With plentiful data available to help make business decisions, Patrick Gaskins of AmeriQuest Transportation Services advises using managed solutions and other such strategies to attain efficient and cost effective business growth.
Considering the rapid pace of technology in our industry, replacing an asset based on gut feel or even historic patterns is no longer an efficient strategy. Equipment purchasers operating on the principle of inertia are deluding themselves if they are defending their purchasing decisions by saying, “This is the way we’ve always done it, and if I don’t change anything, I should be safe.” To remain relevant, businesses need to continually analyze and take advantage of all the data that is available to them, especially when determining the proper time to replace an asset or purchase additional equipment.
The good news/bad news report is that equipment today is designed to provide a mountain of information, with additional information available from telematics and other monitoring devices. However, to be useful, the data needs to be compiled, normalized, analyzed and sliced based on the operator’s KPIs to uncover the information that is actionable. Many managers have neither the time nor the skill set needed to extract the data from all the various sources and develop tools to determine what the valuable nuggets of information are that will help them make better purchasing decisions.
Instead, many managers are turning to “managed solutions” that track and analyze the data to help the owner maximize the efficiency of their equipment and to ensure that a manufacturer’s productivity claims are being met. In fact, according to the Equipment Leasing & Finance Foundation’s 2017 Industry Future Council: Staying Ahead of Tomorrow, “The speed with which customers are now demanding managed solutions is also notable.” In fact, they can now be found in many classes of assets.
The managed solutions idea, which started out in the office products market with the cost-per-copy concept, has grown to look at assets on a cost-per-mile, per-hour or other such measures.
A managed solutions provider uses data gathered throughout the asset’s life cycle to improve efficiency. For example, with a managed solution, a fleet manager can see what happens to fuel efficiency when he governs the truck to run at 62 mph vs. 65 mph.
On a larger scale, the managed solutions provider studies trend data to determine proper asset replacement time. However, a managed solutions provider looks at more than just what is going on with the asset itself. One of the key advantages a managed solutions program offers is the ability to provide a “what if” analysis.
It can answer questions like “If I invest in this new asset, will it be more productive than the current asset?” by using data in an optimal manner. Whether the issue is vehicles, drivers or outside influences, the data is used to help customers predict spend patterns, become more efficient and avoid potential missteps in the future.
During the analysis, the managed solutions provider will look at things like interest rates, fuel prices, residual values, the improved efficiency of the new equipment, etc.
For example, if interest rates and asset costs are low, it might be a good time to invest in assets for the next five years. But if interest rates spike, and there is a huge increase in financing costs, then it makes more sense to continue operating current assets.
Another example would be if signs begin pointing to a decline in residual values. The managed solutions provider might suggest that new equipment be purchased immediately, while residual values are still high, or advise the company to ride through the storm and plan no equipment replacement over the next year or two.
The business owner would also be cautioned in this scenario that this decision will impact other areas of the business. If assets are kept for a longer period of time, they will require more maintenance. Consequently, fleets will need to prepare for that by setting up a national rental program or hiring more technicians.
If assets are replaced prior to the downturn in resale value, or an uptick in interest rates, then perhaps the fleet will need fewer technicians because the newer assets will need less repairs.
The key here is that managed solutions allow an operator to make decisions based on their data (not industry averages), as well as consider all of the outside influencers. Managed solutions allow businesses to focus on their core competencies while leveraging the expertise of others to make their business more efficient and cost effective.
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