Saving a State Transportation Organization Millions in TCO

STATE TRANSPORTATION ORGANIZATION

A state transportation organization had a large diverse fleet of equipment. A key decision was when to replace equipment. There was a limited budget for replacement, and the demand for new equipment typically exceeded the budget.

Missing Data

Prioritizing what to replace was difficult given that the total cost of ownership of the equipment (TCO) was not available from the financial system.

Didn't Know

There was also no methodology for measuring the missing information, prioritizing replacement and increasing the overall fleet health.

Results

The TCO decreased by $4 million the first year according to a study by Internal Audit.

Challenge

The Challenge. A state transportation organization had a large diverse fleet of equipment. A key decision was when to replace equipment. There was a limited budget for replacement, and the demand for new equipment typically exceeded the budget. Prioritizing what to replace was difficult given that the total cost of ownership of the equipment (TCO) was not available from the financial system. There was also no methodology for measuring the missing information, prioritizing replacement and increasing the overall fleet health. 

The Solution

The Solution. SAS Cost and Profitability Management was used to calculate the TCO—the cost of acquiring, operating, maintaining and disposing of equipment. This information was fed into an analytic model to determine the optimal replacement point for each piece of equipment. Output from the model included the ranking of replacement for specific pieces of equipment in each category. This analysis provided visibility into TCO and specific operating activities for benchmarking and comparison. It was easy to identify equipment classes with a high TCO, and the replacement process and priorities were driven by cost data and analytics. The TCO decreased by $4 million the first year according to a study by Internal Audit.

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