Cost Recording Made Easy A CCURATE records of tyre costs are
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rarely kept. Few operators can produce figures which really indicate the tyre costs of any particular vehicle. Many, no doubt, keep records of overall cost of tyres, and with these as a basis take out an average for each vehicle. As a rule, however, these records are liable to err to the extent of, at the maximum, the cost of a full set of tyres per vehicle.
Sometimes, the existence of an error of that extent is obvious by reference to the cost figures. For example, I have the records of the cost of operation of a certain vehicle. They relate to nearly three years of use, during which the vehicle has covered 125,800 miles. According to the records, the expenditure on tyres totals £283, which is equivalent to a cost of rather more than fcl. per mile. There is, however, no entry on this schedule of costs for the tyres which were on the vehicle when it was new.
The record of tyre cost is, therefore, inaccurate to that extent, and actually the cost per mile for tyres, if corrected, would be increased by 50 per cent, to id. per mile. Moreover, these cost figures come from an operator who prides himself upon the accuracy of his cost records. How much more likely, therefore, is it that the ordinary operator, without the experience and knowledge of this one, will make a similar error. In fact, I do know that incomplete recording of tyre costs is a common mistake.
It is to guard against this error that I inserted in the model cost analysis sheet which appeared with the first and second of these articles, a figure of £180 at the top of the column for "tyres, actual cost." It is put there as a reminder to the operator that whatever arrangement he makes for recording tyre costs, he must not overlook the need for entering the cost of the set which was on the vehicle when it was put into service.
Tyre Manufacturers Helped
In pre-war days many large operators did keep accurate tyre costs: They had to do so because of the arrangements into which they entered with the tyre companies for the supply of tyres. Alternatively, the tyre.companies,.in those cases where they were under contract to supply the tyres to a fleet, quite naturally took steps to compile accurate cost records themselves. In preparing pre-war issues of "The Commercial Motor" Tables of Operating Costs I have had considerable assistance from the tyre companies, in regard to this matter of cost of tyres.
Now they cannot give me that assistance, nor can the big companies, for the reason that accurate costs have not been kept during the war because there has not been sufficient staff. Moreover, I assume that pre-war arrangements for the supply of tyres to large fleets have been suspended, as also have pre-war contracts between tyre manufacturers and big users.
Apart from that, users of big fleets were usually content to take out overall figures for groups of vehicles of the same type and loading, and to accept those as giving comparative figures for cost. It is on that basis that many operators of big fleets are Claiming that their tyre costs are up by 600-800 per cent. in comparison with pre-war figures.
The tyre manufacturers are not satisfied that the data thus compiled are sufficiently accurate. They certainly do not accept the figure of 600-800 per cent. Their expectation is that synthetic tyres should cost per mile run approximately double that which natural rubber tyres cost before the war. My own data seem to indicate that the cost is three times what it was before the war.
On the other hand, the information I have shows that experiences differ so widely that it is hardly fair to use some of the information at least as the basis for averaging, Many operators, for example, tell me that their average tyre cost for 6-tonners is 21d. per mile. On the other hand, I am well aware that there are cases where the cost does not reach Id. per mile, although the vehicles are similar and are engaged on the same class of work as those for which the tyre cost is stated to be 21d.
One thing is certain: the method of taking the total amount spent on tyres during the year and dividing by the miles run by the fleet does not satisfy authorities who require from the operator specific proof of cost, especially when that proof is desired as a means for checking the fairness or otherwise of the rates for which the operator is asking.
A New Set of Tyres "Free"
I have in mind in this connection the Milk Marketing Board, which points out that the costs thus assessed may be erratic to the extent of the cost of a new set of tyres for each vehicle. There is nothing in such records, it points out, to show that at the beginning of the year some of the vehicles were equipped with worn tyres, and at the end of the year were equipped with tyres practically new. If that were the case, the operator would be in the position of gaining the cost of a new set of tyres over the period involved.
The method which I am about to describe is one whi-eh I have worked out myself, and in my belief is the simplest, and yet gives the most accurate results. I must refer again to the specimen cost analysis sheet, reproduced with the first and second of this series of articles, which includes two columns for tyre costs. One of these is for estimated costs, for the entry of totals based on the cost per mile figures in "The Commercial Motor" Tables of Operating Costs, or on the basis of an estimated cost per mile inserted by the operator and derived from his own experience. The other column is for recording actual tyre costs, to be checked against the estimates periodically so that it can be revised and true costs recorded.
One of the difficulties which arise in this connection is that of ascertaining the actual tyre cost in relation to any individual vehicle. I can easily show that it is not enough to debit a particular vehicle with the cost of every new tyre that is fitted to it, or the cost of a repair effected to any tyre on that vehicle.
Take, for example, a situation that is likely to occur in dealing with a couple of vehicles of the same make and type. One of them may have a new tyre fitted every time a puncture occurs, or whenever it becomes clear that one of the tyres should be removed for attention. Whenever a tyre on the second vehicle suffers a puncture it may be replaced by a repaired tyre from the first vehicle.
The result is that the first vehicle is debited with a new tyre every time one of its tyres needs repair, whereas the other vehicle rarely has to bear the cost of a new tyre. All that is debited against it is the cost of the repair of the replacement tyre which has been taken from the first vehicle. On that basis the first vehicle may be debited with five sets of tyres in a year, and the other with a set in
• five years, plus, of course, the cost of repairs to replacements. Neither set of figures will be correct. The first will be too high, the second too low.
