The transportation group of any company is operationally intensive. Their mission is to get the product delivered on time and safely. Although most transportation managers recognize new equipment is a key factor in equipment reliability, driver satisfaction and on-time deliveries, they are often challenged by competing departments when it comes time to access capital. CFOs typically allocate capital based on its potential to grow the company or by its return on investment. Although it is challenging for the transportation group to demonstrate how new trucks can contribute to the growth of the company, it is not difficult to calculate the return on investment. However, it requires a financial analysis that is familiar to finance.
There are four steps necessary to calculate an appropriate return on investment and although not easy, it is well worth the time and effort as the results demonstrate a rapid return on investment.
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Benchmark your fleet by completing a fleet study. This should be in the form of a spreadsheet that contains the following:
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Current equipment model year
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In-service date
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Prior 12-month mileage, maintenance and repair costs
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Fuel expense
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Pro forma cost for the upcoming 12 months
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