Return on Investment (ROI) has been on the tip of every company's tongue since the economy began its downward spiral. Whatever you purchase has to save you money or make you money in a calculated, measurable timeline or you don't buy it -- bottom line. Contractors fighting fierce competition, plummeting profits and increasing costs need all the help they can get.
At first glance, wireless fleet management can seem like a costly addition, and one that's difficult to justify. It's not a machine you can put to work or materials you can use on the jobsite. It's information for intelligent business decisions. It's how your machines are working on the jobsite. It's about increasing efficiency and cutting costs. And in this challenging economic climate you have to cut to increase profits.
This article focuses on how contractors can, have been and will, leverage wireless asset monitoring systems that deliver the real time data necessary for increased fleet efficiency and containment of operational costs.
Accurate data results in substantial savings
Contractors face an interesting conundrum: equipment usage (from hour meter readings) is used for job billing, service scheduling, budgeting equipment purchases and estimating work. However, almost every contractor I have worked with will quietly admit that this information is inaccurate and out of date. Inaccurate in that the information is manually collected in the field and subject to a variety of "mistakes" such as fudging, hoarding practices, timecards and other gamesmanship. Out of date in that at best this manually collected data is delivered 1-2 weeks behind real time. So how can a contractor efficiently bill, maintain equipment, make buying decisions and bid with such erroneous, stale data?
Right sizing your fleet, a fleet size decrease of 5%-10% while maintaining the same level of work. Running an analysis quarterly, monthly, annually or whenever your budgeting needs arise of utilization by asset type based on actual run time makes it easy to see where your fleet has an excess and where you may need to add a machine.
For example, if the contractor has 30 dozers in the fleet and requests are coming in for additional ones, a quick utilization report shows they have 15 dozers running at 80% utilization for the last quarter, 10 dozers at 50% utilization and 5 dozers at 20% utilization. The reality is that they don't need more dozers. In fact, they can shed a few to bring up the overall production of that asset class within their fleet -- which also frees up the capital they had tied up in non-productive machines. Just one round of "right sizing" and shipping underutilized assets off to auction delivered a yield of $900,000 in cash for this customer. Formerly, those high-value fixed assets were all sitting on their books and tying up capital and ownership costs, but with a few quick reports the fleet became streamlined.
Improved jobsite billing of 10-30%. Some wireless fleet monitoring systems will empower you to designate boundaries on their mapping software which you label as your jobsites. As assets move into those areas, they are assigned to the job and as they move elsewhere they are reassigned automatically without manual entry. This allows you to run jobsite reports to see how much your assets are actually working, which in turn creates accountability at the jobsite level. No longer can machines be hoarded on jobs, while a similar asset is rented on a project down the road. Now you simply reallocate the machines within your own fleet first, before looking to rent another machine. Additionally, the any usage “fudging” is brought to light and the job is billed properly for the actual work performed by the equipment.
Reduced equipment idling by 1/3 on average. The hour meter is one performance metric, but it doesn’t differentiate between “on time”, “working time” and “idling time”. Fortunately for you, a proper wireless monitoring system does. The obvious benefit: turning off the machine when it idles excessively, by implementing companywide idling goals and measuring them frequently.