Utility Week - authoritative, impartial and essential reading for senior people within utilities, regulators and government
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24 | 27TH MAY - 2ND JUNE 2016 | UTILITY WEEK Operations & Assets Market view N obody likes wasting money, and in business the magnitude of expendi- ture is much greater when every penny needs to be accounted for. For smaller utilities companies, making efficiencies can be the difference between survival or going out of business, while in large organisations savings made at a base level can make a huge difference when multiplied across several departments or divisions. Why, then, do many companies still oper- ate fleets of old vans whose quality, reliabil- ity and cost efficiency will only deteriorate with time? Expect mixed expectations Companies with an ageing fleet will not need reminding of the problems associated with running old vehicles and will be all too familiar with the concerns, but there is another factor they may not have considered – appearance. On a fundamental level, a vehicle is advertising collateral for a business. In the same way a salesman's attire reflects his approach to work and business, a van's appearance indicates to current and pro- spective customers what they can expect from a company. For organisations with a single proposi- tion, it is particularly important that they use all advertising opportunities to attract and retain custom, meaning the physical quality of their work vehicle must mirror the qual- ity of work to be undertaken. In short, if an individual drives a vehicle in a poor state of repair, the initial opinion may reflect in the customer's expectations. Disposing of old vehicles The obvious solution is to dispose of old vehicles in favour of new vans, but for many companies, the time, hassle and cost involved with disposal can prevent them from doing so. Renewing leases or contract hire agree- ments can result in long lead-in times for new vehicles, selling at auction can be a lot- tery with oen poor sale values achieved and is dependent on the vehicle's condition, and selling privately involves paperwork, market- ing collateral and a drop-off, which can all result in the vehicles simply being retained, due to ease of familiarity or lack of time. There are alternative options, however, including flexible long-term hire, which is an increasingly popular long-term vehicle acquisition solution that provides new, fuel efficient vehicles and eliminates the hassle involved with vehicle disposal. The cost of downtime Of course, organisations within the utilities industry that do choose to run old vans will not only find they cost more to keep run- ning; older vans have far more miles on the clock and are also prone to breaking down more oen, which has a number of knock- on effects on customer service and business revenue. Even general wear and tear can have a major impact on fleet performance and function, which leads to more repairs, more maintenance and more downtime. Although modern businesses account for as much as possible in their budgets, it is a rare sight indeed for a pot to be set aside purely for fixing com- mercial vehicles. There are many fac- tors that companies oen do not account for, ranging from replacement tyres and MOT repairs, to a break- down and replacement vehicle. This is not even factoring in the poten- tial for accident damage and the financial outlay associated with sig- nificant mechanical failure. A functioning fleet is vital to business continuity and each day of downtime costs the company money, with RAC research suggesting downtime can cost companies up to £500 a day. If no fund is set aside to deal with these costs, when vehicles require repairing, money will have to be diverted from other parts of the business, which can have a knock-on commercial impact. This false economy may be explained away with the attitude that the van has been bought and paid for itself, but all the while vehicle depreciation is a factor, lowering the van's value with every day and mile that goes by. Eventually there comes a time when ad-hoc maintenance and repair becomes a severe cost burden and is no longer sustainable. With long-term flexible vehicle hire, cus- tomers receive a comprehensive service, maintenance and repair offering included in a simple and transparent weekly rate. This not only reduces vehicle and business downtime, but provides ongoing peace of mind because there are no surprising or unplanned costs to impact the business. The advantages of newer vehicles Investing in newer vehicles brings with it a number of cost benefits, with one of the key aspects being fuel efficiency, which can make a major difference when applied across multiple vehi- cles that each travel thou- sands of miles a year. The benefits even extend to staff retention, because employees who are driving a new van have a pleasant working environment and may have perks such as Blue- tooth or a sat-nav, which can boost long-term satisfaction and reduce churn. Sadly – unlike wine – commercial vehicles do not mature with time. However – like wine – they can still cause headaches. By replacing old vehicles, companies can improve their ability to satisfy customer requests, boost business continuity, main- tain the organisation's public facing image and ultimately reduce outgoings. Jonathan Pearce, head of marketing, Northgate Vehicle Hire The trouble with old vans Jonathan Pearce considers the commercial disadvantages of running an ageing fleet – and how long-term vehicle rental can save time and money, while increasing peace of mind. "In the same way a salesman's attire reflects his approach to work and business, a van's appearance indicates to current and prospective customers what they can expect from a company."