We are all well-acquainted with the fact that it is nearly impossible to get a new truck delivered today. Material shortages and delays at the ports are causing backlogs at all the truck makers and order boards are stretched out into 2023.
At the same time, prices on some very common truck components are increasing. According to Rob Garcia, SVP of supply management at Corcentric, prices on tire-related commodities are rising, as are the prices of lubricants. Speaking at a recent NationaLease meeting, Garcia also explained that the prices of industrial metals such as copper, aluminum, iron, and more are rising. This is likely to cause price increases not only in new vehicles but in maintenance and repair parts.
The bad news is that there is not a lot you can do about rising prices. Manufacturers are likely to pass raw material price increases onto you. While you may be able to pass some of the extra costs onto your customers, chances are they may not be willing to absorb the cost increases.
If you want to continue to operate profitably, now might be a good time to look at all aspects of your business to determine if there are any places where you could operate more efficiently and, therefore, save some money.
- Start by looking at how you are utilizing each asset in your fleet. Are some being overused while others spend more time parked then on the road? Take a fleetwide view of how your assets are deployed and reshuffle them as needed to balance utilization. This may help reduce maintenance costs on the assets that are racking up extra miles and, therefore, need to come in for maintenance more frequently.
- Review your procurement processes. Are all purchases being made through approved/authorized vendors? Purchases made outside an approved vendor list tend to be more expensive and could mean you are missing out on rebates or discounts from approved vendors because you are not meeting purchasing thresholds.
- Get your employees involved in cost-savings measures. It could be something as simple as reminding them to turn off lights when they leave a room. Ask them for their suggestions on ways they see that you can cut waste across your organization. You may be surprised at the wasteful practices they are able to identify. Not all the savings will be significant, but you know what they say about a penny saved.
In the current environment, price increases may be inevitable, but that does not necessarily mean they have to affect your bottom line. An in-depth review of your operation may help you find some hidden cash that you can then use to offset higher material prices.
Jane Clark focuses on managing the member services operation at NationaLease as vice president of member services. She works to strengthen member relationships, reduce member costs, and improve collaboration within the NationaLease supporting groups.