The usual practice in the case of a fleet of vehicles which are all of one size and have the same tyre equipment is this: if on any journey the driver makes use of the "spare" on his vehicle, he is instructed to drop the defective tyre at the depot and take out a replacement. That replacement may be a new tyre or it may be a tyre from another vehicle.
The storekeeper records that a defective tyre has been removed from a particular vehicle and another taken from store. He states whether the tyre is new or repaired. If the replacement be new, the vehicle is debited with the cost of a new tyre. If it be an old tyre, the vehicle is debited with the cost of its repair and no more. That procedure results in the anomalous situation already described, in which one vehicle may be always debited with new tyres and another with used tyres.
The method which I, suggest to surmount that difficulty is simple, although at first sight it seems complicated. In fact, the complication is present only at the inauguration of the system. Once it is put in order and set going it is easy and little clerical work is needed. It has the advantage that the costs of individual tyres and the costs to individual vehicles are known as accurately as can be. In addition, as I shall show, it completely obviates the risk of that common error of forgetting to debit the vehicle with the cost of the initial set of tyres. . .„ A Card for Eack,Tyre
It is necessary to .'have one card for eyery tyre. In a fleet of 10 vehicles with twin rear wheels 60 cards would be necessary. The accompanying table shows such a tyre card completed. On it is recKded the complete history of the tyre, the number of which appears at the right-hand corner. The history starts when the tyre is first fitted to a vehicle, and in the case of a new vehicle a card will be made out for each tyre and the cost debited as shown on that card.
The card ernhodies.a record of all the vehicles to which the tyre is fitted.during its life, of expenditure on repairs (including retreading), and of the-mileage it covers to the day when it is discarded as scrap.•
The important thing about this 'card, however, is that it presents. all the essential information from which the cost of tyres for each vehicle of the fleet can be ascertained. In the case of this sample set of particulars, for example, the tyre, during its life, has been fitted to three different vehicles, and the proportion of its life and of its cost in respect of each of the three vehicles is ascertained and recorded, so that the amounts thus obtained can be set down in the appropriate column in the cost artalysis sheet of the vehicle concerned_ Having the foregoing in mind it is of interest to know how few figures are needed on the card. There are actually only eight entries throughout the life of the tyre, a period of 5-i months.
Now to explain the meaning of the headings and the method of use. At-the top right-hand corner there is the number of the tyre which, of course, will he found moulded on the cover, and immediately below that the name of the maker, the size of the tyre and the price.
The first column gives the date, the second and third columns supply information as to the vehicle from which the tyre was removed, and the position it occupied on that vehicle. Similarly, the fourth and fifth columns show to which.vehicle the. tyre was fitted and its position. The sixth column gives particulars of the mileage that the tyre has covered up to the date when any of these removals or replacements is made. There is a seventh column for remarks.
Story of a Tyre This particular tyre, No_ 12.T. 568432, was fitted to the
off-side front wheel, as indicated by the letters 0.F., on
lorry No. 5 on October 25, 1945. For convenience I have made this tally with the date on which the vehicle referred to on the cost analysis sheet was put into operation.
This tyre ran without accident until December, when it was punctured. It Was removed and repaired and returned to the same vehicle, No, 5, as a spare. It should be noted that during that period it had run 4,765 miles.
On December 8, that spare wheel from No. 5 vehicle was removed and put on to No..2 in the inner off-side rear position, as -indicated by the letters I.O.R. It had run no distance in he interim, so that the mileage still stands at 4,765.
It is not necessary for me to discuss in detail the remainder of the history of that tyre: it is set out in sufficient detail on the card, but it is of interest to note that in the course of its life it was fitted to four different vehicles and was finally scrapped after a total of 14,560 miles. Incidentally, it should be noted that although the tyre was carried by No. 3 vehicle for a time, it was only as a spare, and did not run on that vehicle.
. The total cost comprises the sum of all the figures enumerated in the seventh column, that is to say. £18 initial cost plus 6s: 6d. for..repair of the puncture,. 18s. 6d. for . repairing a cat in the cover and £8 10s..,6d. for retreading, less, the JOs. which was obtained for the, tyre as 'scrap. The net cost is £27 5s, 6d, and the cost per mile, which is calculated by diyiding that total by the mileage (14,560), is 0.45d.
Incidentally, if that' figiire of 0.45d. be typical of the cost .of. the .tyres on the vehicle, then on the cost analysis sheet the estimated figure of 1.5d. per mile is going to be inaccurate, as the cost of six tyres at 0.45d. per mile per tyre is 2.7d. per mile.
From the information that the tyre cost is 0.45d. per mite it is possible to debit each of the vehicles with the appropriate proportion of the total cost of £27 5s., nd. Thus, torn/ No. 5, on which the tyre ran,4,765.rnitesat 0.45d. per mile, should be debited with VI 18s. 8d. On No. 2 vehicle the same tyre ran '5,441 miles, and that at 0.45d. per -mile equals £10 4s. 5d. On No. 3 it was carried as a spare, so that there is no debit on account of that vehicle, and on No, 4 it ran for 4,344 miles at a cost of £8 2s. I Id_
Chit of past experience I know quite welt that some carping critic will write and point out that the sum total of the debits against all these vehicles, namely, 18 18s. 8d., plus £10 4s. 5d.. plus £8 2s. ltd., is not exactly £27 5s. 6d., but £27 6s. This is to be accounted for by the fact that 0.45d. per mile is a small fraction of a penny more than the net cost. I am nearly always quite sure that there is no point in carrying figures for a cost per mile beyond the
second figure of decimals. S.T.R.