Do You Need Spare Trucks or Equipment for Your Company?
If you are the owner or operator of a small business, the idea of having spare trucks and equipment might seem like a crazy notion. Once your operation grows a bit, however, the questions about extra capacity become more realistic and tangible.
In fact, some of our customers would certainly claim that they need to have extra trucks or engines to work with. There could be several reasons, including:
- A need to substitute equipment at depots or jobsites because of breakdowns
- Seasonal or unpredictable spikes in demand for transportation or other services
- High costs associated with missed deliveries or deadlines
- A desire to make budgets more stable and predictable with extra inventory
You could probably think of other reasons to hold on to extra equipment, as well. It’s just more convenient to have a spare truck, boat, or generator when you need one.
To keep that extra equipment carries a cost, however. Not only do you have to buy the additional trucks or vehicles, but you also need to store and maintain them. You’ll have to carry some insurance on the extra vehicles and keep them operating often enough to stay in good working order. They could even be targets for thieves.
So, with all of this to consider, let’s get back to the original question at hand. Do you need spare trucks or equipment for your company? In order to find the answer there are a handful of questions you can ask yourself. Let’s look at each one in order.
How Often Are There Maintenance or Availability Issues?
One of the things we find fairly often is that business owners and operations managers tend to under- or overestimate how frequently they need spare capacity for trucks and other equipment. If there has been a breakdown recently, for example, they will say that happens “all the time.” But if the same event took place months ago, then they will report that it occurs “almost never.”
The reality is usually somewhere in between. Even the most dependable equipment can need servicing from time to time, particularly if you’re operating in tough environments (as many of our customers are). But how frequently does it occur? And how often is it that your operations are actually affected?
The best way to find this information is by following the paper trail. Look back at things like maintenance logs, delivery schedules, or even employee reports. See if you can determine whether you have had ongoing issues with things like trucks and generators, or if your inventory has been performing consistently.
The same goes for times when you have found that you needed spare equipment, or that you could have earned a higher profit if you had more resources available. Does the need arise once a week or once a quarter? Is there a certain time of year when you seem to be sure of capacity?
By having the answers to these questions you can start to fill in some of the gaps in your power and transportation plan. But if you don’t take the time to actually analyze the information, then you’ll end up working from hunches… or worse, emotions that are based on recent occurrences rather than hard facts.
You certainly don’t want your business to be without the equipment it needs, but neither do you want to waste money on heavy equipment that isn’t needed. That’s why it’s important to see what kind of story the numbers tell.
What Are the Consequences for Unplanned Outages?
In addition to knowing how often you need a spare truck or diesel generator, you should also think through the consequences of going without that spare capacity. Is it a minor inconvenience to work without the resource you need, or does it grind your business to a halt?
What you’re really trying to establish with these first two questions is a pattern of frequency and urgency. Frequency, of course, refers to how often you are short on equipment (as discussed above). Urgency, on the other hand, is all about the consequences you face. Either or both can become a problem in certain situations.
For example, imagine for a moment you had a small business that delivered milk to customers in a tiny residential neighborhood. Now imagine this business has four trucks, but really could use five. Deliveries would probably arrive late every day. Although the cost associated with each delay would be low, the chronic problem would eventually lead to issues like customer dissatisfaction, excessive overtime expenditures for drivers, etc. In other words, the high frequency of the problem would force you into action even if the urgency was low.
Now imagine an EMT unit working in this same small town. It could be that a single ambulance would be enough to cover the area on most days. But once or twice a month a second unit was needed to respond to life-or-death emergencies. In that situation a second ambulance might be purchased to save lives. The frequency is low, but the urgency is quite high.
These are simple examples, and there are probably more gray areas in your own business. You probably aren’t sure on capacity every day, and it’s likely that the consequences of being without a truck or generator aren’t as severe. That’s why it’s even more important you look through your data to figure out what happens when you don’t have the equipment you need. Is that something your business can survive over the long term?
How Long Are Lead Times for Repairs or Replacements?
In theory, deciding whether or not to invest in spare capacity would be as simple as weighing those first two factors together. If you needed another truck or generator, and could afford it, you would simply purchase one.
In the real world, though, business owners and operations managers will know that nothing is so simple. That’s because you’ll need to think about how long it takes to get back to normal working order when there are issues.
