How Owners and Lessees Can Extend Machine Life and Retain Higher Values

Too often, machine owners focus on initial purchase price — “What am I paying to buy this machine?” That leaves out so much that can impact your bottom line while you’re running that machine. With the uncertainty in the economy right now, it’s especially important to think holistically about equipment costs. That’s why in this blog post, I want to home in on the importance of managing operating costs (which can actually cost more than the machine) and productivity, whether you’re an owner or a lessee.

Total Cost of Ownership (TCO) is important for buyers because it helps them factor in costs over the entire time they’ll own the machine: costs like fuel, maintenance, repairs, downtime, insurance, etc. But if you’re a contractor who leases or rents machines, you likely aren’t considering TCO because at some point (maybe soon) you’ll be returning it. But lowering operating costs and/or increasing productivity is crucial to maximizing your profitability while you’re running the machine. And if you’re an owner, it’ll help you lower your TCO, too. These tips can help you get it done:

Get a preventive maintenance and repair agreement.

Owners: For owners, preventive maintenance and repair agreements can improve resale values dramatically by helping prevent unnecessary wear and tear and long-term machine damage — and that higher resale value equates to a lower TCO for your investment.

Lessees: These agreements have a similar impact for lessees too. While monthly rates are important, so is the amount it’s costing you to keep your machine up and running, not to mention how efficiently it operates. With these agreements, you can bundle different services and offerings to optimize your equipment and keep costs during the lease term as low as possible. These agreements, for example, help ensure you’re maximizing fuel efficiency and that you don’t have unscheduled repairs for components. They help keep the machine in good shape to reduce costs associated with damage or higher wear and tear before it’s time to turn it in.

Monitor fuel consumption to see if you can adjust your service intervals.

Owners: While a lot of customers set up maintenance calls solely based on machine hour intervals, some customers who own their equipment have us set up their preventive maintenance and repair agreement on how much fuel they’ve burned. At Volvo, we monitor their fuel consumption through our CareTrack or ActiveCare Direct telematics services (cross referencing with customer inputs like how much fuel is put into the machine) and then build out a tailored agreement. So, as an example, if a customer burns 500 gallons of fuel in a 1000-hour period, but the engine can burn 1500 gallons before there’s an issue with the oil, we can extend the drain out. We’ve also seen instances where 500 hours is too long (based on fuel burn) and we’ve had to move it back to 350 or 250. More and more customers are looking for tailored agreements like this, especially with more fuel-efficient machines that can potentially extend their service intervals to lower TCO. Plus, they can save on lubricant and filter costs and ensure they’re not over- or under-servicing the unit. Through additional monitoring, customers could even go through cycles and tailor the agreement by different jobs to find a median service interval. There are so many ways these agreements can be tailored.

Lessees: If you lease your equipment, this likely isn’t an option for you. Regardless of whether you own the asset or not, you want to lower your cost — but in most lease agreements, there are clauses about service intervals that must be met or the lessee will be penalized. Be sure to check your lease agreement and follow what’s been laid out with documented maintenance records to avoid unnecessary costs and potentially lower residual values.

Use oils specced for the machine.

Both Owners & Lessees: Oils these days are fantastic. I’ll use the ones I’m most familiar with, Volvo lubricants, as an example. They’re specced and formulated specifically for Volvo machines to improve efficiency and lower risk. We know the approved lubricant can handle extended lube drains, a lot of different duty cycles and things like that. With other oils, you may end up doing a lot more monitoring and data capture to understand the true life of the oil.

So, if you’re an owner looking at a preventive maintenance and repair agreement to extend your lube drains, make sure you’re using OEM filters and lubricants. These oils can handle a complete duty cycle — from light duty all the way up to heavy duty. Lower-priced lubricants may meet specifications, but not have the same formulation, and in a really heavy-duty cycle, may break down before the machine gets to its recommended 500-hour lube drain. With other oils, you’re potentially risking early (oftentimes major) component failure which adds unnecessary repair costs and downtime.

Don’t underestimate the value of proper operator training.

Both Owners & Lessees: When it comes to operator training, it’s probably one of the biggest detriments to TCO for owners — it can either enhance it or destroy it. Placing an operator in a new machine without any training or knowing exactly how it works can do a lot of damage. While you could use site simulation programs to ensure your fleet is properly matched to the job and machines are configured correctly, if your operators aren’t properly trained, that efficiency probably won’t be realized. Operator training can help you reduce component damage, idle times, fuel consumption and more — all of which factor into your TCO. In recent years, telematics data and in-cab technology packages have become more and more popular because they assist operators with their performance — and in the end, good operators will positively impact TCO the most.

Whether you own or lease, design changes with Volvo equipment also help reduce daily/weekly greasings, and features like grouped grease points, slide-out coolers for our wheel loaders, the placement of air cleaners and more make service fast and easy and help keep fluids protected from contamination. It’s all designed to extend machine life and lower your operating costs while you’re running the machine.

A final note on operator training: Be sure your operators know how to avoid unnecessary problems that can pop up with Diesel Exhaust Fluid (DEF) like contamination and improper storage. For some quick tips, check out this article.

Consider programs that provide active machine monitoring and reporting.

Both Owners & Lessees: If an operator doesn’t know there’s something happening to a machine, telematics programs like ActiveCare Direct will. The operator may not even realize an issue is occurring because it’s likely an error code that’s being sent out. With ActiveCare Direct, machines are monitored 24/7 every day, and you and your dealer are notified of any critical issues that can lead to unnecessary repairs or downtime. If your operator is losing oil pressure or overheating, for example, we help you address it before it takes your machine out for unscheduled downtime and added operating costs. Owners should also check out this article that shows you how telematics and technology can help you calculate a truer TCO.

If you’re a machine owner, be sure to ask your dealer about the service offerings and machine features that can help you manage operating costs and increase productivity to lower your TCO over time — and if you’re in a lease, ask about how they can improve your uptime, profitability and residual values. If you have some unique ways to lower operating costs or TCO and you’d like to share, feel free to leave a reply below.

Randy Bushelli – Director of Volvo services, sales and attachments, North America

Randy joined Volvo in 1987 as a regional customer support manager representing the Northeast region. He now serves as the Director of Volvo services, sales and attachments responsible for all North America customer solutions commercial sales to ensure customer satisfaction and successful dealer support. Prior to Volvo, he worked more than a decade for an equipment dealer as a field technician.