If your work or business involves mobile assets you should READ THIS.
I like Led Zeppelin’s music. I know, I’m showing my age. But their songs had a few good messages.
Like this one.
It’s a total bell-ringer for a mobile asset specialist like me. It’s a twist from a line Shakespeare used and it’s from their classic Stairway to Heaven.
And it goes…
All that glitters is gold
Neat and clever, eh?
Led Zep released Stairway to Heaven in 1971. The mistaken belief that All that glitters is gold was true then. In fact, it was true a thousand years before.
And it’s still true today.
I see it with many organisations my team and I work with.
The management of mobile assets has a few moving pieces. And one of them is a distraction called Shiny Syndrome.
This occurs when the people who buy mobile assets — such as company cars, machinery, plant and other equipment — get swept up. They get dazzled by fancy features, brands, colours, hearsay, and other influences. And this is fine — to a degree.
But the problem occurs when Shiny Syndrome gets in the way of the less interesting bits. The bits that NEED to be considered.
Here are some of them:
– Depreciation: what will its forecast market value be when the time comes to replace it?
– Downtime: how often will it be used and — more importantly — how often will it be UNUSED?
– Maintenance costs: ALL machinery and vehicles need to be maintained. How do the costs compare? And WHO will be doing this maintenance work?
– Suitability: what are your EXACT NEEDS? And which version of this machine or vehicle matches the task?
There are many more.
You can choose to ignore these. Or just address them when you have time. You can even leave it until tax time to think about them.
But organisations that create these blindspots have this creeping problem:
Silent chunks of money get eaten from their cashflow.
It’s like little profit-killing termites are feasting under their financial floorboards. And the effects resemble a 1980s corporate lunch: long and expensive.
All of these DATA-DRIVEN FACTS should be balanced with the shiny factors I mentioned earlier. Do this, and you’ll make better procurement decisions.
Your financial results will thank you for it.
So always keep this in mind:
If you procure mobile assets just on financial maths, you could end up with stuff that won’t deliver what you need.
And if you buy just from the manufacturer’s catalogue, it’s certain you’ll spend too much over the long-run.
And that’s the ONE thing you need to keep in mind:
It’s the long-run that counts.
The financial data relating to your mobile assets MUST relate to cost per unit travelled (or engine hours run) TOGETHER with the fixed cost of ownership.
Because this will let you calculate the OPTIMUM TIME TO REPLACE YOUR EQUIPMENT. It will tell you this by its distance travelled or hours used. Not by…
– the manufacturer’s need-to-sell-you-more suggestions
– the vehicle’s forthcoming new model year
– and not by the finance company’s best estimates
But by YOUR REAL-WORLD DATA.
The challenge most buyers, owners, and procurement departments face is this:
The perception of obsolescence given by suppliers and manufactures of these machines.
New doesn’t always mean better. Sometimes, yes — but not always.
This is because you need to calculate the optimum replacement time — and buy the most suitable unit for YOUR NEEDS.
My clients calculate this using Uniqco’s Fleet Data Analytics Tool. IT REVEALS THESE ANSWERS – and it saves them money and gives them the Return on Investment (ROI) they need.
And it helps preserve their cashflow.
And it can do the same for you.
I can show you how. Just get in touch with me.
See you next week for a new topic: Fuel data.