We are beginning to hear murmurs of a recession in the second or third quarter of the year. Most sources are saying they don't think it will be a long or deep recession, but most agree there will be an economic slowdown.
While there is no need to panic, now might be a good time to perform a thorough analysis of your operation to look for signs of inefficiency that are costing you money. You need to determine what things are essential for your success and what things are good to have but could—if a recession does materialize—be cut back or eliminated.
A good place to begin is with your assets. Spend time evaluating asset utilization. You want to make sure that assets are not being over- or underutilized. Balance is what you should strive for. And given that most fleets are operating older assets, proper utilization takes on even more importance.
See also: Scheduled maintenance more important than ever
In the face of pandemic-related parts shortages, many fleets overbought replacement parts when they were able to find them. Review your parts inventory to see if there are excess parts you can return to your suppliers for credit. You’ll also want to look at the number of suppliers you are sourcing parts from.
Consolidating parts sources can result in savings from discounts and rebates for reaching certain spending levels. During the pandemic, many fleets went outside their normal channels to find parts and, as a result, likely lost some leverage from volume purchases. As supply chain issues are improving, consolidating spending once again may make sense.
See also: Maintenance costs up? Your fleet needs smarter parts purchasing
Automation is also a way to reduce expenses, especially in the accounting department. If you have not already automated some of your routine processes, now is the time to explore your options and determine what your savings could be.
Your evaluation should look at every cost center to see if there are ways to improve efficiency, which should result in cost savings.
It’s best to perform this deep evaluation now so that if a downturn does happen, you’ll have a plan in place on how to effectively deal with it.
Patrick Gaskins, SVP of Corcentric Fleet Solutions, oversees both sales and operations for the company's fleet offerings. Gaskins joined the company in 2010, bringing more than 30 years of experience as a financial services professional in the transportation industry. He leads a team that works with a supply base of more than 160 manufacturers to help the country’s largest fleets manage all aspects of their fleet operations and fleet-related spend.
