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the costing column
Page 80
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A second look . . .
• Before starting any costing exercise a survey of the prevailing factors and ultimate objectives needs to be conducted if wasted effort is to be avoided. The background to a decision whether to own, hire or lease a commercial vehicle is a case in point.
Before getting down to the actual cost of the alternatives one needs, for example, to take a further look at operational factors which, because of their repetitiveness, tend to be taken for granted.
The own-account operator of a small fleet of delivery vans may well consider he runs his vehicles reasonably efficiently and possibly justifiably so. Yet the fact that he has already approved a considerable outlay on those vehicles may inhibit him from asking himself the basic questions: "Do I really need to operate my own vehicles and how did I come to start in the first place?"
At this point Many own-account operators would_ be compelled to admit — if only to themselves — that it was several years,ago since they made the decision. Almost by default as it were, they have assumed that all the factors on which that decision was first made have remained the same. And in this rapidly changing era that would be a doubtful assumption, to say the least.
1 0 years ago .. .
Consider two common reasons for starting to operate own-account vehicles. The butcher or grocer operating his one small van may have justifiably decided 10 years or more ago that local hauliers were not really set out to provide the local delivery service he needed. Indeed, they may still not be interested in this type of traffic and so from this aspect there has been no change.
However, the success of the supermarket concept of large turnover and rio delivery services must compel a reassessment as to whether those long-established local delivery services — even if efficiently run in transport costing terms — really contribute to overall profitability.
A second reason for own-account operation is the belief — justified or otherwise — that some special feature of the company's traffic makes it unsuitable to be carried by public transport whether road or rail. There may be a wide variety of factors here resulting in a decision being made in favour of own-account operation.
But here again conditions which applied perhaps 10 or more years ago when the decision was made to operate own-account vehicles may be no longer valid. A wider range of vehicles and services are now available from both hauliers and contract hire specialists than applied previously. At the same time the complexity and cost of operating own-account vehicles has increased substantially.