Workforce Management and the Return on Investment: Vehicles, Part I

Over the last few weeks, we have been tackling the return experienced after investing in wireless forms, dispatching, and timekeeping. While integral in increasing the overall efficiency of a workforce, these aspects all have a common lynchpin: the human element. There exists another element of the workforce that, while a bit less prone to going against the grain, still require ample amounts of attention in order to ensure it is conducive to the growth of the business.

That aspect is known as your “vehicles” or “fleet.”

Businesses with employees that operate away from the main office must account for the automobiles within their Fleet. According to a joint study by the National Insurance Crime Bureau (NICB) and National Equipment Register (NER) in 2012, fleet vehicles are liable to be targeted for theft, resulting in between $300 million and $1 billion lost by businesses each year.

Let us revisit our friend Paul and see exactly how his Pool Cleaning Company is doing:

Paul has put some big plans into motion since we last we checked in on him. His company has expanded to not only handle pool cleaning, but also pool construction! Paul’s Pool Cleaning & Construction Company now has added three mid-sized excavators to its fleet, each with a cost of $200,000 dollars for a total of $600,000. Let us assume that in a forty-hour business week, each excavator can dig two pools. Between all three excavators, Paul’s company digs 24 pools over the course of a month.

Assuming the average cost of excavating a pool is $1,200, we can conclude that Paul’s three excavators are contributing $28,800 to Paul’s gross monthly revenue. While amounting to over $300K in annual revenue, the excavators would require two years before Paul saw any profit on their purchase.

However, those two years of consistent work are not guaranteed with vehicles being targeted as they are. While the average cost of stolen equipment $17,400, heavy equipment like Paul’s excavators are a more lucrative prize; they are five times likelier to be stolen than damaged in an auto accident. Coupled with the statistic that only 20% of stolen equipment is ever recovered, theft poses an incredible threat to the overall productivity and profitability of businesses like Paul’s.

Let’s imagine one of Paul’s excavators is stolen and never recovered, resulting in the immediate loss of a $200K piece of equipment. Not only is the equipment lost, but Paul also loses its contribution to his business. As stated earlier, 24 pools at $1,200 generates $28,800 for Paul’s Pool Cleaning & Construction monthly and $345,600 annually. The loss of the excavator negates its ability to pay for itself, while the cost incurred by the purchase of all three vehicles remains (-600K). Paul now must rely on his two remaining excavators to pay off the costs of all three machines. With these concrete numbers, we can calculate exactly how long it would take Paul to pay off the cost of the excavators and see a profit:

-$600,000 costs to be accounted for because of all three excavators

+ $230,400 revenue generated by the two remaining excavators in the first year

-$369,600 remaining costs of excavators going into the second year

+$230,400 revenue generated by the two remaining excavators in the second year

-$139,200 remaining costs of excavators going into the third year

+$230,400 revenue generated by the two remaining excavators in the third year

$91,200 profit after excavators pay off their cost in the third year

It would take Paul’s excavators three years to pay off their costs after one of them was stolen, hindering the profitability of Paul’s Pool Cleaning & Construction.

To mitigate the impact theft has on his business, Paul can install tracking devices onto his excavators. The devices work with Actsoft software that can be calibrated to detect any movement of the vehicle after work hours and immediately report said movement. Tracking technology can also relay the location of stolen vehicles, increasing the successful recovery of the vehicles.

The installation of Actsoft’s software into vehicles is one of many steps to guard against vehicle theft. Not only does it help prevent the total loss of a vehicle you have already invested in, but it also lessens the negative impact on your business’s productivity and reputation. Taking special care of the vehicles within your workforce is key to elevating your workforce management!

Next week, we continue Part II of this discussion on “Workforce Management and the Return on Investment: Vehicles” with a special focus on the maintenance and safety of vehicles within your fleet!

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