In today's troubled economy, companies are holding onto equipment longer and delaying the purchase of new devices. However, keeping equipment too long is an almost surefire to spend too much money, Dave Dawson, CEO of Houston-based AssetNation, told attendees of a WasteExpo conference session on Monday.
Dawson's remarks came during the "Leveraging End-of-Life Assets to Improve Cash Flow in a Struggling Economy" session. His company has sold more than $1 billion in assets on behalf of Fortune 1000 companies.
Noting the intention of some waste haulers to drive their trucks "until the wheels fall off," Dawson said such an ownership strategy can be financially harmful as maintenance costs soar and the re-sale value of the equipment plummets.
"There is really a better way to manage the end-of-life asset," Dawson said. "At some point, it costs more to maintain than the monthly cost of new equipment."
Larger fleets often go about answering the question "When is it time to trade out my equipment?" in a "very programmatic way," Dawson added.
These larger companies keep an eagle eye on life cycle costs - carefully keeping track of acquisition costs, maintenance expenses, the costs of idle equipment, risk-management expenses and disposal/exit costs - to best calculate the right time to get rid of a piece of equipment.
For an asset management program that seeks to get rid of equipment at the right time to be successful, the following dynamics need to be in place, according to Dawson:
* The program must be a strategic priority.
* The program must have an executive sponsor.
* It needs to be rolled out uniformly across a company.
* It requires ongoing management and reinforcement.
* The program must have the ability to measure progress toward financial goals.
* And, it requires frequent communication across multiple levels of a company.
However, even if you do drive your truck "until the wheels fall off," you will still likely find a buyer of some sort, Dawson added.