Hosted by Mark Bradley
We all want to control costs, but we should be more concerned with cost optimization instead of cost savings. What does that mean? Think about it this way – the post office could save costs if it got rid of all the mail sorting equipment. But if they got rid of that equipment, they’d spend ten times (or more!) in labor doing that all far less efficiently.
Cost optimization works the same way in our landscape and snow businesses. If you’re trying to avoid equipment because it increases your monthly payments, or the equipment is an expensive payment, be sure to look at cost optimization before you make any final decisions.
Use Acme Maintenance again as an example. Imagine they have 5 ¾ ton pickup trucks with plows and salters on the road during each event. Each driver starts at the yard and loads with salt. They plow and salt, but during the night they return to the salt yard to wait, then load, then sign paperwork, then return to their route. They plow + salt a few more sites, then return at the end of their shift to clean up.
Acme could complete its routes more efficiently with a larger, dedicated salt truck. Instead of all the pickup trucks salting, the larger truck is a dedicated salter. This could save money several different ways:
- Acme could eliminate or reduce the size of salters on its pickups.
- The pickup trucks would accumulate less salt damage, require less time washing/maintenance.
- Acme’s drivers would spend a lot less time loading salt and driving to/from the salt yard(s) and could spend more time plowing. With only one truck (the dedicated salter) having to load/reload salt, and far less often, more employees are on billable time instead of unbillable time.
- The pickup trucks could add one or more extra sites to each route using time saved by not salting and loading/reloading salt during every event.
- Acme could use the larger truck (especially when equipped with a hook-lift) in the summer for large material moving, equipment mobilization, bin/disposal moving and more.
Given all these savings, Acme runs a simple scenario. If they purchased a dedicated salt truck, they estimate each pickup truck driver would save at least 1 hour per shift now that they are saving time loading, driving, re-loading and unloading salt. Here’s what their numbers looked like:
| 5 Pickup Trucks | Time | Revenue |
|---|---|---|
| Billable Time Per Shift, Per Truck | 6.5 HRS | $975 |
| Unbillable Time Per Shift, Per Truck | 3.5 HRS | |
| Site Time Per Shift (All Trucks) | 32.5 HRS | $4800 |
| Unbillable Time Per Shift (All Trucks) | 17.5 HRS |
| 5 Pickup Trucks & Salt Truck | Time | Revenue |
|---|---|---|
| Billable Time Per Shift, Per Truck | 7.5 HRS | $1125 |
| Unbillable Time Per Shift, Per Truck | 2.5 HRS | |
| Site Time Per Shift (All Trucks) | 45 HRS | $6750 |
| Unbillable Time Per Shift (All Trucks) | 12.5 HRS |
In just 2 events per month, Acme more than covers the cost of the salter truck lease with the extra billable time generating more revenue per event. In this example, and factoring all the other benefits above, it looks like a good business decision.
So as the snow season approaches, take the opportunity to study the equipment you have in your fleet. Where possible, optimize your spending instead of just controlling it for the greatest impact on your bottom line.
*As always, the numbers in this article are intended to project realistic examples, but are not intended as actual costs/savings for any one specific company. Be sure to run scenarios with your own costs/revenue and time saved estimates.
