4 tips how to reduce the Total Cost of Operation (TCO) for your materials handling equipment

okt 28, 2019
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The right tools for the task
 Are your struggling how to reduce the Total Cost of Operation (TCO) and do you want to know how to effectively measure the total costs for your equipment? No worries, just about every company that finances its materials handling equipment has, at one time or another, been charged overtime at the end of a lease or forced to keep equipment with escalating maintenance costs due to improperly structured finance contracts.

We at DLL are specialized in fleet financing and asset management and happy to share some tips and tricks to help you get started.

Tip 1. Make sure that your Operations and Finance team align with each other
One reason the costs for your equipment are escalating is oftentimes because the Operations and Finance teams are not working together to effectively manage your fleet. It is no secret that these two departments have different perspectives and priorities, but the TCO of your fleet is dependent upon a continuous dialogue between them. They need to communicate regularly regarding the 'health' of the fleet, which can only be determined by combining financial information with usage data and maintenance records. By analyzing this information together, your organization is better equipped to optimize the TCO.

Tip 2. Regularly monitor and compare your actual usage data
A collaborative relationship between Operations and Finance is not only important up front when lease contracts are being structured, but throughout the entire lifecycle of the assets as well. Our independent analysis of meter reads at end of term revealed that usage estimations are wrong 89% of the time. That means that nine times out of ten, materials handling equipment is either over- or underutilized compared to the lease allowances. When equipment is under utilized, it means the monthly payment is higher than it needs to be. And when it is overutilized, it means substantial overtime charges at the end of the contract. By monitoring actual usage data and regularly comparing it to the lease contract data, your organization will be able to make critical decisions that can help lower the TCO of your fleet.

Learn more about our flexible, usage-based solutions

Learn more about our flexible, usage-based solutions

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Tip 3. Gather meter reads on a regular basis
One common challenge is that it can be extremely difficult to gather meter reads on a regular basis, and the larger the fleet, the more complex this task can be. If your fleet professionals have access to the data, the task is fairly simple. But surprisingly, many large organizations resort to having someone manually pull meter reads on a quarterly or annual basis. Others never do it at all. Unfortunately, that means Finance teams never have access to the data they need in order to restructure out-off balance contracts or effectively structure new ones. If you don't gather meter reads on a regular basis your organisation may have lost sight of one of the most important and impactful aspects of fleet management - leveraging data to maximize utilization.

Tip 4. Partner up for a better management of your materials handling equipment
High or unknown operating costs, varying utilization levels, inefficient maintenance planning, unexpected downtimes, decentralized fleet, multiple service providers?!... In case you are facing any of these challenges, at DLL we can help you take control over your fleet, improve your business and stay ahead in the market.

With our Fleet Consultancy service, our team of industry professionals can provide deep insights on how to optimize your fleet and reduce your Total Cost of Operation. Using the right fleet management tools, we combine operational and financial data to analyze your current fleet challenges and future needs. Based on that, we advise you how to achieve considerable cost savings and improve fleet efficiency.

Contact us today!

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Guido Guiking

Account Manager

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