I know there’s COVID-19 but why are fleet departments fighting more than ever to fund their replacement programs?

By: Anonymous Fleet Manager 

For the last few years before COVID-19, we were seeing strong trends around the country for a reduction in capital replacements funds. The driver of these decisions in most cases is the mistaken belief that extending replacement cycles reduces the cost of running a fleet. Now it’s even worse with the onset of coronavirus and the perception that residual values have significantly reduced or will not recover.

As far as I’m concerned, nothing could be further from the truth – if you’re not spending your dollars on capital replacements, then you’re spending it on increased maintenance activities and the costs associated with increased downtime. Plus, there are considerable safety issues to consider.

History has shown that there are no savings to be had by deferring replacements.

In a lot of ways, fleet departments don’t do themselves any favours, particularly when it comes to providing robust figures and information using scientific methods in support of maintaining capital budgets to replace fleet assets at ‘optimal replacement points’.

In order to be able to support the argument for stable capital replacement funds fleet departments must be able to produce sound financial and operational data.

Data that shows the operational costs of items that are kept beyond their optimum replacement point must be kept and pushed up to demonstrate that there are no savings. In many cases there are significant increases in costs and loss of operational efficiencies when factoring in obsolescence, innovation and a loss of availability of these ageing items.

Without robust and disciplined processes in place, it’s very difficult, if not impossible, to produce solid data that can resist any challenge from senior management and the bean counters.

As a community of fleet professionals, we owe it to ourselves to be able to produce quality data to support our argument for stable vehicle and plant replacement funds.

The ability to provide good quality, reliable data starts long before the budget process begins. Your everyday decisions and processes have the biggest influence on your ability to produce this data.

Do yourself a favour – review your processes regularly and identify any weaknesses, before the budget discussions begin.