At face value, an easy way to cut down on capital expenditures it often to defer asset replacements.
The problem with this approach though, is that it doesn’t actually achieve the intended goal of cost cutting, but instead shifts expenses to the fixed and operating categories, has vehicles operating outside of the warranty period and creates increased risk for unbudgeted costs. Decreasing the total lifecycle costs should be the goal, and when not adhering to a scheduled cycling policy, catastrophic component failures are more prone to happen as well as increased downtime.
A better approach is to utilize a flexible replacement guideline. This could include extending a replacement cycle just as a short-term solution to help reduce capital expenditure budgets. Or, it could be to shorten the service life in order to take advantage of a strong resale market. Experts recommend a flexible mindset for replacement cycling in order to be financially prudent and be able to adjust to changing market conditions.
Article Source: https://www.automotive-fleet.com/
Link to complete source story: https://www.automotive-fleet.com/10132764/extended-cycling-doesnt-achieve-the-intended-goal
Disclaimer: In the News blog posts are Doering's take on the best content and the latest news in the Fleet Management Industry. Doering did not write the original source article.
