Pain Points in the Post-Pandemic Supply Chain
Vehicle replacement strategies can be completely subjective to each fleet, dependent on variables such as utilization, application, and budget. A manager with a mixed fleet of 500 vehicles will follow different replacement schedules for their light-duty versus heavy-duty vehicles, their ICEVs versus their EVs and older vehicles that are still in great shape versus ones costing thousands in maintenance.
Typically, managers would plan annual asset replacement, keeping track of vehicles’ lifecycles and timing for ordering their replacements for on-time delivery. With previous supply chain lead times, these replacements would be ordered in advance to arrive the following year. The process was pretty straightforward.
Unfortunately, the automotive supply chain is not quite the same post-pandemic. While we have recovered in many ways, there are still new challenges that persist, adding another layer of complexity to fleet management and vehicle replacement. While managers used to plan replacement a year in advance, current lead times have increased to 2-3+ years depending on the vehicle class. This has created a series of new pain points for managers and demands a new process for effect planning.
New pain points
The Covid-19 pandemic caused a major hit to the global supply chain which has had a ripple effect across nearly all industries. Within the fleet industry, this has added some hurdles for fleets looking for vehicle procurement and replacement.
The vehicle replacement process is no longer yearly. Replacement planning has become a continuous, constant effort, with fleets looking to buy new units as soon as they are available. Fleets with aging vehicles needing to be replaced will have to hold out, and growing fleets could be temporarily stunted, unable to grow their size to meet demand. To get by, managers might have to hold onto older assets long past their regular life cycle just to keep the flow of operations.
Lead times are volatile. This makes it even trickier to keep track of when vehicles can realistically be replaced, as delivery dates for each make and model will vary. Some OEMs have even pushed back original delivery dates more than once due to ongoing shortages and delays. So, essentially, we know that vehicles won’t arrive for a long time, but exactly how long could be unclear. This again makes asset replacement a constantly evolving endeavor.
Our data-backed solution
To combat this new industry problem, Utilimarc has updated their Replacement Scheduling model to better reflect today’s reality. We can know incorporate the extended lead times for each of your vehicles by class. Basically, the need for Replacement Scheduling has now become a need for Replacement and Ordering Scheduling for the most accuracy and effectiveness in planning.
The goal here is to identify when vehicles are reaching the end of their lifecycle, place orders so that they can be replaced on time, and model future cash flow on a monthly basis to keep you under budget. Essentially, due to new supply chain challenges post-pandemic, replacement must be treated as an ongoing, monthly process.
Another data solution for fleets struggling with this would be performing a rightsizing/repositioning analysis. Not only can we help with asset challenge, but we can help strategize on how to maximize the vehicles that you have now and which units you can afford to keep around longer. The key is leveraging fleet data effectively, turning it into information to inform critical decisions.
If you’re interested to see how our platform and team of analysts are driving fleet success with telematics data, schedule a demo with us today.