Today’s uncertain economic times demand serious planning, especially when it entails large layouts of cash. Buying equipment to support your landscape maintenance operation is no exception. I’ve been on every side of the supply chain – as a manufacturer, distributor/dealer and an end user – and I know there needs to be better cooperation at every link, which stretches from manufacturers through distribution (sometimes several levels), and finally to end users.
We’re talking partnerships here. Yes, the purhcase price of any major piece of equipment, including commercial mowers, is a big consideration, and the old adage “you get what you pay for” holds true. Even so, consider price as just the starting point. There are other things to know, including what drives each step in the supply chain. This will better allow you to match price to value. After all, it’s value you want.
In other words, you’ll make smarter equipment decisions if you know how the supply chain works.
Equipment manufacturers deal with challenges that most of us rarely consider. At the top of the list is when, how many and what equipment models will you, as an end user, need in nine months. Manufacturers have to commit to their suppliers of components like engines, drive systems, steel and bearings 12 to 15 months out, and the traditional buying period for most contractors is about four months in the spring.
5 Key Take-Homes
- Partner with vendors and take advantage of their programs.
- Identify equipment needs and give vendors your projected needs as early as practical.
- Perform regularly scheduled services.
- Track PM and repairs.
- Plan ahead to sell or trade-in used equipment; include service records to increase your return.
This means that manufacturers are investing in hard assets ahead of your equipment order. For example, they have to make decisions about how many 36-inch or 61-inch decks with 23-, 27- or 32-hp engines you will need in February, March or April. They order the components and build machines starting in the fall and through the winter while you’re renewing contracts. They have to project the right models and how many of each to have ready when you need them. This adds additional costs to the equipment for interest, warehousing and guesswork involved.
The solution to this is a partnership with your manufacturer or supplier that lets them know as early as possible what you think you’ll need and your willingness to take delivery a little ahead of your season. Is this a burden on your company that benefits the manufacturer or supplier more than you? Not really, because you haven’t actually ordered the equipment early, just forecasted what you’ll need.
Partnerships work best when all parties try to keep costs down to everyone’s benefit.
Talk to your manufacturer or suppliers, let them know you want to work with them to keep the total supply chain cost down and share in the benefits of the partnership. Arranging financing, leasing or cash payment options ahead of time will also help reduce everyone’s costs. Trade-ins are becoming more popular as smaller or startup contractors find the need for pre-owned machines. Again, don’t wait until the last minute to discuss this with your partners.
Many contractors begin the search for new equipment with a singular focus on price. Don’t limit your buying decisions so severely. Determine what’s most important to you and approach your suppliers with a partnership plan that addresses your needs and also considers their perspective.
Limit the number of vendors you do business with. This will increase the volume and opportunities for vendors; it also gives you the best purchasing and negotiating position and reduces your overall cost of owning the equipment. Overall cost of ownership is a number that’s based on all the elements of purchasing, using, maintaining and servicing the equipment for the time you own it; it’s not just your initial purchase price.
Repair service and parts availability are important to keeping your machines running and producing revenue. Consider this when you calculate your overall cost of ownership. If you get a low upfront price but your machines are out of service a day, week or (heaven forbid) a month due to lack of parts, you haven’t achieved the lowest cost of ownership. Figure the availability of parts and service into your total cost of ownership evaluation. The most effective program for you will always be a partnership that provides all the elements your fleets need to perform properly.
This brings us to preventative maintenance (PM), another important part of fleet management. Track your PM and you’ll find that the low cost to properly maintain your fleets comes back big-time in reducing the cost of ownership. Simple computer-generated files can provide instant reports on the PM, repair and condition of your equipment fleet. Accurately tracking this will result in your equipment being in better condition, more productive and worth more at trade-in or resale time. You’re an expert at maintaining landscapes; with some planning you can reduce your fleet ownership costs and be an expert at fleet management, as well.
I’d like to hear your ideas and programs that have helped you reduce costs and improve your fleet management.
Rick Cuddihe, CLP, president of Lafayette Consulting Co., owns a maintenance company and works with contractors to improve their businesses. He serves on PLANET’s Landscape Management Specialty Group, Safety and Governmental Affairs Committees. Rick is a PLANET Trailblazer. Contact him at email@example.com.