If you face extraordinarily long lead times for repairs and replacements, then that might push you toward investing in spare equipment. Conversely, if it takes very little effort for you to get new parts and equipment, then you might be able to spare the expense.
Much of the calculation here will depend on the details of your own business. For example, certain locations are so remote that it can be difficult to source and deliver diesel trucks, generators, and other pieces of heavy equipment. That’s particularly true if you’re dozens of miles from a highway or airport.
Branding is another consideration. If you buy from established and well-known manufacturers, then you probably won’t have too many problems getting parts. But if your equipment is less common, then you may struggle to get it back in operation after a breakdown or during a busy period.
And of course, the way you’re using the equipment will factor into things, as well as your choice of maintenance vendors. Do you have on-site dealer support when you need it? Or will you be left scrambling to find someone who can help you replace your equipment or get it running again in an emergency?
These are important issues to think about as you plan ahead and consider what you need within your fleet or inventory.
Can You Lease Spare Trucks or Extra Equipment as Needed?
In some cases you might not need to purchase extra trucks or equipment. Instead, you may be able to lease different units as needed to meet demand.
The advantage of this sort of arrangement is that it can allow you to get access to what you need essentially on demand, and without having to make a heavy up-front investment in capital equipment. Imagine for a moment that you needed extra delivery trucks for three weeks every December. It might be much more cost-efficient to lease them (and potentially even hire temporary drivers) during that period than it would be to hold on to spare equipment you don’t need the rest of the year.
By leasing things like diesel trucks and generators on an as-needed basis you can save money, gain flexibility, and get access to well-maintained equipment when needed. And so, for a lot of companies, it makes for a perfect supplement to an existing fleet.
Leasing doesn’t always solve every problem, though. For one thing, lots of businesses and industries get busy at the same time. That means your competitors might be looking to lease equipment at the same time as you. There is the chance you could miss out, or be forced to pay higher than expected rates for short-term rentals.
And speaking of lease rates for diesel trucks and generators, daily operating costs are generally higher when you’re using someone else’s equipment. Over time, you’ll end up taking a lot more out of your budget by leasing than you would if you had simply bought the equipment outright. You’ll also probably get fewer write-offs and incentives.
Additionally, leasing leaves you choosing from someone else’s inventory. What they have available at the moment is what you can choose from, even if it’s not right for your business or the task at hand.
As with anything, there are positives and negatives to using leases to deal with seasonal or emergency equipment needs. Is it the right answer for your company? We can give advice, but only you can decide.
Are There Any Other Contingency Plans You Can Count On?
If you sometimes need spare trucks or heavy equipment in your business, then your choices are usually going to be limited to buying spare capacity, leasing it elsewhere, or going without. However, there are other creative solutions you might find.
For example, you could partner with a non-competitor with a similar need and share equipment. Or one of the companies could buy the item and occasionally lease it to another. This is something we see from time to time when an entrepreneur has more than one business. That makes it easy to set up arrangements where a truck or generator, for example, can be rented from one business unit or department to another.
These kinds of arrangements can work out surprisingly well. It helps to spread costs around and keeps equipment from going unused (and gathering rust) when it should be productive.
Other possible solutions include buying used equipment, using it for a short period of time, and then selling it to another business. This doesn’t make sense in many or most situations, but could if you’ll have a heavy short-term need followed by a return to regular demand.
It could even be possible that you could repurpose an existing engine or vehicle for another use. Again, that will generally shorten the life of the equipment, but it might be a good way to get you through a short-term logjam where you have extra power and transportation needs.
The bottom line? It’s always best to think about what your business actually requires and then get creative about meeting those needs. Of course, a good diesel engine and generator dealer can help you think through each of these possibilities.
Want Help Piecing Together Your Diesel and Power Strategy?
One of the great things about working with Valley Power is that our team of experienced representatives and technicians has seen this business from a lot of different angles. That means we can not only help you find the right equipment for your company and source it at the perfect price, but also develop a strategy that keeps you covered for your power and transportation needs.
If you want to know more about our work, the brands we carry, or the ways in which we can help you plan for the future, then contact us today. We will be happy to schedule a free meeting and talk about the ways we might be able to help you run your company more smoothly.