleet would save off of those extra years for each vehicle.
2) Requisitions, purchase orders, invoices… How do I stay on top of all of these and make sure they all reconcile appropriately?
The goal of your business efficiency practices is to be able to streamline your processes so that a single source of information populates as much as possible. With this available, you can integrate all of your data to reduce manual entry errors and out-of-sync data. Furthermore, CAM encourages an automated reconciliation process, while also highlighting discrepancies for manual review. As a result, your involvement is only necessary if an error or anomaly appears. Otherwise, the system is crunching numbers and generating actionable reports.
3) Is the cheapest option always the best option?
Simply put, cheaper does not equal better. Do you remember your high school math or science teachers saying, “correlation does not equal causation?” The same principle applies here. While the cheapest option may be the best option in one given scenario, that is a dangerous principle to apply to every circumstance. Instead, your organization should shift its focus from cost to value. Gather all of your data and evaluate which is most important to help make a decision, including: historical maintenance data, needs analysis and cost comparisons. These important items will help guarantee that you make the right choice.
Take an outdoor painting project for example. If you wanted to repaint your railing by your front door, and you chose the cheapest standard paint, it may look good for a few weeks or even months, if you’re lucky. When the weather takes a turn, the paint won’t hold up, however. It will chip, peel and leave the unprotected metal underneath exposed. On the other hand, investing in an outdoor-designed paint would have protected your railing for a significantly longer time period, despite the greater initial cost. Thinking about car purchasing is the same way! If you go with the cheapest option and have to replace it in half the time of the other option, you’re only using more of your resources.
4) People tell us what they want, but is it what they need? How do I streamline the process to keep track of the required specifications?
It’s not always easy to communicate to all of your staff the preferred way that you want them to do things. In fact, in more easy-going environments, staff may be encouraged to find their own way of doing something, so long as it is ethical, legal and effective. However, that freedom presents a problem: if everyone submits their own style of purchasing order, you’re in for a mountain of indecipherable paperwork. What should you do?
- Use standard vocabulary to help people request vehicles.
- Analyze historical usage data to evaluate how future vehicles may perform
- Use facts and figures as a foundation to be transparent about purchasing decisions
By presenting this information up front, staff will be required to use certain terminology, and they will also see why some requests may be rejected immediately. Not only does this save you and your team time, but it saves the staff’s time by encouraging them to only submit requests that follow the rules and are more likely to be accepted the first time.
CAM is capable of providing the automation, data accuracy, visual models and much more that your organization can use to streamline all elements of vehicle life-cycle analysis, including procurement. Hopefully this helped provide a solution to some of these bigger procurement headaches!
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